We see a lot of experts and billionaires predicted an “Inflationary Crash” expected soon before the end of 2021, but here is why it will be the otherwise (in simple explanation).
Covid-19 disrupted the economy and businesses globally, putting us into a recession –various markets crashes: both goods and services. A recession usually decreases demands, but with stockpile panic, it pushes demands higher while supplies stay the same causing shortage of supplies. This is one of the reasons why we see certain prices increased.
Aftermath: over a short period of time, in this case with the global pandemic, supply chains are disrupted. One perfect example would be the containerization –freight costs increased by 500% in mid-2021 and also driving shipping air costs up by 200%. This is due to the outbreak in ports around the world, which means shipping containers are stuck at their destinations without being transferred back.
By understanding this, we then realized why businesses aren’t able to satisfy demands of consumers; (1) shipping costs sky-rocketed, (2) rapid demands fluctuation, (3) supply chains disrupted. How will this result in a “Deflationary Crash?” At this point (after over a period of time), not being able to import/export, businesses with supplies stored are forced to decrease their products prices due to scarcity of demands = Deflationary Crash.