We may not be the first to shed economic light on the topic of inflation here, but the current situation should be familiar to everyone. The causes of the problem can be traced back to the monetary and fiscal policy programs from 2020 and 2021. These were used in a targeted manner to offset the economic effects of the Corona pandemic. However, this resulted in an inflated money supply in the market. Further political measures such as energy policy and the European Central Bank's (ECB) low interest rate policy, which has persisted to date, are now breaking the camel's back and resulting in strong inflation in Germany as well. On 21.07.2022, the ECB raised the key interest rate to over 0% for the first time since 2014. *** All this severely restricts the ability of major banks, up to local banks, to continue to provide cheap loans to businesses. Economic growth is automatically slowed. This, and a continuing shortage of raw materials, which are influenced by Corona and the ongoing Ukraine conflict, are making themselves felt among consumers in a sharp rise in prices. While the high wage level is still trying to compensate for the current inflation, the direct impact on consumers' wallets is primarily felt in the case of food. With the central banks now pursuing a more restrictive monetary policy, equity valuations have also fallen for investors on the financial markets, leading to declining profits. In recent years, a large number of new participants have become active in the financial markets through offers from so-called neo-brokers. This positive development is slowed down by the current inflation. The DAX and thus beside the gross domestic product (GDP) the most meaningful representative of the German economy lost its beginning of the year already more than 17%. ****
The current development should not worry us all, but lead to a more conscious handling of money and our daily consumption. To draw attention to this, we will be parading through downtown Munich over the next two days, handing out banknotes. The campaign is intended to draw attention to the fact that a full wallet cannot be taken for granted. Under the motto "Don't leave your money lying around," we will use the banknote on the street to allude to the money lost to inflation. We will give a treasure map to everyone who finds a real bill or coin from us. This maps the way to market-neutral investment strategies to avoid losses from inflation. The most important thing for us, however, is to draw attention to the issue in the overall context and to promote a conscious approach to our money. About Sub Capitals: Sub Capitals is a FinTech (finance/technology) start-up from Munich, which has been developing machine learning algorithms for financial markets out of the University of Applied Sciences Munich and the Technical University Munich since 2017. Founded in Munich in 2021, Sub Capitals GmbH is funded by early investors Trade Republic's (Europe's largest neo broker). The team's mission is to democratize Artificial Intelligence (AI) in financial markets and empower investors to use the same AI trading systems that large institutions and hedge funds have been using for years. Through Neo Investing - a new way of managing assets - Sub Capitals is creating equality in the financial markets and has already tested this with over 1000 users, 90% of which outperformed MCSI World. Through autonomous AI trading, Sub Capitals takes over the portfolio management of retail investors. They will go live with their first product in Q4 2022, greatly lowering the barriers to professional investing.
Sources:
*https://www.destatis.de/DE/Presse/Pressemitteilungen/2022/07/PD22_319_611.html
**https://www.zeit.de/news/2022-04/16/doenerpreise-steigen-deutlich-imbissbesuche-werden-teurer
***https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.mp220721~53e5bdd317.en.html