Why has inflation been so high recently, and is it really the fault of the president alone? Can another person who gets into the White House change it? I am not an economist or a finance major, might I provide a list of reasons, in no particular order, as to why inflation has raised its ugly head recently, and why or why not the president can or cannot do much about it. I’m sure there are other reasons or causes that can be added to this list, but here goes for now:
1. We had a global pandemic which put a large dent in manufacturing and in the supply chains around the world.
2. Vladimir Putin’s provocative war in Ukraine has disrupted some of the most important natural resources that go into farming and the making of foodstuff around the world.
3. The war in Israel and the Houthis attacking shipping routes. As a result of this, many if not most of large cargo ships coming from Asia and going to Europe and elsewhere through the Suez Canal have been interrupted, causing them to now have to go all the way around Africa and then back upwards to Europe and America. Longer shipping times requires more fuel, as well as an increased amount of time to travel. All of that cost has to be passed down from the producers to the consumers.
4. Increased energy and moisture in the atmosphere, as predicted decades ago, is now starting to cause more extreme rains, flooding, desertification, and more all around the globe, as a consequence of us continuing to add over 35 billion metric tons of carbon dioxide into the atmosphere each year. This, as well as having stripped many of the nutrients out of the ground where we plant our crops, also takes its toll on our food production.
5. The U.S. has been investing hundreds of billions of dollars under the Rebuild America Act, and the Chips Act, and as a result, the manufacturing sector and building sectors are now building in America faster than I have seen in quite some time. That will take time and effort until completed; we may expect the price of goods and services to continue to rise.
6. In the last several decades, hundreds of millions of people around the world have been moving out of poverty and up the economic ladder with more purchasing power. That increased the number of people who live like us, which then equals greater demand for goods and services around the world. That takes a toll on the Earth and our environment, as the resources are limited, and if we don’t live sustainably, then by definition, we are unsustainable!
7. Greed by the wealthy 1% and those who run and operate Wall Street. While the people stagnate and have to pay higher prices for goods and services, and we squabble amongst ourselves, higher prices and higher profits are going into the portfolios of the wealthy,
8. A trade war between the U.S. and China saw tariffs imposed upon goods, which those countries do not pay. Instead they simply pass down the cost of the tariff into the price of the goods that we now purchase.
9. Companies are leaving the largest manufacturing country in the world, China, and they’re moving their plants into other countries, and they are not set up to push out the same amount of goods that they were before. That takes money and time.
10. A better economy in the U.S. and elsewhere, as we came out of COVID and people went into purchasing mode again.
11. A rapid rise in interest rates here and around the world to try to combat inflation. The U.S. Federal Reserve, which is its own institute and not controlled by the U.S. government, raised interest rates quite a bit, which has cost businesses more to operate and as a result they charge higher prices for their products and services.
12. The baby boomer generation is retiring and requiring more healthcare and they are spending their money in their later years.
13. Globalism, where the U.S. worked with countries all over the world for over 50 years, had us as the main superpower who could project political, economic, and military power all over the world is being eclipsed by new factors. We are now moving from a monopolar world to a multipolar world, with new strategic partnerships and alliances.
14. As a result of the war in Ukraine and the Chinese threat to southeast Asian countries, as well as numerous other conflicts all around the world, countries are increasingly military expenditures and purchasing lots of weapons and necessary equipment, very much like countries did in the 1930s, and we all know what happened soon after that.
15. Governments, with their printing presses all around the world, have been increasing the paper money supply and as a result reducing the value of that paper, causing a rise in inflation.
16. Due to aging populations, and the prerequisite for higher education, there isn’t enough people to work in a lot of the jobs that need to be fulfilled. As a result, employers have to raise the salaries that they are willing to give to their employees and or potential ones.
We live in a market economy based on supply and demand, where businesses set the prices on goods and services, not the president of the United States. Yes, POTUS can influence the economy through his budget and he can do things like cut taxes through signing Congressional legislation that does just that. Cutting taxes allow for people to have more money to spend, but it also helps to increase the nation’s debt, too much of which we already have. If you want to live under an economy where the government is in charge of the prices of goods and services, then I suggest that you take a trip and or move to Venezuela, North Korea, China or Russia, and see how well everything is good over there.
I welcome any and all respectful responses. I reserve the right to be wrong if shown to be.
Richard Freifeld
Chester