Everything is more expensive. A lot more expensive. You´re not just imagining it, the United States is undergoing record-breaking inflation. The biggest jump in prices in the last 30 years. Compared to an annual inflation rate of about 2%, this past year the U.S. saw a more than 6% inflation across all industries. But that 6% is just an average. Appliances are up about 15%, foods like bacon and steak are up 20% – 24%, used cars are up a whopping 27%, and gasoline is up 50%. The Federal Reserve has spent the past year trying to convince Americans that the higher prices are temporary, but this latest inflation report from the Bureau of Labor Statistics, pretty much confirms that it’s not. It will probably last well into next year, if not longer.
Now, the cause of most of this inflation is extremely simple to explain: Vaccinated Americans are spending again, creating a huge demand. But because of the supply chain crisis, and “The Great Resignation”, the supply simply isn’t there. So, across the board, there’s more money chasing after fewer goods. That’s the simplest macroeconomic explanation, and you’re going to hear that one a lot. But here’s the trick: inflation only accounts for a portion of these price increases. In fact, things should be a LOT cheaper than they are and that explanation isn’t one of supply and demand, but of pandemic driven greed.
The real reason you’re hearing so much about inflation isn’t just because of higher prices, but because there’s an aggressive effort to tie the higher inflation to political and economic change. Even though the inflation and higher prices affect everyone, they affect the ultra-wealthy the most. Now that might sound contraintuitive, but the thing is, inflation basically means that your money is worth less. So, if you have a lot of money, you’re seeing a greater decline in your purchasing power. Therefore, consumers are seeing dramatically higher prices than they should, even during the spending boom. And the inflation that we’re seeing, although driven by the vaccine boom, is partly the real economy responding to this unprecedented transfer of wealth. So yes, inflation is here, and its bad.
sources:
https://www.forbes.com/advisor/investing/why-is-inflation-rising-right-now/
https://edition.cnn.com/2021/11/13/economy/what-is-inflation-explainer/index.html
