Americans are quickly realizing that the recent increase in prices has a massive impact on bank accounts. With energy and oil sources being limited and the supply chain being backed up everywhere, prices of all goods and commodities are going up. If the government doesn’t find a solution fast, higher than usual prices might remain as the new normal. If things don’t change soon, it will not be good for consumers and businesses. The economy is experiencing changes that could be here to stay, and the government’s actions, or lack thereof, have negatively affected the American economy for all those involved.
Prices are rising. Gas prices across the United States are at an all-time high, and even the price of basic grocery necessities is increasing. This price increase in consumer goods and commodities may be a result of multiple things such as the Covid-19 pandemic disrupting the supply chain or the more recent war in Eastern Russia affecting oil supply, but a more prominent possibility is how the U.S. government’s insufficient actions over the past few months have not been enough to reduce or avoid such high inflation.
Consumers and businesses alike are facing the consequences of uncontrollable global issues as well as our own government’s inadequate policies. So, which of these issues is to blame? With U.S. inflation being at a 40-year high, it is appropriate to place much of the blame on the failure of economic policy actions. During the Covid-19 pandemic, the government dumped stimulus checks into the bank accounts of many Americans, and this flood of free money caused an increase in spending. Because money was more abundant and spending increased, demand rose, and as a result of this high demand, prices went up.
This demand increase came at an inconvenient time. Supply chains were backed up nearly everywhere. Container ships headed for Long Beach Harbor were stuck for weeks before they could unload their cargo, and truck drivers were hard to come by. The traffic jam only got worse as demand continued to increase and more goods were bought that needed to be shipped in. Businesses could not receive their inventory as it became harder to move products, so they raised prices in order to cover these transport costs.
The argument that uncontrollable global issues are the sole cause of current inflation can be disproved by one fact. In an article from The New York Times, economist Jason Furman says that, “The United States has had much more inflation than almost any other advanced economy in the world”. So yes, inflation is rising all over the world due to the pandemic, but obviously the U.S. government is making detrimental moves to make it worse domestically.
I recently bought a meal for $10 that used to be $7.50 just a few months ago, and the price to fill my car with gas has near doubled since 2016. The change is drastic and rapid. We are suffering through a 7.9% inflation rate in the United States, which is the highest since 1982. There needs to be some sort of regulation by the government to help avoid or limit this situation that it caused. Oh wait, there is, and this simple economic policy is taught in basic economics classes- if there is high inflation, then the Fed should raise interest rates. Although the Fed is finally raising interest rates, the government should have implemented this monetary policy before inflation got out of control.
There are also other ways the government can help solve this problem, the first being stop putting more money in circulation by giving Americans free stimulus checks to spend. Along with this, there has to be a contractionary policy. The solutions are trivial, and while I’m sure there are reasons above public knowledge as to why it has taken so long for these policies to be implemented, it would be convenient for inflation to subdue any time now.
If things stay the way they are, our money will continue to be stolen by high, inflated prices. It is nice to receive stimulus checks in the mail because it feels like an extra pay-day, but in theory, these checks are not maintainable for the economy. Our wallets bank accounts will deflate while prices continue to inflate, so hopefully the organizations in charge immediately fix this problem they created. Oh, and it would also help if the pandemic and war in Eastern Europe ended too.
I totally agree that the way the government handled these different events to be sub par. Although I don't have a car here at school to really feel the increased price of gas, I have surely noticed the inflated prices of meals and ride services. In a city that was already expensive to begin with, the inflated prices of everyday items has made this city cost an even bigger fortune to live in. I feel like the government has been using short-term solutions to appease people to increase their approval rating with things like stimulus checks and debt cancelling and postponing. These solutions sound good, but are likely to make the prices even more inflated and I don't know if…
Great article, I completely agree. The prices are outrageous and it is because we have a government that is becoming more and more against business and capitalism as a whole. The endless amount of regulations and politics that go into decisions as simple as basic supply chain issues - what type of trucks can pick up cargo from ports, etc. - is absolutely ridiculous. However, I am hopeful - with the pandemic coming to what appears to be a close - the future is bright, that is, unless WWIII breaks out.