We spoke before about the pressing problem of inflation. It still persists, nay, it has worsened. Last time we stressed politics, speculating on the political impact on both Democrats and Republicans.
Now we must speculate on the economic causes of this persistent and punishing inflation. They are foundational and threaten to be impervious to amelioration.
Demand side causes include trillions of dollars pumped into the economy by Congress, with additional trillions funded by the Federal Reserve Board to suppress interest rates. We describe this phenomenon as "too many dollars chasing too few goods.”
Supply side causes of inflation involve persistently choked and constrained supply chains. Goods cannot get to where they are needed. In addition, chronic shortages of workers restrict the supply of goods, thus raising prices.
Current demand for goods exceeds constrained supply, thus driving prices up to almost unprecedented levels. There are two acute imbalances, and they threaten to persist. Too many fellow citizens suffer.
We spoke of the political threat. The real threat is the economic threat to our fellow citizens. We must help them.
I'm Bob Evans, and that is my perspective.
