04/13/2022
Causes of Inflation
Inflation at 8.5%, the highest level in over 40 years!
What has caused this? While there are a number of factors, some include:
1. We have had very low interest rates since the 2008 financial crisis. Low rates lead to increased borrowing, which puts more cash in circulation. More cash means each dollar out there is a smaller "slice of the pie." So you need more slices to buy things.
2. Various state governments and business entities decided to shut down and stay shut down for a long period during the coronavirus scare. This led to lack of production all over the place, impacting production. Bottom line, our decisions to shut down led to less production, which means each item out there is more expensive.
3. Stimulus money. The government handed out cash indiscriminately during Covid. Yes, some people lost hours or jobs and needed it, but the handout was very loose and also gave it to the two-thirds of Americans who weren't financially impacted. Money in the system with no goods or services for the money will lead to inflation.
4. Going offshore for oil means higher gas prices. We had 100% domestic oil production during the Trump years. Biden's stopping of the Keystone XL pipeline and other domestic opportunities meant we imported oil again. Importing is more expensive. More expensive fuel means more expensive deliveries, which impacts the cost of everything upward.
So here we are, in a time of soaring inflation. I suppose the Ukraine war had a small impact on oil, but really this whole thing was in motion well before that happened, despite what some media outlets are trying to say.
