Europe has similar supply issues with half the inflation. The difference….no late spring trillion dollar spending spree. Basic economics tells us adding trillions of dollars into the economy over a short period of time results in upward price pressures. The statement more spending (trillions) won’t exacerbate inflation is blatantly wrong and goes against all monetary lessons . I warned of inflation months ago. Many dismissed my warning. I was correct then and correct now.
By going down this path the Dems are ensuring the poor and middle class will face hard times ahead providing food and shelter for their families. You don’t add trillions of dollars into an inflationary environment.
…and yes, supple shortages and trillions and trillions in spending have resulted in our current mess…and now we want to double down. Insanity
This might be a part of the problem… which if true, would have been a Trump era decision:
Labor Market Crisis
The U.S. inflation situation appears to be unique and may be the result of the country’s way of handling the labor market crisis during the pandemic. Although European responses varied somewhat by country, governments generally mitigated lockdown-related unemployment by lending money to employers to keep workers on staff and making those loans forgivable so long as workers were not laid off. As such, when lockdowns ended and businesses reopened, workers simply returned to their previous jobs. The rise in U.K. and eurozone unemployment was fairly modest because even when they were not able to show up for work, most workers in these nations were still technically employed and on payroll.
By contrast, U.S. employers laid off workers in droves in March and April 2020, sending the unemployment rate soaring from 3.5% to 14.8%. These workers could then apply for enhanced unemployment benefits, which untethered them from their previous employers. Depending on the state, the enhanced benefits lasted for 15-18 months, and for many low-wage workers, the benefits paid about the same, and in some cases more, than their previous employment. Meanwhile, some workers relocated, moving in with friends or family members. Some left high-cost areas like New York and San Francisco to live in areas with lower costs of living.
As the U.S. economy began to reopen, this meant that workers were not necessarily able to return to their previous employers even if they wanted. This in turn sent employers scrambling for talent, in some cases offering signing bonuses or wage increases in order to entice workers back. Nothing comparable appears to be happening in Europe.
Moreover, the shortage of workers aggravated supply chain issues in the U.S. In the rest of the world, there have been supply-line problems pertaining to shipping containers and extremely strong demand for manufactured items, but these issues have not, by all appearances, generated the kind of inflationary pressures that so far seem to be peculiar to the U.S.
asiatimes.com
