Reply to Can someone explain to me why we have such high inflation now?

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Reply to "Can someone explain to me why we have such high inflation now?"

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[quote=Anonymous]Demand side:
CARES Act, American Rescue Plan, and zero interest rates means that a LOT of money was pumped into the financial system. It takes years for these funds to work their way through the economy and taper off. Look at my family alone: we refinanced from 3.75% mortgage to 2.75% mortgage. This put an extra $500/month in my family's pocket....forever. While we used this bonus to pay down principal faster, lots of people did not. Now add in PPP monies, money to state governments, money to families and working poor...that's a lot of dollars chasing the same (or less!) amount of goods.

Supply side:
Supply chains still are not fully back to normal. High energy costs from disinvestment and the Russian war are pumping up inflation. We also have a demographic labor issue - retirement of Boomers, closed border for two years, lack of professional training for young people, substance abuse - that is leading to a labor shortage. This is leading to a wage-price spiral.[/quote]

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