A lot of politicians are debating how to fix inflation in America. But beating rising prices likely won’t be a quick fix for the country, which has seen record numbers rise over the past decades. It’s only the first quarter of the year, but prices are hiking up forever. There are many causes of inflation, and measures to control are there, but it’s hard to find one fix to a long-term problem.
Inflation today isn’t just because of Russia’s war on Ukraine or the COVID-19 pandemic; it’s been an ongoing trend for the past 40 years. And it’s hard for experts to pinpoint an exact reason why. It could be supply chain issues, rising oil prices, customer demands, corporate greed, or a mix of all.
Because of how entangled the issues are, there’s really no quick solution on how to solve inflation rates. Whatever the problem is, one thing is certainly clear. The issue has been here for a while, and it’s not going away any time soon.
Why is inflation happening?
Experts are as confused as we are. Depending on who you are asking, there are different reasons why inflation is happening and many opinions on how to fix inflation. To backtrack, the pandemic has made production hard to maintain for businesses.
Consequently, it has caused supply chain issues, specifically, a shortage of goods that people want to buy. As if that isn’t enough, the situation with Russia has made things worse. Sanctions against Russia stand to raise the price of precious resources, such as gas and wheat.
Harvard economist, Jason Furman, thinks that the government put too much money into circulation. He points to the American Rescue Plan enacted in early 2021 as the culprit, saying that a plan of that scale was not necessary.
But other theorists say that it’s corporate greed that made inflation worse. Because of the power of corporations over market prices, some experts say these companies are manipulating inflation to increase prices and make a profit.
How are we handling this?
There is no easy answer on how to fix inflation.
The government is currently trying to think of remedies for inflation. The current steps taken by the government to control inflation are spearheaded by Jay Powell, who chairs the Federal Reserve. He wants to raise interest rates to make it more expensive to borrow money. But Furman says this is not going to change the situation drastically. Apart from that, the White House has also implemented a supply chain task force that will address port bottlenecks and shortages in semiconductors.
But these solutions are no quick fixes. In fact, these short policies and task forces act more like band-aids rather than systemic changes. If inflation continues, there might be a need to raise taxes and cut government spending, which will require the power of Congress.
Meanwhile, Brad DeLong, an economist at UC Berkeley, thinks we have nothing to worry about. In fact, he says that five to 10 years from now, inflation is bound to quiet down and that the problem will fix itself with the Fed’s help. Other industries and sectors can’t risk the waiting game, though, which is why the pressure for the government to control inflation is high.
Why is it important to control inflation?
There’s no easy answer on how to fix inflation, but it is becoming an increasingly persistent problem across the globe. If inflation persists, it will likely cause huge waves across different industries. Broad fixes for domestic and global inflation will take some time. And more importantly, it’s not going to take one government action to solve a decades-long crisis.
