By Chuck Wiser, I write the words to share what my eyes see and my heart feels
While traveling alone in the car the other day I tuned the radio in to a news broadcast wherein the topic being discussed was the trending rise in inflation. What prompted that was the increased accusations that the President was causing this move toward inflation. The discussion pretty much was leaning toward the fact that any sitting president has very little, if any, influence on inflation but rather it is an offshoot of several conditions and activities over which the president has little control. I thought the points made in support of this concept were fairly simple, and thus I might be able to share them in this week’s Wramblings.
Thus, not being an economist, or financial wizard, I sought to educate myself a little, so as to speak an opinion given some insight. What I learned right off the bat is that it is not a simple, cut and dried, “cause and effect” type of thing. A short answer to the question of what a president can do to control the inflation can be summed up in what is likely the only intelligent thing I can say about this: “The economy is much more likely to influence the election of the President than how the President could influence the economy.”
We have a governmentally designed system regarding the establishment of our “body” of laws. The Legislative branch “makes” the laws. The Executive branch carries out these laws, while the Judicial branch upholds these laws punishing violators.
Unfortunately, the government, as much as they would like to, cannot control a few unregulated laws that exist. They cannot control the “law of gravity”. They cannot control the “law of probability”. They especially cannot control “Murphy’s Law”.
In my research I ran across several lists of factors that drive or promote inflation. There are two similar lists that are prominent. Each of the lists covered basically the same causes or contributor’s but the differences are due to various combinations of the factors.
My mind has condensed the 5 or 7 characteristics into the other prominent, real, but for the most part uncontrollable, law, that being the “Law of Supply and Demand”. The following factors listed as separate items of contributary “Identifiers” each represent my main. They either have something that is in high demand, or they don’t. Those are what drive inflation. The President has little or no control over these factors.
- The economy is going strong. Unemployment is low. Wages are up or raising. More people have money to spend.
- There is more currency available. The Federal Regulatory Agency has put more currency into circulation.
- Housing Market Takes Off. This is self evident and seems to be happening today.
- Government Implements Expansionary Fiscal Policies. This is an increase in personal “discretionary” income such as derived by tax cuts and more recently due to the Pandemic with our Stimulus Checks, and Infrastructure Projects.
- New Government Regulation Cost Increases. This could include tariffs increasing imported products costs, shortage of essential commodities like oil etc..
- Exchange Rate modulation. Comparative differences in monetary values such as that which exists between our dollar and the Canadian dollar.
- Basic Materials and Goods Increase in Prices. This one to me is the “killer” and most recent contributor.
The “Law of Supply and Demand” is paramount in that last item. It was noted as a contributor in some of the itemized list above which was a compilation combining aspects of several of the researched materials. This to me could be listed as the single most significant factor and explains a majority of the problem of inflation. This one area is where the government, and namely The President, has little or no control. More on this after I make a point on one area where the President could have a direct influence on inflation, but it too has its limitations, or pit falls.
The United States Congress forms the Federal Regulatory Agency based upon the approval of the President’s appointment of members of this agency. If the Congress fails to approve of any such nomination, as happened recently, then the Presidents influence or impact is thwarted. Enough said on that.
Back to “Supply and Demand” and how some of the listed factors come into play. Jobs are aplenty. Anyone not currently employed would almost have to intentionally shun the opportunities available. Unemployment is down. Salaries thru negotiations, or wage increases offered to attract employees, are up.
Materials and goods however are not available, largely due to the effects of the Pandemic. Combined with “isolation or regulation” of entry into our delivery systems, shipments are delayed. Due to high demand of certain goods, sales have reduced availability. Manufacturing and delivery of goods by truckers has been decreased measurably by a lack of workers, and or illnesses causing short term worker absences.
As is their wont, retail agencies are taking advantage of “The Law” and raising prices because the demand is high. Even where shortages are non-existent, prices are being raised, “just because they can”.
Don’t take me wrong. I am not casting aspersions on local retail establishments. They are at the mercy of their wholesalers and distributors.
It seems kind of contradictory to have to absorb the increased prices at a time when perhaps you finally found a job or are now receiving a better wage. But that is not unusual. Inflation is kind of like the Perfect Storm…unless you are the buyer, and then it’s not so perfect.
Is the President to blame? Not really. Can the President fix the problem? Not really…unless he gets some help. He needs the opposing party to step up in a bipartisan way, but they are chomping at the bit knowing that, if the economy is in the tank during midyear elections or the end of the first term, the President and his party is vulnerable. They don’t care about you and me. They only care about getting themselves re-elected and more importantly, their party in control.
Chuck Wiser of Scio NY is a regular contributor and has been since May of 2021. Mr Wiser is a multi-talented, award winning artist, retired college professor, musician, poet, and avid naturalist. You can read is first contribution below: