Many factors cause inflation

There is a lot of talk about inflation in the news. Inflation is usually defined as "Too much money chasing too few goods or services." A few examples might help see how this works.

Suppose you make $100 and spend $100 to pay for the bare minimum of goods and services you need. You have no extra money to invest. Sadly, this is the situation for many of us. If on the other hand, you make $150 and spend $100 for the bare minimum of goods and services, you have $50 to invest. This is the situation for the wealthy.

Suppose the federal government passes a tax cut that favors the wealthy but not you. Then they may, in fact, increase their earnings to $160. They have now increased the amount of money to invest to $60. Where do they put it? Recently, they put it in the stock market and the market experiences inflation, and the prices of stocks goes up. They call it a sound investment, which it may be, but it is all caused by inflation of stock prices.

If on the other hand, the federal government sends you a check of $10 to supplement your income, you may have enough money to pay off loans or save the $10.

But hold it, there is another entity at play here. It is called business. Business wants to get as much money from you as they can whenever they sell something. This is not demonization but a simple fact.

Shortages factor in as well. COVID shutdowns of factories and supply chains around the world have influenced prices but not everywhere. The point is pricing is a business decision and not necessarily a necessity.

Sadly, some businesses are using the excuse provided by the pandemic to raise prices, regardless of need.

John S Strauss

Campton Hills