The Truth about Inflation

We’ve all been hearing how the economy is the most critical issue of the mid-terms. It is an important problem that needs to be addressed. However, inflation is not what we think it is. Inflation is at a 40-year high but so are corporate profits.

The truth is that inflation is a very real thing, and it is hitting us all in the pocketbook. The cost of living is rising faster than wages, and this is making it difficult for families to make ends meet.

For much of the year, we have watched the Federal Reserve raise interest rates to counter the inflation caused by the pandemic supply chain issues. It is the Federal Reserve’s job to prevent prices from spiraling out of control, but the tools at their disposal are limited. They can raise interest rates to reduce the buying power of companies and individuals.

By raising interest rates, it makes it more expensive for banks to borrow money. This, in turn, raises the cost of borrowing for everyone, including average Americans who are trying to take out a loan for a car or a home.

The answer is not a simple one, but it comes down to macroeconomics. The policies that have been put in place by the government have led to this situation and it is going to take some time to correct them. This is where politics come into play. Depending on how you view the world and the role of government in making life better for “average” Americans will determine where you land on the issue.

If you believe the government has a role to play in helping “average” Americans you disagree with the path the Federal Reserve is on, as its interest rate hikes have reduced your buying power. If you believe the government has no role in helping ‘average’ Americans, then you think the Federal Reserve is doing an excellent job.

However just since yesterday the stock market has ticked up to levels not seen in 2 months and inflation started ticking down. If this had anything to do with the interest rate hikes of the Federal Reserve would have seen it last week after they announced that the rate increases on Wednesday.

So, what made the stock market happy? China. China announced that they were lowering their quarantine time for future covid cases. The new policy is to quarantine for 5 days as opposed to 7 days. This…