U.S. inflation has reached a new high in 30 yearsFly into the homes of ordinary people
Overseas Network, November 17th. The US “Fortune” magazine website published a commentary on the 16th, saying that as of October this year, the annual inflation rate in the United States has risen by 6.2%, reaching the highest level in 30 years. Unless the Fed and the Biden administration change their current practices, inflation will have particularly serious consequences for the disadvantaged groups of society, namely the poor, women and ethnic minorities. The article also reminds the American people not to believe that “inflation is good for the poor”, which is not the case.
The U.S. government and the Federal Reserve were worried that the epidemic would cause severe economic contraction, so they adopted monetary and financial measures to stimulate the U.S. economy. The article believes that the current concern of the US government is not rising prices, but falling prices will lead to a decline in consumer willingness, which will affect the recovery of the US economy. For this reason, the Fed not only does not recognize people’s concerns about price increases, but even considers this to be a short-term phenomenon. Such a statement is exactly the same as those advocating the benefits of inflation. For example, the former executive director of BlackRock, a well-known American asset management company, claimed that “non-rich people are more likely to benefit from higher levels of inflation.”
However, it is difficult for people who have not experienced inflation to understand the serious consequences. In the past three decades, the annual inflation rate in the United States has increased by less than 5%, and nearly half of Americans do not understand the consequences of large-scale inflation. . The article stated that although advocating inflation can temporarily reduce concerns about the poor and social inequities, the reality is far from simple.
The article details the impact that the continued rise in inflation will have on the United States. First of all, inflation will cause severe inequality in distribution. Although inflation has eroded everyone’s purchasing power, for the wealthy class with certain assets, they are better able to withstand the economic pressure brought about by inflation. Wealthy Americans often have the opportunity to use hedging mechanisms to resist the effects of inflation, such as transferring assets abroad, trading currencies, or buying gold and cryptocurrencies. On the contrary, in the face of severe inflation, American working-class wages will not be able to maintain their wages. In fact, rising inflation has reduced the income of American working-class people at the beginning of the epidemic, and their income levels are now even lower than before the epidemic.
Secondly, in the inflation cycle, the US government must take more stringent measures, and the cost of control will also rise. These measures will have more serious consequences for vulnerable groups. More substantial interest rate hikes and reductions in fiscal expenditures have led to a serious slowdown in economic activities, and layoffs and higher borrowing costs will greatly affect the lives of working-class people.
Finally, inflation is not just an economic phenomenon, it also has an impact on politics and society. The high inflation rate will cause people to feel uncertain and anxious about the future, especially those at the bottom of the United States who lack the ability to resist. They will feel that their lives are directly damaged, which will further affect the political life of those in power in the United States. Related research pointed out that inflation is a key factor affecting voting. If the current US government cannot control inflation, it will be directly reflected in the support rate. About 60% of respondents in the United States believe that the current economic situation is not good.
The article finally warned that the Biden administration and the Federal Reserve have a joint responsibility to prevent inflation from worsening, otherwise the disadvantaged groups will be forced to pay for it. (Overseas Net/Zhang Min Intern Compiler/Wang Ruiqi)
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