It seems on top of the money printing that Powell did, there were a lot of reasons that the inflation is persisting.
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One of the person that people point fingers to is Powell – 2 years of 0 interest rate, massive buying of bonds. That certainly spiked the money flow.
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One can also blame Putin because it’s the Ukraine conflict that gave a huge bump to the gas price, making inflation (food and energy, specifically) way higher and more sticky than the Fed likes.
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Another compounding reason for inflation was the Shanghai shutdown for the better part of 3 months. So many businesses were hit with the possibility of not getting their parts, leading to massive spikes in components and materials, leading to a lot of inflation in goods.
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Yet another person to blame would be Trump, and no, it’s not the stimulus. It’s the things he has done to the immigration system. He makes immigration very hard for foreign workers and the policy is proven to be particularly difficult for businesses that want to hire people. They have to compete for good workers and keep them with higher salary.
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And at last, it could be said it was Biden’s fault – because it happened on his watch. Biden did release a lot of oil reserves (like half of all the reserve), but the administration’s failure to reach diplomatic solutions before the Ukraine conflict (especially Blinken) is more or less relevant to the inflation predicament we are in.
But I think it’s probably a compounding effect of all of their actions that resulted in this situation. It’s unfortunate that poor people have to pay so much for the basic needs. But it’s also unfortunate for people whose portfolio got hit a lot – plus high interest rate is inherently bad for the US’s future because the Us’s leadership is fundamentally a leadership in technology, and advances in technology requires risk taking, growth and low interest rate.
Lessons to be learned:
1. Peace and trade benefits everyone.
2. Gutting your immigration system while you rely on immigration is a horrible idea.
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