Inflation- Jimmy Hernandez

 

Inflation

"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens" - John Maynard Keynes

Inflation has been on the rise and it seems as if it is not going to get any better any time soon. Inflation affects so many people in this world and it is one of the biggest nightmares to many people in todays day and age. With the minimum wage being the same and not going up this makes it much more difficult to live a comfortable life with the way that everything is going on right now. There is no question that inflation is a crucial economics topic. Deflation, which is the reverse of inflation, is a concept that is well known.   The majority of people worry about inflation, and this is a valid concern. A low rate of inflation, however, can be advantageous for the economy. The price of everything is so high in todays day and age with the gas as well as the groceries just going up it is very difficult for many families in a city like Los Angeles where even the rent went up high to be able to live a comfortable stress free life at this point. 

PEC ANNUAL INFLATION

    This is a chart that goes to show how insane the inflation has gone up over the years. After the spike in 2020 it seems like it is just very difficult to be able to function like how once did before. Back when the supply chains were normal and everything was not backed up we were not dealing with things like such as a community. It is absolutely absurd how the rates were at less than one percent before the pandemic and after the pandemic they were at over seven percent. Inflation increased and continued to be high in 2021 and 2022 after initially declining at the start of the pandemic. Inflation has averaged 4.4% annually for the entire time since the pandemic began, or from March 2020 to August 2022. This number decreases to 4.0% if we take away energy's contribution; if we take away both food and energy, we obtain 3.7%, which is still high compared to the Federal Reserve's 2% aim. In 2020 and 2021, durable goods were the main drivers of inflation. The cost of durable goods has been progressively declining before the pandemic. The pandemic's impact on consumer spending meant a sharp rise in demand for durable goods, with supply failing to keep up at the same rate. Prices increased as a result. This category's inflation appears to have drastically decreased in 2022 as consumer purchasing habits stabilized.

Maria Guzman

"The pandemic and what happened after with inflation affected me in so many ways. I drive every day from East Los Angeles to Century City for work. With all the traffic and the distance to get to my job I am spending double on gas than what I was wasting before. My husband and I split the rent and my rent went up as well. In a city like Los Angeles it can be really stressful because one is used to living normal our whole life and now we have to live on a tight budget working extra hours just to have a decent living."

Elizabeth Zendejas

"My family and I were greatly affected by inflation because now when I go to the grocery store I would spend more money than what I would. I am a stay at home wife and my husband is working overtime because he wants me to take care of our three kids. Everything is more expensive now and it is difficult when all this time we have been used to only bringing in one source of income and that is very frustrating. I know my husband does not like the gas prices since to fill up his truck it costs more than one hundred and thirty dollars. This inflation has affected us drastically as we now have to manage our money more and do not have as much fun time like before. Our children are getting older and they are asking for new iPhones and being in Boyle Heights is very difficult because of the rent. California in general is really expensive and this is a big issue."

The Cons

Everyone's wallet feel a little bit pressed when the price of products and services increases. You may have personally experienced the effects of inflation as the cost of your typical food shopping basket increases. However, the truth is that growing prices don't always translate into increased wages, which means that many people across the country are forced to deal with difficult times when inflation is on the rise. Typically, people with fixed or low incomes. Consumers are forced to take note of the changes when inflation is on the rise. Many increase their spending and investing when prices start to rise, while some people start to tighten their budget.

Why I chose Inflation 

    I chose this issue because I know many friends and family members that were greatly affected by this and I got to see them struggle by it as well. I know that my sister was affected by this as well because when she wanted to purchase her home although she had a great credit score because of inflation she had to pay more for this. I was affected and still am because my gas prices are insane driving to Glendale to work all the time it adds up after a while. I had family members move to Minnesota because they simply were not able to afford these California prices and this made me very passionate about this topic as it does not seem to go away any time soon.

What Can Be Done

Inflation control strategies that are more prevalent today include contractionary monetary policy. By raising interest rates, a contractionary policy seeks to reduce the amount of money in an economy. Credit becomes more expensive as a result, which lowers consumer and company expenditure and slows economic growth. By encouraging banks and investors to purchase Treasuries, which provide a specific rate of return, rather of the riskier equity investments that profit from low interest rates, higher interest rates on government securities also hinder growth. Voting for the right politicians is huge because it is important to have the right people in office.

References

Martin, F. M. (2022, October 14). Inflation is still high and widespread. Saint Louis Fed Eagle. Retrieved November 9, 2022, from https://www.stlouisfed.org/on-the-economy/2022/oct/inflation-still-high-widespread.

Sharkey, S. (2022, September 22). The effects of inflation on the economy. The Effects Of Inflation On The Economy | Quicken Loans. Retrieved November 9, 2022, from https://www.quickenloans.com/learn/effects-of-inflation 

Kramer, L. (2022, September 22). How do governments fight inflation? Investopedia. Retrieved November 9, 2022, from https://www.investopedia.com/ask/answers/111314/what-methods-can-government-use-control-inflation.asp