An Introduction to Inflation

By Vincent Trinh

June 2022

As world events rapidly change the economics of the U.S, economists, political pundits, and politicians have brought up the topic of inflation. When corporate media covers the issue of inflation, they fail to break down what exactly is inflation. The media just naturally assume that the audiences know what inflation is. Naturally, as the Dragon Scroll audience is on the younger side, I think it would be beneficial to break down inflation so you have a better understanding of the news and world situation. Inflation is an extensive topic so I suggest after reading this article, to go do some additional research. This article is a brief introduction to what inflation is and how it affects people.

What is inflation, and why does it happen?

Essentially inflation just means the increased price rate of a given good or service. Inflation is just an easier way of saying something is more expensive than it was before. A modern-day example of this is oil because it was much cheaper to purchase oil a year ago than now. Inflation occurs for various reasons. The most common reasons for inflation would be war, famine, or an overall increase in the production of the item. If you are interested in keeping up to date with inflation in America, the U.S. The Federal Reserve keeps up to date with everything.

How does inflation affect local communities?

Locally inflation causes major issues. In that, it erases wages gains for the American working class so it increases the cost of living. Recently there was a survey conducted in Oregon that asked if Oregonians were having a hard time paying for household expenses and 40% said they were, and Oregonians who said they were having a difficult time jumped 26%.

Who is to blame for the current rise in inflation, and can it be fixed?

As previously stated, the U.S. inflation rate is skyrocketing, and a lot of people are asking who is to blame for the rise of inflation. Is it the President, the Democratic or Republican Party, Putin, or other foreign countries? I think we have to reframe the question, instead of looking at one group of people to blame, look at the entire problem as a whole. The focus should be on fixing the issue rather than focusing on who caused the issue. One possible solution to inflation is getting the Federal Reserve to raise interest rates. This would make it more expensive to get big loans to purchase houses, cars, etc, and the result of that would cool off the economy. The Federal Reserve is independent of the government so they could raise the interest rate without having to worry about having to go through Congress.

Bibliography:

Andrew, Craig · Economics 11/02/2022 · 5 min read, and Andrew Craig · Economics. “Graph of the Week – US Inflation, Higher and More Persistent (Again).” Investors' Corner, 24 Mar. 2022, https://investors-corner.bnpparibas-am.com/economics/graph-of-the-week-us-inflation-higher-and-more-persistent/.

El-bawab, Nadine. “What Can the Government Do to Stop or Slow Inflation?” ABC News, ABC News Network, https://abcnews.go.com/Business/government-stop-slow-inflation/story?id=84031525#:~:text=With%20increased%20consumer%20demand%20being,to%20start%20 selling%20off%20 assets.

Fernando, Jason. “What Is Inflation?” Investopedia, Investopedia, 2 June 2022, https://www.investopedia.com/terms/i/inflation.asp.

Rosalsky, Greg. “The Movement to Stick Inflation Blame on Biden.” NPR, NPR, 18 Jan. 2022, https://www.npr.org/sections/money/2022/01/18/1073053108/the-movement-to-stick-inflation-blame-on-biden.

Shivaprasad, Ashitha. “Oil Rally Hits Omicron Demand Roadblock as Glut Worries Rise.” Reuters, Thomson Reuters, 3 Jan. 2022, https://www.reuters.com/markets/commodities/oil-rally-hits-omicron-demand-roadblock-glut-worries-rise-2021-12-31/.