Why is Inflation so High?
And how did it come on so quickly?
When it comes to the economy, we are just regular people and definitely not economic experts, but it doesn’t take an expert to notice that inflation has soared over the last couple of years. Why? In this video podcast episode and companion article, we’ll ask that question, share some things that we’ve noticed, and let you be the judge.
If you’ve been watching the news or reading the newspapers, most of the stories, talking heads, and politicians will state that inflation is the result of “the pandemic” which caused extreme consumer demand.
However during the height of the pandemic—although demand for products was way up and in the early months store shelves ran low on certain supplies—we didn’t see prices soar. It was just the opposite. Prices stayed level, and in some cases, went down.
By the last half of 2020, the stock market and the GDP, both of which suffered in the first half of 2020 due to Covid lockdowns, recovered after a temporary sharp dip. In October 2020 gas was $2.15 and diesel was $2.36 on average.
And if you have a 401K, it’s easy to see that the value of investments soared and then did a sharp downturn during 2021 and 2022.
So what happened?
It seems as though there’s been a trickle-down effect and we’re not seeing those connections being made through the mainstream news outlets.
Here are some major changes that happened post October 2020:
A new vaccine was approved for emergency use by the FDA
A new administration took the helm
Fossil fuel production was halted on public lands
US oil production went down
Supply chains impacted by state laws and mismanagement at US ports
Several private and public sector companies began to mandate vaccines globally
New money being created
Government spending increased
After noticing all of the above influences, a picture can be painted showing how we got here.
Gas and Energy Prices
We were told that gas prices were up because of the Russia/Ukraine conflict. If we’re already energy independent, how could Russia impact our energy costs?
Executive and Secretarial Orders were signed early in 2021 halting fracking, oil, and gas permits on public lands, along with revoking permits for the Keystone XL pipeline, and placing the United States back into the Paris Climate Agreements.
EO 14008 - Return to Paris Climate Agreement (section 102)
SO 3395 - Halt any gas/oil/fossil fuel drilling/fracking on public lands (section 3g)
EO 13990: Revoke Keystone XL pipeline permit (section 6)
With a new climate initiative and these newly signed orders, oil production went down while demand for oil did not. Throughout 2021 gas prices slowly started increasing, not just in the United States, but all over the world. People in Kazakhstan protested over rising gas prices and the government resigned. Protests started breaking out all over the world to protest rising prices and covid mandates.
In the spring of 2022, gas shortages were noticeable. Biden tried to work with Saudi Arabia, Venezuela, and Iran to make deals on energy imports but fell short on any deals. This, after we were energy independent just one year earlier.
To try and prevent gas hikes, the current administration dipped into the oil reserves. By summer of 2022 gas prices were at an all time high averaging $5.00 per gallon. The price of gas more than doubled for all, and even tripled in some cases. Therefore, another 10 million barrels of oil reserves were tapped to temper price hikes over the summer and fall.
Oil reserves are now at their lowest in 40 years. Will the reserves continue to be tapped? Will gas prices see extreme hikes over the winter if we don’t use the reserves?
With higher gas prices comes a higher cost for the supply chains. Truckers have to charge more to move goods and in return the price of those goods has to increase.
Luckily, the halt on fossil fuel production was lifted. I guess it was a “lesson learned” for the current folks in charge?
Covid Mandates & Labor Costs
The summer of 2021 saw millions of people choose to leave the workforce over vaccine and mask mandates. Demand for employees increased dramatically and the cost of hiring began to rise rapidly with the workforce demanding higher pay. Fast food restaurants competing with one another offered unheard of hourly wages just to bring in staff. Having to pay staff higher hourly wages means consumers will likely pay in the end. And now, California law AB 257 could raise the minimum wage for franchise restaurant workers up to $22 per hour!
Labor is the highest cost for most companies already. Add new laws and mandates that cause employees to leave in droves? Well, that’s just a problem waiting to happen and it sure won’t help with inflation.
Many big companies, along with governments, started mandating the vaccines, and then the boosters.
One of the largest impacts were in the trucking industry. There wasn’t just a big push for all truckers to be vaccinated in the United States. In Canada there was also a big push for vaccine mandates and this impacted the trucking industry both in the US and Canada.
Remember the large truck caravans and protests in Canada?
Covid mandates impacted not only the supply chain as it related to the trucking industry, but also air travel and other industries that suddenly saw a large drop in employees due to these mandates.
Supply Chain Issues
Remember back in the fall of 2021 when ships couldn’t drop off the shipping containers at the California ports? This was due to the fact that shipping containers already delivered were just sitting and not moving supplies across the country.
At first the alarms were set in September 2021 in Long Beach, CA:
Then by April 2022, the problem increased exponentially in Shanghai due to Covid lockdowns which made the problem even worse:
Why did the shipping crisis start?
There could be many reasons for the shipping crisis including high demand, bad management, covid mandates, lockdowns in China, and state laws and regulations.
California passed legislation requiring trucks to meet new emissions standards by 2023, but they starting phasing in requirements beginning in January 2020.
Not only do emissions need to be updated, California also has new employment laws that have tougher restrictions over independent contractors. Most truckers who don’t work for FedEx, Amazon, or UPS are independent.
This is resulting in thousands of truckers opting for work outside of the US ports in California.
https://www.truckinginfo.com/340211/california-bill-means-end-for-independent-trucking-in-state
Just thinking through this logically, seeing the shortage of truckers, along with a shortage of employees due to vaccine mandates might just have been the perfect impetus to cause the shipping crisis.
Due to the many ships waiting out at sea to drop off goods, Florida rerouted several to Florida ports to be processed.
Freight delays were at their peak in January 2022. What’s interesting is that freight delay times have come down, but are still much higher than even at the peak of the pandemic back in the spring of 2020. Why is that?
It’s expected that freight costs will continue to increase based on a report from October 2022.
Government Spending
Government spending is at an all time high. Sometimes it’s intentionally used as a “stimulus” to stimulate the economy, but there can be side effects, theoretically including inflation.
The government is touting growth, but that growth came mostly from government spending. I don’t know about you, but I’d much rather see real organic growth from the people and small businesses rather than government created growth which will come back later as a painful boomerang.
Is the Fed “creating” money to help enable government spending?
All the banks are broke because banks can lend money they don’t have and governments just keep printing money. We’d be in jail if we did that. How did we get here? Why do we allow this to keep happening?
Now here’s a voice of reason we could all learn something from:
Are we headed into a recession? Are we already there? Bloomberg says yes, but the White House administration says the economy is strong.
I don’t know about you, but my increase in salary is not matching the extra money I have to pay in gas and food. Wages are definitely not keeping up with the steep rise in prices.
Final Thoughts
Inflation can be a complex topic that leads to many other topics. If you step back and look at it from a 30,000 foot view, it’s easy to see how everything fits together and how a destructive domino effect might occur, whether through unfortunate circumstances or through a grand design created by the globalist elite class. More to come on this in the future.
The most important thing is that you vote and that you know who you are voting for. What are their policies?
An informed citizenry is at the heart of a dynamic democracy
The best defense of democracy is an informed electorate
An educated citizenry is a vital requisite for our survival as a free people
The cornerstone of democracy rests on the foundation of an educated electorate
-Thomas Jefferson
Thank you
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