• D61 [any]
    ·
    2 years ago

    No one reason but lots of little things.

    A few key imports are in short supply for their export markets and prices for those items and downstream products will go up. With proper price controls or subsidies from governments there shouldn't be too much of a price hike passed on to the final customer. But since those won't happen and the capital classes don't like it the line on their profits graph goes down, price hikes will be passed down to the final customers to help keep their profits high.

    Politicians, bureaucrats, pundit classes talking about inflation gives cover for lots of other businesses to raise their prices even when their costs haven't gone up significantly.

    Housing being a thing that you rent (without rental price controls) instead of own.

  • usernamesaredifficul [he/him]
    ·
    2 years ago

    My theory is that for practical purposes the US dollar is inversely backed by oil. In that the higher the price of gas/oil the less the buying power of the dollar.

    (the pound and Euro are backed by US treasury bonds so are basically priced in US dollars)

  • SickleRick [he/him]
    ·
    2 years ago

    Modern Monetary Theory (MMT) is a useful tool here. It says that, in countries who control their own central banks and use fiat currency, money is created by the government, and is injected into the economy by government spending. The government then collects taxes to take money out of circulation and control inflation.

    The US government cut taxes significantly under the Trump regime and the Biden regime hasn't corrected this. The PPP paid tons of money to the bourgeoisie and petit-bourgeoisie. Tax avoidance loopholes exacerbate the problem, and the US tax code is full of them, and, by starving the IRS of funding, taxes that should have been paid by the most wealthy are able to go unaudited and unpaid because the IRS can't afford the legal fees to pursue them. On top of that, the US government continues to increase spending on the usual garbage that doesn't produce anything socially useful.

    Beyond that, Overnight Reverse Repurchase Agreements have been issued at a record pace since the second quarter of calendar year 2021, currently standing at $2,26 trillion (at the beginning of CY2021 it was effectively $0). Risking oversimplification, this is banks printing money to lend to each other.

    Inflation is when there is too much currency in circulation, which devalues the currency. The way too much currency gets into circulation is the government putting it into circulation and not removing enough from circulation. We workers have no ability to print money (without going to jail), so there is no way that us having a better bargaining position has any substantial effect on inflation.

    The USD being the global reserve currency (for now :pray-against:), likely has an outsized effect on other countries' inflation.

    Note: EU member countries do not have control of their own central banks (except Germany lol).