Our Economy Cannot Be Viewed Through Silos

When Americans see problems, they tend to look at them as if occurring in silos.

For example, we want to blame the rapid rise in inflation on increasing petroleum prices and not see the other factors involved. Republicans are quick to blame Biden’s policies for the increases. Biden is laying the fault on Putin’s war. The facts are that both are right but only to a limited extent. And petroleum prices are only one facet of current inflation.

The fiscal stimulus that the Democrats passed, although needed, also contributed to the economy roaring back so quickly that shortages have been created. This led to an outburst of hiring, buying sprees, and travelling. All of which are ultimately good for our economy.

Biden’s claim that the Ukrainian-Russo war has fostered a rise in gas prices is also true. Even if only rising prices were due to those two factors alone, inflation would work its way through the system in short order. We would find equilibrium in the economy.

There are other important contributing factors to increased inflation that affect the economy and continue to help cause prices to rise. The first of these would be a housing shortage. This problem has been going on for many years. We are not building enough new product to satisfy demand throughout most of the housing sector.

Some of the reasons for this are local zoning ordinances that prohibit density and accessory units and encourage the building of single-family homes. The lack of adequate housing leads to inflationary price spirals for homes that are on the market. This has nothing to do with oil prices.

Another inflationary factor we have seen are wage increases. Because of our slow population growth, there are not enough employees for the number of jobs we have. Americans are not producing enough children. Currently, our rate is 1.64%, far below the replacement rate that is calculated to be 2.1%. We are in dire straits and will have a falling population like Europe, China, and Russia.

Historically, our population increased at a great rate because immigration occurred at levels that kept our numbers above the replacement rate. Because of unfounded fears that persist today (hordes on our border), we do not have an adequate supply of workers in every employment category to meet the demand. This leads to wage inflation which has nothing to do with oil prices.