*Background — Significance of Inflation
-What is Inflation? Inflation is defined as a rise in prices across an economy, and in 2022 it emerged as one of the biggest threats to global prosperity. In October 2022, the International Monetary Fund warned that inflation — combined with central banks’ interest rate hikes designed to fight it — could threaten the entire global economy, a good reason to understand what causes inflation and how to manage this gradual loss of purchasing power. For more information on understanding how economists describe inflation, go to the article by Walter Frick.
-How Can Monetary and Fiscal Policy Reduce Inflation? The Peter G. Peterson Foundation (PGPF) published an online report that discusses how both monetary policies by the Federal Reserve Board and also fiscal policies by the Federal government can reduce inflation.
*Talking Points:
-Causes of Inflation– Lack of Competition
-Corporate Profits– Driver of Inflation
-Other Factors Causing Inflation
-Global Problem — Higher Food Prices
-Controlling Drug Prices: Corporate Profits and Biden’s Achievement
-Prices Were High Before Biden
-Inflation Causes: Lack of Competition.
In a YouTube video of Feb 28, 2022, economist Robert Reich –who is a bit strident but factual — argues that the underlying problem is not inflation, per se, it’s corporate power. He states that much of the American economy is concentrated in the hands of a few corporate giants with the power to raise prices. To view the video, go to You Are Being Lied to About Inflation | Robert Reich – YouTube
–Driver of Inflation: Corporate Profits.
In October of 2002 Representative Katie Porter, shows that corporate profits are responsible for over half of the increase in inflation during the pandemic. To see and hear Representative Porter in action, click here. To read more about the report by the Roosevelt Institute, that provides the basis for Representative Porter’s statement, click here.
–Causes of Higher Prices:
The strong rebound of the economy from Covid-19 and the impact of Russia’s invasion of Ukraine are cited as major factors in prices being higher, as explained in The Entrepreneur.
-Higher Groceries Prices: A Global Problem.
Paul Krugman in his opinion article of August 8, 2023 sees USA higher grocery prices as part of a world-wide problem, caused by factors such as the Russia invasion of Ukraine — a major provider of grains — and adverse weather conditions, many related to climate change. If you subscribe to the new York Times, click here to read the article.
-Inflation Reduction Act.
A Summary of The Inflation Reduction Act (IRA) of 2022 provisions are listed below. The actual impact on inflation of the IRA is not immediate but will have a substantial effect over several years.
- Enacts historic deficit reduction to fight inflation The estimated deficit reduction is $300 Billion
- Lowers energy costs, increases cleaner production, and reduces carbon emissions by roughly 40 percent by 2030
- Allows Medicare to negotiate drug prices and caps out-of-pocket costs to $2,000
- Lowers ACA health care premiums for millions of Americans
- Make biggest corporations and ultra-wealthy pay their fair share
- There are no new taxes on families making $400,000 or less and no new taxes on small businesses – the bill is closing tax loopholes and enforcing the tax code.
To read more about how the Inflation Reduction Act is helping American Families, click here.
-Drugs Prices and Corporate Profits.
Controlling drug prices helps to fight inflation but drug companies contend that such regulations hamper their research and development (R&D) work to produce and/or improve beneficial prescription drugs. To see Representative Katie Porter challenge that assertion, click here.
See below a short video, provided by the DNC via Greenfly, showing how Biden succeeded in negotiating lower drug prices.
The image below reminds us that one party voted with the drug companies.
-Prices High before Biden.
Republicans blame the the image below remindsushow thw for inflation but this Reuter’s article questions that assertion. The article points out that “the annual inflation rates for dozens and dozens of goods routinely purchased by American households – including food – were already at their highest levels in a decade before Biden entered the White House early this year. That’s in large part because of the COVID-19 relief spending enacted under Republican Donald Trump’s administration with overwhelming Republican support in the Senate. It exceeds what Democrats have allocated so far by roughly $1 trillion.”
*Feedback — Share Your Opinion
-To comment or suggest additional sources of information, go to Comment: Inflation
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