:max_bytes(150000):strip_icc()/158490681720005081-686091e09c434660b2e9d78d69ceb219.jpeg) [Photo Source](https://www.thebalance.com/thmb/6-FERfxyxqMTHf1GzMMXtEmMZ_8=/640x500/filters:no_upscale():max_bytes(150000):strip_icc()/158490681720005081-686091e09c434660b2e9d78d69ceb219.jpeg) ***INTRODUCTION*** Well, in my humble opinion, it depends! Let's look at both sides of the coin, and you decide. ***THE CASE FOR TRANSITORY INFLATION*** Inflation in the United States has now reached levels unseen since 2008. In June, 2021, trailing 12 month Consumer Price Index hit 5.39%,up from 0.65% for June 2020. Raw CPI data for the month of June, 2021 totaled 271.70, up from 269.20 for the month of May, 2021 , and up from 257.80 for the month of June 2020. [Data obtained from: ["Current U.S. Inflation Rate: July 2021"](https://www.in2013dollars.com/current-inflation-rate). (Accessed July 23, 2021)]. Yes, demonstrably, inflation is currently on the rise. So, where did the current bout with inflation come from? The answer to this is both economic as well as political. And, it all stems from the economic devastation caused by the COVID-19 shut downs. Not only did COVID-19 shut down businesses, it shut down basically all the world's supply chain networks. One might think with people forced to stay at home, interruption of the supply chain would not be critical, but for sure, the contrary is true. Even with the lockdowns, people needed to eat, needed medications, and the like. So basic system demand is still present in the economy, but this basic demand has been exacerbated by virtue of the initial and subsequent Government Stimulus Checks to all (and subsequently many) US Residents. Please, not for one single moment do I question the need for the initial stimulus to have issued to address immediate need. The Government put free money in the hands of residents, and continues to do so. The consequences of one having more money - one spends more, which increases demand above the basic economic level. So, it is government's stimulus payments currently driving the inflationary pressures in the economy. But what about the supply chains? Aren't they reopening or restructuring as the case may be? Of course they are, and eventually enough supply will reach the markets to meet and exceed demand so as to remove the inflationary pressures. Well now, maybe.... It is a general axiom that Government's create inflation. Such is the case in the US right now. The Government must stop all stimulus payments to curb the inflationary pressures it is fueling. The effect of stopping stimulus at this time would allow the supply chains the opportunity to catch up with and meet the pandemic pent-up demand permitting a relaxation of prices in the market. Lower prices equals lower inflation. [Parenthetically, one might argue that the current state of the labor market warrants continued stimulus. Such is not the case, In fact there is presently a labor shortage in the US which is worsened by the Biden Administration's and Congress' continued free money not to work. Human psychology dictates why should I work when the Government pays me to stay home. Absent the stimulus payments, people will have to return to the work force to survive, and if wages are permitted to be set by the labor market rather than government dictate, supply and demand will work to set a fair wage. But this digression into the labor market is clearly the subject of a separate article, but was worthy of mention here]. So, if the US Government would cease stimulus payments immediately (if not sooner) and permit the actions of supply and demand to work unfettered in the markets, under these conditions current inflation would be transitory.  [Photo Source](https://img.etimg.com/thumb/width-640,height-480,imgsize-43021,resizemode-1,msid-38252275/analysis/7-types-of-inflation-and-how-they-can-affect-your-financial-planning/7-types-of-inflation-and-their-effects-on-your-financial-planning/7-types-of-inflation-and-how-they-can-affect-your-financial-planning.jpg) ***THE CASE FOR LONG-TERM INFLATION*** The causes of the current inflationary increases remain the same as set forth above. The only change to the scenario is: what government actions will continue or be conceived? As set forth above, by continuing the stimulus checks ad infinitum, the government is only exacerbating system wide demand that even with the reopening of supply chains simply can not be met. The governmental mentality of we'll give you free stimulus money to stay home is counterproductive, both literally and figuratively. This increased demand fuels the inflationary factors in the economy. But this story does not end here. There is a leaning in the current government toward a liberal socialistic approach to America on a whole. This movement not only affects the political arena, but the basic economic structure of this country as a whole. Why is this reality of our basic structural direction important in discussions concerning long-term inflation? This new approach embodies the concept: if it's broke, throw money at it. Examples: infrastructure, throw trillions at it; wages, well let's give everyone a universal wage so they can stay home and contribute nothing to production, cost in the trillions; in-kind provision of free health care, adding to the household's disposable income as it no longer has to be paid for, cost in the trillions; and so on through every socialist piece of legislation proposed. All of this spending just keeps adding to the American's disposable income (while costing the working class higher taxes - but that is for yet another article). With increased disposable incomes Americans will spend more, increasing demand to a the point where the lower rate of production afforded supply simply can not meet this demand. The result - continuing inflation. So, if the government is permitted to continue it's socialistic spending spree, and American's continue to get paid to sit at home and contribute nothing toward economic production, the case is made for the current higher inflation to become long-term inflation.  [Photo Source](https://informationstation.org/wp-content/uploads/2021/03/shutterstock_1803069226-1024x683.jpg) ***CONCLUSION*** This article is intended to present both sides of the coin when it comes to the current spike in inflation in the US. One thing can surely be taken from this presentation. The actions of the current US Government will dictate which direction inflation heads in the future. Plus, of course, as a disclaimer of sorts, the present uncertainties concerning the delta variant of the COVID virus, as well as the current state of the World Order, could impact future necessary government action. The bottom line, only time will tell the true direction of US inflation. Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/hive-167922/@kevinnag58/is-the-current-bout-with-inflation-in-the-us-transitory-or-long-term) --- <center><sub>Posted via [proofofbrain.io](https://www.proofofbrain.io/@kevinnag58/is-the-current-bout-with-inflation-in-the-us-transitory-or-long-term)</sub></center>
| author | kevinnag58 |
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https://twitter.com/taskmaster4450/status/1418919197288058881 <sub> The rewards earned on this comment will go directly to the person sharing the post on Twitter as long as they are registered with @poshtoken. Sign up at https://hiveposh.com.</sub>
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The USG only accounts for 20% of the money creation globally. The other 3 large central banks bring the total to 80% while the smaller countries around the world fill in the rest. Yet most only focus upon the USG. Ironic that Japan engaged in 74 easing projects since 1995 yet still are mired in a deflationary supercycle. By the way, those who hate inflation, what until deflation takes over. People will really have something to complain about. Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@taskmaster4450le/re-kevinnag58-2geukn)
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