The Two Culprits Behind Inflation and Supply Chain Issues



Shortages and rising prices have not been absent from the national conversation for the past year and a half as the coronavirus pandemic has raged on. Just about every American has felt their effects on some level, from the grocery store to the gas pump. In September, the consumer price index which covers food, energy and other goods leaped 5.4% compared to 2020.

According to the White House and the Federal Reserve, the issues we face are simply transitory, or temporary. Unfortunately, this isn’t true; these issues are here to stay. Two systemic flaws in our economy encompass the problem: The Federal Reserve itself, and globalization. 

The Federal Reserve affects everyday Americans by turning their hard earned dollars into more worthless pieces of paper each decade. It prints US Dollars out of control, and ties them to absolutely nothing. The United States once tied dollars to actual gold bars or coins, which had a stable purchasing power. Gold constrained the Federal Reserve’s power to print money out of control. Now, the Federal Reserve purchased over three trillion dollars of federal debt in the span of a year. On top of that over 40% of dollars ever printed by the federal reserve were printed over the last year.

Globalization, or depending on foreign production for our goods, is the culprit behind the supply-chain woes. When one nation, no matter how far away, experiences a shock to it’s supply, so do we. When pandemic lockdowns closed chip-making plants in Asia, it threw a wrench in the plans of US auto companies whose factories could not produce new vehicles. Laptops for students and consumer electronics like new iPhones or gaming consoles have been in short supply due to our dependence on foreign production. Energy shortages in China are going to affect its exports of coal, plastic and textile used by western nations such as our own. Our ports have been overrun with 100 cargo ships stuck in the Pacific outside of LA last week and 20 in the Atlantic outside of Savannah

Policymakers can ease the inflation/supply crisis through two major acts. First: tie the U.S dollar to a stable metal or commodity like gold so that the power of our dollars is not in the hands of political appointees, but security. Second: Put Americans first in trade policy. Stop shipping jobs or prevent outsourcing materials to foreign lands within reason. The more independent we can make our economy, the more domestic jobs we create and the less likely we are to experience these problems in the future.