Quote:
Originally Posted by EldrickOnIce
Everything else points to a number of factors, including pandemic related supply chain issues coupled with a shift in demand (during the pandemic) from services to goods, creating even more shortages, and then fiscal packages post pandemic (to kick start the economy) increased demand for labor raiseing wages and then prices.
You should write a paper refuting those factors and placing US economic policy as the main driver of this last global inflation cycle. But I'm not certain it would stand peer review.
|
I think you're getting my words slightly twisted. I never said the tax cuts were the
main driver of global inflation, I said that they were a significant contributor. After all, the US is the world's largest economy, and when things happen there, they are felt around the world.
Without those tax cuts, the global inflation surge would have still happened, but have been much less severe. With all that pent-up demand from people staying home during the pandemic, there was bound to be a sudden blast of consumer spending once things opened back up, and that's what we saw.
But if more money had been removed from the economy via Obama-level taxation from 2018 thru 2021, the inflation spike would have been smaller.
Supply chain problems due to the pandemic, obviously yes. The war in Ukraine as well.
The stimulus spending in response to the pandemic played a role too, but it would have been incredibly callous and depraved to not provide relief to people during that time.
Higher wages contribute to inflation, but the extent to which they do is disputed. I don't think people buy twice as much food when their wages double.
But the biggest driver of inflation in my view has been the housing shortage. Neither Trump nor Biden have done enough to address it.
But it is folly to pretend that these ultra-low tax rates on corporations and the wealthy haven't played a big part in driving prices up in America.