Why is there a shortage worldwide?

In economic affairs, inflation is the hot topic. Investors worry, of course, because inflation isn’t always good news. Increase production costs and reduce revenue. What is not desirable. However, the greatest fear among investors is a possible change in monetary policy. The US Federal Reserve could raise interest rates to contain inflation. This would drain liquidity from the system and have a negative impact on the financial markets.

However, the Federal Reserve has reiterated that such a policy change will not come in the near future. Although we already have inflation in many sectors, the authorities warn us that it is temporary and necessary. Conservatives in particular are in a state of horror at such an attitude. Many fear a scenario similar to the inflationary crisis of the 1970s, and many business people share this concern. In other words, the reserve is seen as a refusal to see reality. I mean, Powell, his director, denies. Bottom line: this inflation can be permanent and damaging.

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Why is there a shortage worldwide?
Why is there a shortage worldwide?

The Federal Reserve is being held responsible for its mishandling of the situation. That said, the (exaggerated) printing of money is responsible. In other words, fiat money. This is the typical conservative conclusion of the libertarian school. to????Inflation is always a monetary phenomenonto????. Which automatically means that inflation is the responsibility of the reserve. As simple as that.

Given such a simple and categorical accusation, there is not much to tell. In my experience, libertarians don’t change their minds easily. However, it would be good to hear from the other side. Let’s go into detail this time. That is, let us start from the facts and not from the doctrine. Let’s track inflation and determine its causes. In this case, it is best to go to a California port. It is no secret to anyone that the ports in California are on the verge of collapse. There are no containers. There are staff shortages, long waiting times, few trucks and delays everywhere. We have a major logistical crisis in hand.

Why the crisis? Simply put, it is easier to turn off the machine than turn on the machine. Suppose we have a farm. Our harvest is already promised, but the order is canceled at the last minute. It is painful to stop the entire operation overnight. But technically it’s not that difficult. Now let’s assume that the orders are coming back soon. The company cannot respond with the same capacity as before. You need time to comply. Inventory can fill some orders. But not all. So we have a shortage. Scarcity creates panic. And buyers in the midst of nervousness are ordering more than they are on the account. Which, ironically, leads to more scarcity. This deficiency, of course, drives up prices. In other words, it’s inflationary. But its origin is not monetary. It’s in the production and distribution chain.

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