Inflation has gotten very bad in the last year. What caused inflation to rise to the point where it is today? Well it all can be traced back to the stimulus checks that were given to families during Covid-19, supply-chain issues, and the war between Russia and Ukraine. People who didn’t need the money got stimulus checks and as a result, more money was spent on buying products instead of essential stuff such as paying rent, or bills. As a result, this money just increased demand and caused a lack of products to be available. This meant that the prices rose and became unaffordable. This caused money to not be worth what it was before and it was starting to cost more to buy the same products. However, we can stop, slow or even reverse inflation by raising interest rates. High interest rates will deter people from spending money on certain things such as cars and houses, which means less money will be spent, demand will decrease, and products will begin to have lower prices. Another idea concerns wages. The issue about raising wages is that to make up for the more money they have to pay their employees, employers will just have to raise values meaning the 15$ the employee is making, will eventually be 7.25$ in the long run. Overall, to reduce inflation, we have to encourage people to stop spending, or to spend less. People had too much money and weren’t saving enough.
Other people have a much more interesting idea to reduce inflation. Some people argue that if we just don’t buy products and wait for the cost to be more reasonable as demand is reduced, then we can combat inflation. However, this would likely not work and would just cause inflation to pick up again once consumers began to buy the products again.
Overall, inflation is really detrimental to the economy. Inflation stacks on top of each other and rapidly grows so the longer we let it go on, the worse it will be. The government has already taken steps to try and reduce inflation by making it more expensive to get loans to buy houses and cars and pushing to slow government spending down.
https://www.economicshelp.org/blog/2269/economics/ways-to-reduce-inflation/
