Carnes: Inflation demanding more supply |

Carnes: Inflation demanding more supply

The higher the demand for a basic product, the higher the price. It’s a core principle of capitalism, thus when supply is limited for that product, demand increases in lockstep with the price as more consumers want it.

Think: toilet paper in March 2020.

This generally accepted “law” of supply and demand is not political in nature, yet petty divisional team rivalries ignorantly claim the issues exist solely upon the letter in parenthesis following a politician’s name.

I honestly believe most Americans understand reality, but choose to play the ignorance card in order to further a narrative to win elections and make the other team look incompetent (not that either side needs help). But to the remaining clueless minority, I remind them just because they don’t understand something is not a valid argument against it.

Prices on just about everything are up: milk, bread, bacon, gasoline, natural gas, real estate, used cars, Halloween candy, booze, Christmas trees (you’ll see in a few weeks) and the single biggest cause can be (over) simplified with two words: worldwide pandemic.

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Not nihilistically confined to the R’s and D’s within American borders, but across our entire planet.

The pandemic reduced the production of goods and services virtually everywhere, and the global supply chain shortages, and thus inflation, are the direct result of a planet struggling to return to pre-pandemic levels.

Beginning with dormant, or at the very least reduced capacity, Chinese ports in early 2020, the domino effect on international trade caused container ships, their cargo and ports everywhere to all but collapse worldwide to the point that the price of containers has skyrocketed to more than 10 times what it was in 2019.

Who believes the corporate overlords selling what’s inside those containers is absorbing the extra costs out of altruistic desires to the detriment of shareholders?

Not me.

Energy production and exploration were reduced as demand plummeted, and now the recovery back to 2019 demand levels has reduced the limited supply much quicker than anticipated.

But hey, oil companies are known for their philanthropic decisions to help the little guy, right?

The world’s supply of computer chips, almost exclusively from Taiwan and South Korea and critical in everything from vehicles to appliances, closed entire factories during lockdowns, and is expected to take at least another year to meet worldwide demands.

Combine the above with extreme trucking shortages across the United States and you have the perfect storm for economic inflation.

There are exceptions to the rule, of course, such as the supply of religious types in next week’s local election far exceeding demand or the number of juvenile adults chanting the incredibly childish “Let’s go Brandon!” far exceeding the number of real adults bothering to listen to their immature antics, but for the most part demand will simply outpace supply for the time being, and we’re going to have to deal with it whether we understand it or not.

Just accept the fact that prices cannot and will not return to anything resembling “normal” until the never-ending precarious balance between supply and demand reaches some form of equilibrium, and in the meantime that both political sides will continue to blame the other in futile attempts to convince the gullible that electing their side is the one and only solution.

It ain’t.

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