According to US Treasury Secretary Janet Yellen, “substantial increases” in the cost of living are “a problem for many people”: “President Biden is aware of this and intends to address the problem to the best of his ability using the tools he has at his disposal” disposition”. The former Fed President continues: “Although wages have risen significantly, and, at least on average, more than prices there are substantial increases in prices that are important to people”; “They see these when they buy food. They see them in terms of rents. With higher rates, it is difficult for young people who want to buy a house to approach the market.”
Six months before the elections, the price increases of the last two years become an electoral issue. The indices that measure wages and inflation only partially reflect what has happened to families both because the wage increases are “average” and some have been left out, at least in part, and because inflation weighs on family budgets even in a very different depending on income. Just as a particularly aggressive phase of inflation seems to be coming to an end, the likes of which has not been seen since the 1980s, reflections on the impact it has had on people’s lives are multiplying.
The price increases remain officially shrouded in an aura of mystery and somehow, incredibly, still linked to a “supply crisis” due to the pandemic. Above, a little more clarity can be found in public discussions among leading bankers and investors and the US deficit is increasingly associated with the word “unsustainable”; the increases in the stock markets, with a monetary policy that is considered unnecessarily restrictive and on the eve of a slowdown considered probable if not certain, instead remains almost without explanation even if in reality the indices on financial conditions, still expansive, elaborated by the main banks of investment give some indications.
The paradigm with which crises are treated, at least since 2008, made up of deficits and expansionary monetary policies, gives rise to anomalous “recovery” phenomena. The number of homes, even in some large Italian cities, below a certain price threshold today are a fraction of what they were five years ago, but average wages have in no way followed those values. The rising price lists have an impact on families in proportion to their savings. The geopolitical context, the green revolution and the breakdown of supply chains today present the full bill of a certain method of economic policy differently, for example, from 2008 when globalization counterbalanced with deflationary pressures. Policies officially for the poor and the middle class in fact work much more and much better for the “stock market”.
All this becomes a political issue that can also give rise to unpredictable phenomena because the terms of the issue are not clear except in the consequences that are experienced while shopping or trying to buy a house. The “price” of a quick and rapid recovery, made with debt, presents a bill made up of houses that are much more difficult to buy, lower real wages and stock markets at their highest levels. Getting out of this paradigm is very complicated and not painless because the debt accumulated to immediately buy the recovery is a lot. Not acting is not an alternative as the average family struggling with the “cost of living” somehow understands.
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