Who is to blame for inflation in the US?

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I heard a lot of inflation talk among friends recently. I think the CPI data kinda confirms it. The gas and food prices went up a lot in recent months. Last time we saw $4 a gallon gasoline, it was about 2012 or 10 years ago. The answer to “whom to blame” question, like many things in this country, depends on “to whom” you ask this question. Once I saw a small Biden sticker at local Sam’s Club gas station, the point the sticker trying to convey is “the high gas price is all president Biden’s fault”. I think the real answer is more nuisance, and I think it’s largely supply and demand. For the crude oil, the Russia and Ukraine war, aka. Putin is to blame, because he started the war. But again this can get political quite easily. There are a lot of supporter of Putin in this world, unfortunately. Then there is the refinery cost. I think recently the refiners are adjusting from the winter to summer (they need to tune their refineries), and this cause some disruption and could reduce the output too. Diesel is in similar situation as gasoline. Note the crude oil, fuel cost etc is a part of cost for many other things such as fertilizers, transportations (cars, trucks, rails and airplanes) and so on. So there is the secondary effect (tangential effect) from the rising oil prices. Last but not least, inflation adjusted, the gas price seems flat in the US for last 40+ years.

Gasoline and diesel aside (and the war), other factors I can think of is the supply chain issue, and related China zero covid policy did not help here either. Then there is this labor shortage in the US due to pandemic, basically the people doing the physical labor were a bit hard to find especially in the early phase of pandemic due to various reasons: some people got Covid; some people got money from the government to stay at home for quite a while; at the same time the demand actually increased since pandemic, here is a good example at Starbucks. I saw similar situation at local Chipotle’s and Pot’s Belly. People are now used to order online via mobile phone.

Last and definitely not the least, the Federal Reserve. I think they have been accommodating the stock market for too long since 2008 financial crisis, and they did buy too much assets, printed too much money to prop up the economy artificially since March 2020 pandemic shutdown. Note the money was made way to the real economy via congress, via various rescue packages since March 2020 (both presidents), or President Biden’s infrastructure plan.

How to counter the inflation? For that I would borrow Warren Buffett’s idea. Blame someone else does not help in the real world, on the other hand, if we can make us more valuable to others, and live below the means, we will get desired outcome.

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