Nearly four years ago, the Biden administration and Congressional Democrats made a $1.9 trillion bet in the form of the American Rescue Plan. They lost, as it contributed to a surge in inflation that fueled massive voter discontent and Donald Trump’s return to the White House.
Why it matters: In the next recession, politicians and policymakers may be more hesitant to unleash the type of programs that drove America’s rapid recovery from the pandemic-induced crisis.
Prices go up faster than they go down. They rose fast as costs went up. They didn’t go down because profit margins were higher than what any of them lost from customers leaving. (Doubling the price of goods and halving the customers leaves companies ahead.) When other companies also kept prices high, suddenly all incentives went away.
Also, people have become entitled. Everyone. Just look at McDonald’s. They kept raising prices, way above competitors. They just kept raising prices until people stopped going there, but they never stopped. Even when they couldn’t afford it or they could go somewhere else.
People are feeling inflation and prices still aren’t coming down.
Honestly, I think government’s part in the higher prices are close to zero. People don’t want to give up their conveniences and capitalism just doesn’t work the way people think it does.