How does this inflation end?

On a personal note, I just booked my flights for my bachelor party to Cabo. $730 for roundtrip non-stop from San Francisco. That’s just about double what I paid last year for the same flight in October.

We can blame inflation but the real root cause of all this is due to excessive spending. Let me explain.

The pandemic caused the government to print more like no end. There was excessive cash in the system and people are now looking to spend that cash. There is more demand for consumer goods and services than they is supply right now.

As there is more demand, then consumers are willing to spend more cash to purchase that same avocado, television or plane ticket. Hence the value that my dollar could buy is less today than it was last year.

This cycle of excessive spending by consumers is driving this inflation today.

In basic terms,. the easy answer is to get Americans to spend less. Unfortunately, this is a country where everyday Americans are used to excess. We like our extra cars, our vacations, multiple TVs in the household, etc.

The only way to curtail this inflation is to reduce the amount of dollars in circulation by raising interest rates. This upcoming November will mark the anniversary of the first interest rate fed hike.

The scary part to me is how all this will end. Americans are spending more and saving less. Many of those are spending more than they can afford. Like most, I’m hoping that this will be a soft landing, but there could definitely be more economic pain in the near future.