Article review for business and international issues

Select a recent/relevant global business issue that is of interest to you and reflects your course learning. Highlight the learning form your modules that relate to the issue. Reflect on the relevance of this issue to international business.

Article Title: Higher Inflation Is Probably Costing You $276 a Month

Article Link: https://www.wsj.com/articles/higher-inflation-is-probably-costing-you-250-a-month-11644489000

Article Date: 10-February-2022

Overview: This article provide data related to the recent rise of inflation within the United States and its implications for the global environment. Namely, inflation has occurred throughout the global economic environment due primarily to accommodative fiscal and monetary policy. These accommodative policies were a result of the COVID-19 pandemic and resulting business shutdowns that created adverse economic circumstances throughout the world economy. These circumstances including large and protracted job loss, global supply chain disruptions, and other supply-demand imbalances. To rectify these issues, governments around the world engaged in stimulus efforts designed to mitigate the impact of the virus on the economic circumstances of their respective constituents. These measures, although successful, created a massive influx of currencies around the world. In particular, the United States, through its American Rescue Plan infused nearly $2 Trillion of capital within the markets through various capacities. As the article illustrates, the world is now contenting with the ramifications for the accommodative monetary and fiscal policy through inflation (Alchian, 1973).

The world is currently experiencing rapid amounts of inflation that is ultimately harming the poor and middle class in society. Inflation has eroded the purchasing power of middle-class savers around the world. In has also caused consumers, retirees, pension funds, and institutional investors to invest in riskier asset classes to maintain their income and standard of living. This has created price inflation of assets including stocks, real estate, and crypto currencies. Likewise, inflation has caused rapid price increases for other goods and services around the world eroding the middle class and contributing to income inequality.

Supply and demand imbalances are causing large supply chain bottlenecks. Here, as vaccinations became widely available consumer demand began to increase dramatically. This rapid increase in demand proved too much for global supply chains to handle, thus creating a supply-demand mismatch. As demand was extraordinary higher than demand, prices began to rise in response. Wealthier nations, who could more easily afford and absorb these higher prices, were able to obtain these demanded goods and services. However, from an international context, poorer nations have been unable to endure these rapid price increases on essential goods. This has cause further economic and political instability in poor third world countries unable to deal with the rapid increase in global prices. Countries such as Zimbabwe, Argentina, and Venezuela are grappling with higher prices and economic instability (Ball, 1990).