Apparently the Right, Left, and Center agree on one thing and that is we are too dependent on China and other countries for too many commodities and manufactured goods. When we started to try to recover from the Pandemic it became very obvious how much America depends on China to supply us with vital items used by our Military, businesses, and the public.

            Pictures of huge storage lots of cars without Taiwan and Chinese chips, tens of thousands of containers sitting on ships off our over stressed ports, and China’s reaction to the Pandemic by closing the manufacturing plants and cities showed we are too dependent on Asia for our “normal” life.

            The answer to solving the dilemma is easy to see and to solve. We must “On-shore” the materials used to manufacture the items. The problems with the “On-shoring” is finding workers in the needed areas or even finding the millions needed. Finding already trained people is almost impossible so higher wages is required to get immediate help. For those plants being built thousands of craft people are needed now and they aren’t in the building areas so higher wages need to get them to move to the area for months. Building the plants may take years. Allowing time to train permanent workers that will be difficult to find and for the housing to be built for them. Those plants being built in low wage states will have to change to get workers to move in to work!

            Housing, food, and other items will increase in price significantly. That is called inflation! The Federal Reserve says it is better to increase unemployment by cutting investments and consumer demand.

            “On-shoring” is the direct opposite of what the Fed wants so “Damned if we do?”

            During the Ohio Senate race debate both candidates agreed on one topic. They both agreed that bringing jobs back from China is a great thing. Here’s the problem with doing that today. The Chinese are paid for the day’s work what our workers will get in a little over an hour. Chinese labor has gotten so “high priced” that work is being outsourced to Vietnam and Africa.

            Now when we re-shore those jobs the price of those items must increase, sometimes greatly. The Federal Reserve raises their rates to combat the wage inflation. Raising rates causes the buyer to think twice before buying a company’s more expensive product since the competition’s product is still made in China or Vietnam.

            It was easy to put American workers out of work and start production in China, thus lowering prices and the inflation rate. Reversing that trend is called inflation. Those rising prices means labor wants more money so they can continue to buy what they had been buying causing more inflation.

            The obvious question, is re-shoring a good idea? Obviously it is but it will be unsettling to the economy as the Federal Reserve raises interest rates. Their economic programs can’t be updated to account for supply conflicts, sanctions, Ukraine War, and Politics. We have so many transitory problems their outdated programs are just making inflation worse.

            Our inflation problems are very complicated and the Federal Reserve can’t see why we have inflation. The past two administrations and the Biden Administration have been making an effort to bring industry back to America. This has caused prices of those items that were made by people making less than two or three dollars an hour offshore to Americans making many times more. The difference is called inflation.

            Finding people to produce items here is difficult. Millions retired during the pandemic so manufacturers can’t find qualified people to hire. With a limited supply of warm bodies, the manufacturers are faced with a choice of making a lot of an item demanded by the public or making some because that is all their limited number of employees can produce. Shortages create price increases.

            Price increases are also a product of free enterprise. The shortage of baby formula was a classic example. To make more money for the formula manufacturing companies, Trump ended the importing of formula. When one of the major plants had to be shut down a major shortage occurred. The reason was the companies making formula had bought up others and combined their production into those of their existing plants. Loss of one was disastrous. Many other industries are similarly concentrated. All are potentially inflationary.

            Loss of transportation is inflationary. Even a shortage of truck drivers or high fuel prices, as we have now, causes inflation across all wage and production prices. Supply disruptions because the products are circling on ships off the West Coast are inflationary. More drivers, cheaper fuel, and faster unloading will reduce costs.

            The Federal Reserve is mandated to control inflation and using a computer program that is hopelessly out of context with the current economic conditions, they raised their rate a half a percent.

            The program doesn’t account for the supply disruptions causing shortages. The disruptions are causing containers and their ships to triple their cost. The price of petroleum increased almost double in year-over-year due to increased demand and supply shortages caused by sanctions on Putin. Food price increases are caused by Putin’s war, climate and fuel costs, and increased driver wages.

            The shortages of computer chips means new cars – if chips are available – may cost more than manufacturers suggested price. Used cars cost more because of fewer trade-ins. Rental prices for shelter (Fed term) are higher because more people are needing a place to live and fewer houses and apartments are being built causing rent and house prices to increase.

            With the price of petroleum up, gasoline is much higher. Because we are sending natural gas made into LPG (frozen and compressed natural gas) to Europe, the price has almost tripled year-over-year. Since 40% of our electricity is generated by burning natural gas, electricity prices are increasing proportionally.

            These items, along with a few others, are what the Fed uses in deciding what the inflation rate is and how to reduce it with interest rate increases. None of the above is something the Fed can control with any method so they are powerless to reduce the rate of inflation. They may interfere with the on-shoring manufacturing which in itself raises prices. Not doing so keeps us subservient to our enemies and prolongs supply disruptions.

            The news if filled with so-called experts saying we are heading into a period of high inflation while others say the increases are due to shortages and therefore transitory. The latter is the most likely but the food inflation is going to get much worse.

            Pictures of thousands of vehicles parked bumper to bumper and door to door on parking lots and fields are because of the chip shortage. When dealers get a new care with a chip, they don’t need to negotiate a price. It may be sold before it arrives. Since few cars are coming to the dealers, used cars are in greater demand exploding their price. When chips become available the prices of new and used will fall.

            Most other items are in temporarily short supply due to the sudden surge in demand. Supply chains are still being disrupted by Covid and lack of materials. As the transportation and supply chains become efficient prices will drop.

            Food is another matter. Global warming is now and will, in the foreseeable future, have a huge impact on food production. The Colorado River irrigates millions of acres of farmland which will shortly become useless. Thousands of farmers didn’t plant many of the vegetables we eat. Fruit and nut trees will die from lack of water. Water is being withheld from hay fields that feed the dairy and beef cattle. The lack of rain and grass and hay means the Texas and Oklahoma ranches are going to cull their herds. That will flood the market in short term and raise them in the long term. Droughts and floods in other areas will create shortages and raise prices of those products.

            The future will have much price instability as the economy tries to absorb all the influences and instabilities with the effect of climate change on the world and increasing populations.