ANSWER

U.S. Inflation Shows Signs of slowing

Since the start of the pandemic, the CPI increased steadily to as high as 9.1% in June 2022 before
tapering off to 7.1% in November 2022. Notwithstanding, according to the former Labor
Secretary and Professor of Public Policy at the University of California at Berkeley, Prof Robert
Reich, "there's a deeper structural reason for inflation, one that appears to be growing worse: the
economic concentration of the American economy in the hands of a relative few corporate giants
with the power to raise prices." Do you agree with Prof Reich's point? Why? Or why not?

I totally agree with Prof. Reich's insight that there is some kind of deeper structural reason
for inflation, what will make this inflation worse is that it is the concentration of the
American economy in the hands of a few giant corporations with the power to drive up
prices. The reason is because if that happens it will put pressure on the supply side, such as
disruption of the global production chain due to China's restrictive zero-Covid policy, the
impact of the Russia vs Ukraine war on energy and food prices, and an increase in US worker
wages. Moreover, these bear companies will take monetary steps from bank loans. Thus the
steps taken by the governor of the US central bank in controlling the US inflation rate will
certainly be by suppressing the demand side. As a result of the US super-tight monetary
policy, the US dollar strengthened even more until it reached its parity value against the euro
and pound sterling, and reached its highest value against the yen for 20 years, which in turn
suppressed inflation triggered by the price of imported goods. And all these series of events
will lead to higher levels of inflation in society itself. Therefore, economists and investors in
America hope that the Fed will tighten monetary policy by increasing interest rates and
reducing the emergency stimulus package to put the brakes on inflation. When cash loans
become more expensive because of rising interest rates, it can dampen rising prices and make
the economy calmer.