I had an epiphany about inflation. I actually know a lot of people who make $120,000 a year. I know even more people who have a household income that exceeds that threshold. None of these people can afford a home now, because in the Salt Lake area, you need to make $90.00 per hour just to afford an average house. This is becoming ubiquitous across the nation.
However, this doesn't change the fact that people who make $30, $40, $50, and $60 per hour doing whatever it is that they do, are not (in fact) still bringing in that money. They just can't afford to buy a house. So they are stuck renting, which drives up the price of rentals as they seek out luxury apartments that they can afford because (again) they are not millionaires who are able to afford a regular old house.
This also means that all of this income is flooding the market, and they are buying everything they can afford. Cars? check. Luxury goods? check. Vacations? check. All. The. Things. And this is making inflation crazy hot. I don't think higher interest rates are going to do much against this weird circumstance. You've got an entire group of people who can't leap up to the next level because the gap has grown so wide to home ownership. So instead those people are awash in cash, and they're going to spend it. On everything except a home (because they can't find one in their price range).
I know this kind of anecdotal point-of-view is crude at best. I am not an economist. But the internet allows me to voice my opinion on what I'm seeing, and this is what I'm seeing. People driving $75,000 cars and going on vacations to Hawaii while living in a one-bedroom basement apartment that they will never escape. Meanwhile their rent keeps going up, because landlords know they can charge more and that their renters can pay because they see all that cash sloshing around. It's like shooting fish in a barrel. It's easy to do, and just so long as you keep the price of renting barely within reach (and owning a house is outright unreachable), they can just keep raising the rent, and everyone can charge more for everything.
It's a super weird capitalist dystopia, because high home costs are pricing people out of the market. But everything else costs so much less than a home...so everything else is suddenly affordable. I think the only fix is to make housing affordable again. Then that can soak up all the extra cash, rents will fall because people can suddenly own, and we'll finally get a decrease in inflation. Until that happens, I think inflation is here to stay because people will not ever do the right thing (so businesses definitely won't). I guess my second epiphany about all this is how stupid it is to have an economic system where owning a home is the bedrock. Why is housing (a basic need) seen as the ultimate asset and investment? Whose smart idea was that (I'm being facetious)?
In the near future, we are going to see a dramatic rise in hedonism. People have tons of money that is not enough to buy a home. But it can still buy plastic surgery, fitness equipment, crossfit memberships, concerts, and party, party, party. Want to go to Ibiza? That's easy. I live in a shitty one-bedroom apartment, but I can afford that. Ibiza here I come! Want to buy a Land Rover by Jaguar? Sure. It'll be parked outside my mobile home. How f'ing weird...but that's where we are headed. These times are sure strange. And in the meantime, the people who were priced out of the market even when houses were like $300,000? Those people are screwed forever, because they can't afford anything now. And no one cares, except, you know...when church is in session. Then the caring can last for a little while, until the grifting gene takes over.