There were continuing concerns about giving out disaster support funds to citizens. In light of this, the United States recently announced that they would pass the economic stimulus package that costs nearly 1.9 trillion dollars. Increasing government expenditure is one of the expansionary policies, so it can be the right option to choose. However, since the policies raise considerable budget concerns, many economists were concerned about the inflation that might occur in the future. Currently, there are some signs that alert people about inflation.
Firstly, the most fundamental food source, corn, became more expensive, which is quite dangerous for consumers. Corns are used in diverse ways. According to research, in 2011, 36.3 percent of corn were used for feeding, 27.3 for fuel ethanol, 12.2 percent as DDGs, etc. (“World of Corn Report Breaks down Corn Used for Ethanol, DDGS @EthanolMagazine”) Corns are not just food for humans, but also an essential source for animal feed, and fuels. Corns are the basis of many food products, and its price increase will also mean that every other food-related cost will rise. Corn is also used to make fuels, indicating that products that need fuel to operate will cost more than today in the future. Consequently, increasing the price of corn will also raise costs for many other products and eventually cause inflation.
Secondly, in South Korea, two essential food sources, egg and leek, significantly increased their price the previous month. According to research, it was the first big shock in the market after the ‘egg shock’ in 2016. The egg sheet was 5,418 won in the previous year, but it is
now about 7,800 won. (“The prices of green onions and eggs are gradually stabilizing…The price of meat is in place”) According to research, 1 kg of leek was 2197 won in the previous year, but on April 2nd, it was 7399 won which has increased 237 percent. (“The leek that became ‘gold leek’ soared alone… Three times the price of a year ago”) Many people in Korea consume eggs and leek when they eat, and this inflation will increase the mean value of a meal. People will now begin to feel by their skin about the inflation that economists have been talking about.
It is still unsure when the inflation will stop and how high it will be. The US has kept increasing the money supply, increasing the price level again in the future, which will cause inflation, and the vicious circle going on and on. I believe that governments worldwide now need to find a way to decrease inflation to prevent further deterioration. It seems pretty dangerous if the inflation goes on and on, even though the price of leek in South Korea has tripled. If this inflation affects other industries like housing, cars, and electronic devices and gets doubled or tripled, most people will not afford it. Now is the time to think about the alternatives for increasing the money supply and solutions for stopping inflation at an optimal point.
By: Sonbom Lee