I read an article the other day that did a very poor job, in my opinion, of explaining inflation.

As a guy who’s been covering business news for 22 years, here’s my take.

It all started when COVID hit. Stores closed and employees were sent home. That’s when the government decided to act.

State Sen. Janice Bowling tells a joke that the last words you ever want to hear are “I’m from the government and I’m here to help.” Well, government help is what started inflation.

People were out of work so the government decided to help by sending out “free money.” Individuals received modest amounts and some business owners collected huge sums. The end result is people had money in their pocket.

When businesses reopened, people didn’t want to work. They had a little change in their pocket, enough to pay a few bills, so they opted to watch Netflix.

So companies had to pay more to attract workers. Not just a little more, but $2 and $3 an hour more than they were paying for the same job just three months earlier.

To pay those workers more money, the cost of your burger had to go up. So did the price of milk and bread.

To heighten the problem, there were suddenly shortages. It turns out a six-week shutdown is a pretty big thing when it comes to keeping up the supply chain.

Take cars for example. Due to parts shortages, production of new vehicles has hit the brakes. There’s no more haggling with car salesmen for better prices. New cars are sold as soon as they hit the lot and for full sticker price.

It’s the simple law of supply and demand taught in Economics 101.

To add more fuel to the fire, record low interest rates have allowed home buyers to get more house for their buck. If you buy at house at 2.5% interest compared to buying a house at 4% interest, it amounts to about a $40,000 savings over the life of a 30-year loan. That’s mucho dinero.

The mega low interest rates have allowed people to buy more expensive homes which has, in turn, driven up the price of homes, along with a shortage of available homes on the market. See our pal supply and demand.

When we pay more for everything we buy, that’s called inflation. Higher prices have impacted just about everything. Thankfully, the price of the Southern Standard has remained unchanged so there’s that.

People are quick to point to President Biden and say he’s to blame for inflation. He’s to blame insofar as he was the biggest cheerleader for the third and final government handout which was $1,400 a person for many Americans or $5,600 for a family of four.

That didn’t provide any incentive to get people back to work and played some role in driving up wages, which has driven up the price of everything else.

So there you have it. Inflation explained in exactly 500 words.