 The United States is facing an inflation crisis. Inflation from the month of May was at 8.6% of 40-year high. Prices in May also saw a 1% increase from the previous month, with petrol prices playing the key factor. This crisis has been ongoing for many months now, stretching to last year. What are the factors that are contributing to this consistent inflation? How is it affecting the people? Eugene Parrier of Breakthrough News explains. I think the factors that are leading to the growth in inflation in the United States, including the 8.6% growth in inflation that we saw last month, which is really when we started to break it down into individual categories of goods in the double digits and is eroding almost all wage gains. Wages have not kept up with inflation all year, so we're seeing significant hardship. But I think it's a combination of things. I mean, some is the ongoing continuation of the wanted supply chain factors. For instance, one big area of inflation in the United States is automobile purchases and used automobiles because of the chip shortage that is continuing to go on around the world. Obviously, at least the perception of a shortage in oil and natural gas, which is causing energy prices to rise and utility companies to raise those. And I think on a number of different fronts, we're seeing some of those supply chain issues. But I think in many ways that is in fact outstripped by the fact that the combination of what people know to be real issues in terms of supply chain, especially demand rising in the context of the pandemic and different and new types of goods and different corporations, that corporations are starting to take advantage of that in a major way. And corporate greed is playing a major role. I mean, there was a recent study by the Economic Policy Institute that said, essentially for every dollar of inflation, about 54 cents goes towards profits, patting the profits of corporations, while only about 38 cents goes towards supply chain issues and a few cents towards wages in and of itself. So I think that corporations are basically profiteering in this moment where there are some structural factors that are absolutely causing inflation and the fact that they know most people don't really have any idea what anything cost anyway, instead of what they've done in the past, which is a hard suppression of wages, which is much more difficult to do as people in the United States, workers in the United States are looking post-pandemic to improve their wages and their working conditions. Instead, they're using inflation to keep their profit more. They're using profiteering in the context of inflation to keep their profit margins high. So it's a dangerous game because it's obviously causing a lot of challenges inside of the economy itself. But I think we can see over the past two years that really is the bulk of what we've seen in terms of inflation is the taking advantage of the structural issues to pad the profits of major corporations. In response to the crisis, the US Federal Reserve raised interest rates by three quarters of a percentage on June 15. What do they seek to achieve with this policy? What has been the thinking of the administration with respect to targeting inflation? The Federal Reserve's way of dealing with inflation is essentially blunt force trauma. And that's to raise interest rates, which is ultimately to slow down business activity and provoke a recession in order to bring prices back down. And ultimately, this is a tried and true method of dealing with inflation. But it also comes along with a huge amount of pain for the average working class person because if you induce a recession, obviously that means higher unemployment. It means slower growth. It means more difficulty in the fight to struggle to wage your wages, which means wage suppressant. And there's already been stagnant wages in the US since the late 1970s will continue and will continue apace. Now, of course, whether or not this is going to directly affect inflation is a whole other issue. I mean, the Fed themselves says that they're going for something called a soft landing with their raising of interest rates, that they can cool the rise of prices without actually inducing recession. I myself and I think many other people find that to be totally fanciful. We've seen over the past two years a number of big red flashing lights warning inside of the economy that there are a lot of different challenges. There's a huge number of companies that can't actually really, truly cover their debts if interest rates are able to go up. And the possibility of a domino effect of this sort of casino gambling aspect of the capitalist economy really coming down in itself, like it did in the dot com bubble in 2000, like it did in the crash in 2008. Seems like it is significantly likely. But ultimately, we also have to talk about what we just talked about, which is the role of profits. Because if 54 cents of every dollar of inflation is actually going towards the profits of corporations, then in fact, the easiest way to address inflation is not to induce a recession, but is in fact to put in place, you know, high taxation, windfall profit taxes, things like that that make it less profitable, if you will, for corporations to go ahead and use the rise of prices to pad their own profit margins, make them eat more of the costs and keep it cost and keep prices closer to what would be a natural increase or keep them level just by, you know, instead of buying back stocks for the billionaire owners, billionaire shareholders, but actually rolling that back into their business. They don't actually have to raise prices on consumers. So, you know, things like windfall profit taxes, things like stronger, you know, bands on stock buybacks and other forms of profiteering for the ultra-rich would probably actually be more effective in curbing inflation because it would take out the benefit factor, essentially, for corporations who are taking advantage of many aspects of a real crisis going on and going with the pandemic, supply chains, and so on and so forth. But ultimately, that's exactly what the Federal Reserve does not want to do because the Federal Reserve is controlled by Wall Street banks. And of course, Wall Street banks want corporations to make the maximum amount of money because these investors and these shareholders want to continue to reap the rewards of the profiteering and the price gouging that's going on in the context of inflation in the United States. So certainly it could cool inflation to raise interest rates as the Fed is proposing, particularly, you know, maybe even quite a bit, but ultimately that'll be at the expense of the working class. So I think what we see is that there are multiple ways to address inflation and the Federal Reserve and the broader US government is only addressing it from the point of view of a way that will put the burden on the backs of the working class instead of putting the burden on the back of the ruling class. The rising prices have become a political and electoral issue as just a few months are left for crucial midterm polls. How are various sections of the political establishment responding to the inflation crisis? You know, inflation has become the biggest political issue in the country. It's, you know, one of the most googled terms right now in the United States. It's at the top of most polls, at least, if not top one, top three in terms of people's concerns of what's happening right now in the country. I think almost everyone who's not super rich is seeing their money, their paycheck go less and less far every single month. What we're seeing from both political parties is essentially evasion. The Republicans, of course, are aggressively attacking the Biden administration for not dealing with inflation. They are in fact trying to say that the January 6th hearings and things like that are designed to take away from inflation, but the Republicans, realistically, are not being serious about what's going on with inflation. They're blaming government spending, out of what they call out of control government spending. They're blaming the emergency funding that was put in by the pandemic. You know, basically everything they're trying to do is, again, to attack the working class. It's not in any way, shape, or form clear and there's certainly not really good data on how exactly the large amount of government spending to address real problems during the course of the pandemic is somehow causing inflation in a massive way when we have actual data that shows that it really is profiteering and price gouging in addition to some of the structural factors. So Republicans are speaking to inflation, trying to weaponize inflation, but they're offering a totally false solution and they're really looking to just capitalize on people's general anger at the deterioration of the economic system. Now the Democrats, of course, are ultimately really trying to avoid inflation. I mean, they're talking about it to some degree, but they don't really want to touch on it that much because many of the factors that have been involved in inflation, like Biden's massive stoking of the war in Ukraine, you know, they deliberately did these things that have impacted negatively on inflation and the Democrats and the do nothing Congress, even though they control both houses have not taken any significant action that could potentially curb this issue. I mean, I mentioned the issue of a windfall profit tax. The so-called Build Back Better Plan wasn't a windfall profit tax, but was proposing higher taxes on corporations and the wealthiest individuals that could function in a similar type of way, you know, building out a large amount of investment in the country that gives, you know, different individuals in different corporations certainty about the growth of the economy, the growth of wages and jobs and the ability of people to buy things which also could stem the tide of inflation. These things aren't being done by the Democrats. So they don't really want to talk about it because they are to blame for it or their lack of action is to blame for the lack of a resolution. So even though you have this huge issue that is being hotly debated that people are very upset about, neither political party is offering any sort of solution. But what I will say is it almost certainly right now is rebounding in the favor of the Republicans in the context of the midterms. It's demoralizing the base of the Democratic Party who feels like we voted for these people. They did nothing. It's animating the base of the Republican Party who thinks they can win. And for some people who are on the fence, the Republican arguments might seem logical because if the Democrats are offering no counter position on that, then maybe the Republicans are right. So right now it's benefiting the far right. And yet again, we're seeing the resolution of this inflation crisis politically and economically is to put the weight of it on the backs of working class people.