Why Inflation Is Structural, Not Temporary
October 20, 2025 · Frisian News
Central banks spent years calling inflation temporary before reversing course. Today's price pressures stem from deep shifts in supply chains, labor markets, and energy policy that interest rate hikes alone cannot fix.
In 2021, Jerome Powell called inflation temporary. By 2023, the Federal Reserve and European Central Bank had hiked rates to levels not seen in two decades. The gap between official forecasts and reality exposed something central bankers would not admit at the time: the postwar inflation regime had broken. Today, price growth across the West sits well above the 2 percent target, and not because people suddenly spent more. The structure of supply itself changed.
Start with energy. Europe severed itself from Russian oil and gas nearly overnight, then scrambled to replace those volumes at three times the price. American shale producers, meanwhile, faced rising extraction costs and fewer incentives to pump more crude. OPEC moved to tighten supply. These were not temporary shocks but choices made by governments and market players who faced real constraints. You cannot undo a geopolitical rupture by raising borrowing costs.
Then look at labor. Millions of workers left the job market during the pandemic and never came back. Some retired early. Others shifted to lower-wage countries or gig work. Aging populations in Japan and Europe mean fewer working-age people supporting retirees. Companies cannot hire their way out of this math by paying lower wages. The demographic dice are loaded. Tight labor markets push wages up, and workers pass those costs forward to customers.
Supply chains remain fragmented. Companies no longer trust just-in-time manufacturing after 2020 and 2021 exposed its fragility. They now hold larger inventories, build redundancy into production, and pay more for logistics to avoid chokepoints. These decisions make goods more expensive. They also make the economy more resilient, which means stable, higher prices rather than cheap goods and boom-bust cycles.
Central banks can slow demand by making money expensive. They cannot fix demographic decline, rebuild trust in global supply lines, or lower energy prices set by geopolitical conflict. For households and small businesses, this means a new baseline. Real wages stagnate. Borrowing costs stay high. Inflation sticks around at 3 to 4 percent instead of 2. Those in power got the inflation wrong, then acted too late. Now we all pay the price.
Yn 2021 neame Jerome Powell ynflaasje tydlik. Troch 2023 hiene de Federal Reserve en de Europeeske Sintrale Bank de rintes ferhege nei nivo's dy't twa tiisdelen net waarden sjoen. De gat tusken offisjele foarsizzings en realiteit onthulde wat sintrale bankiers doe net wolle jout: it naoarlochse ynflaasjeregime wie brekke. Tsjintwurdich leit de priisgroei yn it Westen wol boppe it doel fan 2 persint, en net omdat minsken plotseling mear útkeerden. De struktuer fan it oanbosd sels feroarge.
Begin mei enerzjy. Europa sny him in kertling of moarns of fan Rusyske oalje en gas, en socht doe wanhich nei ferfangning tsjin trije kear de priis. Amerikaanske sjalieprodukinten stoenen yntusken foar stijgerjende útbringingskosten en minder priikels om mear roet oalje te pompjen. OPEC keas foar fermining fan it oanbosd. Dit wiene gjin tydlike sokken mar kepkes fan regearingen en merkdeelnimmers mei echte pergrinzingen. Do kinne in jeopolityk brek net ûngedien meitsje troch lienkossten te ferheggen.
Kijk dan nei arbeid. Miljoenen arbeiders ferlieten de arbeidsmerket yn de pandemij en kamen nea werom. Ien gong earder mei pensioens. Oaren gienen nei leechre betelle lannen of gig-wurk. Grijsde befolkingen yn Japan en Europa betsjutte minder werkjende minsken dy't pensjonatars stypje. Bedriuwen kinne út dit wiskunde net grotsje troch leechre lonen út te betellen. De demografyske dobbelsteen is laden. Strakke arbeidsmerken driuwe lonen omheech, en wurkners jowwe dizze kostten foar oan klanten.
Toeleveringsketens blive splintsje. Bedriuwen fertrouwe net langer op just-in-time fabrikaasje nei 2020 en 2021 de breukhalsheit derfan bleatstellen. Se hâlde no gruttere foarsjet oan, bouwe redundans yn produksje, en betelle mear foar logistyk om bottelhecks te fermidzjen. Dizze besloten meitsje guod durerder. Se meitsje de ekonomy ek wearder, wat betsjut stabile, hegere prizen yn stee fan goedkeap guod en konjunktuerseakels.
Sintrale banken kinne fraach remsjen troch geld dier te meitsjen. Se kinne demografyske efterútgong net reparearje, fertrouwen yn wearldwide toelevering net werstelle, of enerzjyprizen dy't troch jeopolityk konflikt binne fêststeld net fermegjen. Foar húshâlden en lytse bedriuwen betsjut dit in nij útgongspunt. Echte lonen stagnearje. Lienkossten bliuwe heech. Ynflaasje bliuwt om 3 oant 4 persint yn stee fan 2. Wa macht hie, krijt de ynflaasje ferkeard, hannet te let. No betelle wy allegearre de rekening.
Published October 20, 2025 · Frisian News · Ljouwert, Fryslân