Why We Need to Tame Inflation Before It Goes Wild

 

In recent years, we’ve learned a hard lesson: inflation can disrupt society faster than we think. When prices rise quickly, the impact can feel like a force of nature—unexpected, unstoppable, and affecting everything from the cost of food and fuel to housing and basic essentials. Economies struggle, and governments can even lose elections. Just last week, former President Donald Trump won re-election, in part because inflation is still hurting the everyday lives of Americans. If we want a stable future, we need better ways to prevent inflation from getting out of control—before it starts.

Why Inflation Is Such a Big Deal

Think of inflation as the “price of everything going up” at once. It doesn’t affect just one thing but almost every product or service we rely on. From groceries to gas, when prices spike, people have to stretch their budgets just to get by. Even if wages rise, they rarely keep pace with inflation in the short term, so people feel squeezed. Politicians are aware of this, too, because when inflation is high, people are less likely to support the party in power. 

There are also moments when inflation is particularly likely to spike—right after a big disaster or crisis. For example, the Covid-19 pandemic led to shortages and delays, which allowed companies to raise prices because supply couldn’t meet demand. The result? Prices on a lot of goods and services soared. As companies noticed each other raising prices, they often felt safe doing the same, knowing they wouldn’t lose customers because everyone was in the same boat. 

Why Businesses Raise Prices When They “Have To”

Under normal circumstances, most companies don’t want to increase prices more than their competitors, as they risk losing customers to those offering better deals. But crises like Covid-19 shake up this balance. After the pandemic, businesses across the board faced higher costs for goods, labor, and transportation. This created a “ripple effect” in which companies were pressured to raise prices just to cover these new costs. Plus, since competitors were doing the same thing, businesses were able to raise prices without much fear of losing out.

So, even when only a few costs initially increased, many companies passed those costs onto consumers, driving up prices for everyone. And when enough sectors do this, it creates a cycle that is very hard to stop. Inflation becomes “baked in,” meaning that even when the original problem (like a supply-chain shortage) is solved, prices don’t fall back to where they were. Instead, consumers are stuck paying more for essentials, while businesses keep their higher profits. 

The Role of “Essential Sectors” and Why They Need Protection

In some industries, like oil, electricity, food, and medical supplies, products are “too essential to fail.” People can’t wait for prices to return to normal after a disaster. They need immediate solutions. Yet these industries are often the first to experience price hikes when crises hit. For example, during the pandemic, oil prices went up as soon as demand recovered, leading to huge profits for oil companies while consumers bore the burden. 

Here comes the “strategic redundancies.” This is a fancy way of saying “backup systems.” Just as we might keep a flashlight in case of a power outage, we need emergency plans in key industries so they don’t collapse when a crisis strikes. 

Countering Inflation with “Buffer Stocks”

One idea is to create buffer stocks—extra reserves of critical resources like oil or food—that can be strategically used to keep prices from spiking. During normal times, these reserves would stay in place, but during emergencies, the government could release them to prevent shortages and keep prices stable. 

For instance, imagine the government had a stockpile of oil and grain. If a sudden shortage led to price increases, it could release some of its stock, meeting demand and easing prices. This works similarly to how central banks manage the money supply to stabilize the economy. If we had such stockpiles across critical sectors, we’d be better equipped to keep inflation under control when disruptions occur.

Why We Need International Cooperation and New Regulations

Not every country can easily handle inflation alone. For commodities like oil that are traded worldwide, it’s helpful for governments to work together. The International Energy Agency, for instance, can coordinate oil releases among its member countries, helping stabilize prices internationally. A “buffer stock” strategy could work globally, with countries managing reserves for critical resources and releasing them in response to global shocks.

New Rules for Corporations

Even with buffer stocks, companies often stand to gain from crises, especially if they can charge higher prices with little competition. To prevent price spikes from becoming the norm, using “price-gouging laws” and “windfall-profit taxes” mag come handy to discourage companies from excessive profit-making during crises. If companies know they’ll be taxed on these unexpected profits, they may be less likely to raise prices so steeply in the first place.

The Bottom Line: Planning for Stability in an Unpredictable World

In today’s world, we’re dealing with climate change, supply chain disruptions, and geopolitical tensions that could keep causing inflation spikes. Instead of waiting for the next disaster, we should prepare with economic policies that allow us to handle emergencies without losing stability. A smart combination of buffer stocks, backup plans, and international coordination could help us create a more resilient system. 

By learning from the inflation of the past few years, we can take action now to stabilize essential sectors and build a financial foundation that can weather future crises. After all, as recent elections show, keeping inflation under control might just be essential to maintaining public trust and a functioning democracy.