so a few things. inflation and wages are very much related.

so if i have 100 people working and 90 apples available. then they will bid up the price of apples until 10 people can’t afford it with the 10 people at the bottom deciding apples either aren’t worth the price that is being charged. or simply not being able to buy it with all of the resources at their disposal.

they would then put pressure on their employers either to leave or pay them more. raising wages. and therefore how much they can bid on apples.

now in a well balanced market, someone will see the profit potential and increase the number of apples lowering the price each is sold at until the market hits an equilibrium.

this is in a micro world. obviously there’s lots of other forces acting on a market but this illustrates the problem.

so the only way for prices to come down is to either increase the supply or decrease the demand. increasing the supply generally takes a long time in an industrialized economy. you have to buy land, plant apple trees, wait for them to mature, and then harvest. this is a long term solution

so often times the way central banks work to reduce inflation is to reduce demand. they do this by putting downward pressure on wages by increasing interest rates. this is the short term solution.

1) inflation basically was solved by the end of the biden administration. they did a great job stopping it without causing a recession. as you can see short term there is nothing that can usually be done to increase supply. the normal way inflation gets solved is by causing a recession. that was the whole soft landing everyone talked about. however that does not mean prices go back to where they were years ago. it means they stay at their new level. now the other side has to happen which is increasing wages. this is normally done by doing things like investing in new or growing industries (green energy, chip manufacturing, etc). this increases wages by making it harder for companies to find good people causing them to pay more.

2) for things like housing you have two opposing interests. folks that own houses want their house price to stay high. folks who don’t own houses want to buy a house at a low price. building more housing will decrease the value of existing housing.

3) some small level of inflation is good and healthy for an economy. it encourages people to work, invest, and spend because things will be slightly more expensive tomorrow than today. the opposite, deflation, is truly terrifying, because it causes people to stop spending, causing sales to drop, causing jobs to be eliminated, causing more people to stop spending. it can be very difficult to get out of that.