Lindsay Owens (“Who’s really to blame for inflation,” Ideas, Oct. 30), in attributing stubborn inflation to the actions of corporate America, misses a critical factor that may explain why some large companies are holding prices high even while their expenses go down. When the Federal Reserve saw that the Biden administration was unable to stem inflation and made several moves that (in my opinion) made it worse, the central bank had no choice but to start raising interest rates. For most companies, this increases borrowing costs across the entire supply chain and it is cumulative the bigger the company.
Yes, financial institutions and our 401(k)s benefit, but for companies that depend on these institutions to fund their growth, returning prices to pre-inflation levels before the market fully settles could create losses that hurt shareholders.
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Owens does make an interesting point in closing where she adds that the government needs to crack down on monopoly power and anticompetitive mergers so that small businesses and others can compete. I feel that the best way to keep large corporations honest is well-funded entrepreneurs developing creative ways to compete in larger markets and drive better products at lower costs. But the cost of money, which in turn disrupts the private equity and venture businesses, means that startup and growth capital is hard to find and expensive.
Inflation has many tentacles, and it will take a while to unwind them. It appears that bad political decisions got inflation rolling. Now we need some solid nonpolitical decisions to tame it, such as stabilizing and strengthening supply chains and making sure the Inflation Reduction Act funds really are going to investments that have a measurable impact on inflation.
David Mahoney
Westford
