The problem discussed in the selected episode of the podcast is related to the recent changes in citizens’ wages, which, surprisingly, do not bring extra income. These outcomes are conditional upon the ongoing inflation resulting in rapidly growing gas prices, which becomes an obstacle for some people (Smith, 2021). The adverse consequences were reported by Kristal Moore, who claimed the worsening of her financial situation due to this reason despite the increase in pay by about 10% over the past year (Smith, 2021). Therefore, the development of measures to address the described threat is essential for helping people and maintaining specific operations, such as the delivery of goods during the pandemic.
At present, the Federal Reserve’s policy does not compensate for the above changes at all since they do not seem to have any monetary tools allowing them to make corrections in this case. The new knowledge from the podcast shows that macroeconomic regulations affecting the entire economy do not imply an effective response to inflation. As a result, the well-being of citizens is harmed, and the forecasts remain pessimistic (Smith, 2021). The reason why this event happened is the stable high demand for services accompanied by insufficient supply, as in the situation with gas prices.
The most vital thing I learned from this episode is the dependency of people’s wealth on external circumstances, which the Fed cannot efficiently regulate. On such occasions, rapid rises in inflation do not correlate with wages, and the difference between nominal and real pay becomes more significant. From this perspective, the importance of this information is in its applicability to the process of planning work operations for individuals and companies. Meanwhile, the government should take action to provide financial assistance to the citizens whose well-being was affected by the changes to ensure that all fields are functioning properly.
Reference
Smith, S.V. (Executive Producer). (2021). The money illusion: Have Americans really gotten a raise? [Audio podcast episode]. In Planet Money. NPR. Web.