Posted on 02/03/2022 1:36:00 PM PST by Heartlander
Inflation is the worst in 40 years.
The price of cars is up 37 percent. Gas is up 49 percent.
During the last few years, as politicians spent ever more money, experts told us not to worry.
Jerome Powell, chair of the Federal Reserve, said inflation would be "transitory."
Treasury Secretary Janet Yellen said, "I don't anticipate inflation is going to be a problem."
Now she says, "I'm ready to retire the word transitory."
What went wrong?
"Big corporations have taken advantage," says Rep. Ted Lieu (D–Calif.).
Sen. Elizabeth Warren (D–Mass.) tweeted: "Greedy corporations are charging Americans extra." It's "price gouging."
This is nonsense.
"Greed is constant," says economist David Henderson in my new video. "If it's greed, how do we explain prices falling?" When oil prices fall, is it because "oil companies just suddenly decide, 'I'm gonna be less greedy?'"
Prices change because of supply and demand.
Inflation results "from too much money chasing too few goods," explains Henderson. "If government's spending more money, that's more money chasing too few goods."
Lately, government borrowed from the Fed, and spent much more money. Under President Donald Trump, the national debt rose $7.8 trillion. Under President Joe Biden, it's grown $2.2 trillion in just one year. Biden wants to spend even more—a record $6 trillion this year.
Where will they get the money? Government has no money of its own, so increased spending means politicians must borrow more, tax more, or, easiest of all, create money out of thin air by just printing it.
In the last few years, that's what they did. In an untested experiment, the Fed printed more money than ever in history.
All this new money sloshing around the economy makes money we have less valuable. You notice the price increases, but you may not notice the damage inflation does to your savings.
If you put $10,000 under your pillow, 7 percent inflation will reduce that to $2,342 in just 20 years.
If you were counting on those savings for retirement, too bad. Most of your savings will be gone.
Yet today's politicians want to spend even more.
Biden claims his spending bills will "reduce inflation."
"Biden's wrong," Henderson responds. "There's no economic theory that says when the government spends a huge amount more money, prices fall."
Some people want government to stop inflation by imposing price controls.
That would be "horrible," says Henderson.
Price controls were tried before. In 1971, President Richard Nixon ordered a freeze on all prices.
It sounded reasonable. Too much inflation? Our intuition tells us that government can fix that with a price freeze. But "that's where people's intuition goes wrong," says Henderson.
Wrong because prices are not just money; they are also information.
"Prices are signals…that guide people," explains Henderson. "Mess that up, you've really messed up the economy."
Price changes tell buyers what to avoid and sellers what to produce. When COVID-19 hit, the price of face masks rose sharply. Immediately, producers made more. New Balance switched from making footwear to making masks.
Flexible pricing gets suppliers to produce what people really need.
Now there are shortages of some products because COVID-19 interrupted supply chains.
Price controls would make the shortages worse.
Soon after Nixon froze prices, there were shortages of gasoline. I drove around, wasting gas, searching for gas stations that had it.
"Price controls are like saying it's really cold and I'm going to solve that by breaking the thermometer," says Henderson. "It's actually worse than that because breaking the thermometer doesn't reduce the temperature, whereas price controls cause actual shortages!"
Venezuela's price controls led to a shortage of food. And yet inflation got much worse. 270 percent, 700 percent, eventually 400,000 percent inflation!
Once inflation starts, it's hard to stop.
In Zimbabwe, President Robert Mugabe couldn't collect enough in taxes to pay for his grand plans, so he printed more money.
A few years later, Zimbabwe was printing 100-trillion dollar bills.
Such drastic inflation hasn't happened here. It probably won't because recently the Fed reigned itself in.
But with Democrats and Republicans eager to spend more, it could happen here.
Do ya think?
Gee, what date was it that this all started????
The Phoenicians were world traders and most likely were quite rich. Big-money built banks and acquired money and power. They became rich enough to control countries, start wars and such. Today we call them the world bank, deep state, FED and such. Our wants and needs are nothing to them unless they can get money and power out of us.
Isn’t government the biggest corporation of all??
90 dollar oil does not help
90 dollar oil does not help
These days it’s hard to tell the difference between corporations and the government. They seem to be quite close.
Personally I’m done carrying water for corporations that hate me.
Socialists claiming that inflation is due to corporate greed cannot explain why the “greed” changes so much. All of a sudden, the corporations got less greedy during the Reagan years of low inflation and are getting more greedy during the Biden years of rising inflation.
Government is not a corporation. It’s something much worse.
In Corporatism/Fascism, the lines become blurred.
Leftists. Keep pushing the narrative - evil corporations. Which apparently aren’t comprised of PEOPLE who have just as many rights as their “down-trodden”, which BTW depend on those corps to have some kind of job.
The bad thing is people DON’T SEE THE GOVERNMENT CAUSES.
So it’s easy to blame the last in line before the customer - the evil business.
They don’t see the dominoes that fall to create that inflation. They only see “big price”.
Out of sight, out of mind.
How convenient for Big Brother.
Actually, Fed Chief Powell says 2% inflation per year is a desirable financial policy.
Think about that.
Powell believes that destroying 2% of U.S. Dollar purchase power EVERY year is a desirable policy!
the Fed reigned itself in.
You *rein* something in.
You don’t “reign” it in.
It is both. If my competitor raised their prices 25% why would I not also raise mine for the same product or service even though my costs have not gone up at all? This is a market price reset and EVERYONE jumps on board regardless of their overhead. And just like the oil companies do on holidays, they all use any excuse they can to reset the market. And many times the government through backdoor deals help create this market reset, so both...
If my competitor raised their prices 25% why would I not also raise mine for the same product or service even though my costs have not gone up at all?
But then you say - fine - I’ll just raise mine 24% - grab all the business and keep the 24% increase. Which works fine until another competitor says fine I’ll do 23%.
Point being there’s price pressure in both directions and “the price” is where things balance out just like they teach you in Econ 101.
^^
90 dollar oil does not help
I wonder who is more corrupt for raising the oil prices, the government or corp.
Oil prices are set at auction ... short supply drives prices up among competing bidders ... who cut the supply?
The evil corporations are not the ones who raise prices due to inflation - they are the ones who try to carve out legally guaranteed market positions by backing the Democratic Party and popular progressive causes.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.