Why Inflation Now ?

Inflation is back. In a big way. And, horrifying as it is to contemplate, it could lead to hyperinflation. Hyperinflation brought down pre-Nazi Germany and Venezuela, among other places. Hyperinflation, which involves the total devaluing of the currency, means the kiss of death for an economy, and a society.

How did we suddenly get so much inflation? To understand it better, I recommend the writings of the best economists. I have read Ludwig von Mises, Henry Hazlitt and George Reisman extensively. Also, read the works of Frederic Bastiat.

With inflation, the government “prints” or creates more money than the economy needs. This is what happened after the so-called pandemic of 2020, although it has continued into 2021 and, if Democrat Communists realize their dreams, indefinitely into the future. Through redistribution of wealth, and programs such as open-ended unemployment benefits at higher rates than the market pays for jobs, forgiveness of student loans, and all the rest, the government has poured funny money — thanks to the Federal Reserve’s virtually unlimited power — into the hands of consumers. Any economist will tell you this has the effect of artificially creating demand. “Artificially” means there is, thanks to this money poured into the citizenry for “free”, more demand for goods and services than there otherwise would have been in a pandemic and its aftermath, or any other context where there’s an economic downturn.

I saw a statistic yesterday that inflation in the United States is going up at 5 percent a year already, and climbing, while in other industrialized countries like Japan it’s way down at under 1 percent, or maybe 1 or 2 percent. There’s a reason: The United States, initially under Trump and the Republican Senate in 2020, and massively under Biden and the Democratic Congress in 2021, has spent like there’s no tomorrow. The debt and the deficits are piling up to incomprehensible levels, levels beyond what even ten years ago most would have considered acceptable for fighting a war to save the country from destruction. It’s clear that neither party intends to stop the spending. So we can expect more and more inflation.

Put simply: When the government creates more money than would otherwise have existed in a free market based on, say, a gold standard rather than a politicized Federal Reserve, then there’s more demand for goods and services than would otherwise have been the case. When the government hands out trillions in “free money”, it drives up demand relative to supply, which in turn raises prices. This explains the supply chain, lumber, housing, food and employment shortages, in part. These things are only going to get worse as the government continues to spend, and spend, and spend, and pour trillions of “free” dollars into the market. It’s like creating a fantasy economy; it’s the socioeconomic equivalent of heroin addiction.

Sure, the government could step in and impose price controls, as the government did back in the 1970s. Price controls lead to shortages. Why? Because the high demand remains, and the supply gets bought up by the artificially cheaper prices created by price controls. Without being able to raise prices, there’s no incentive for businesses to hustle and try to keep up with all the demand. That’s when you get, quite literally, a Soviet Russia, a Venezuela or a North Korea, where people eat their pets because the grocery store shelves are chronically empty, or a bottle of milk costs $75,000.

Read economics. Most Americans are clueless on the subject. They listen to people like Paul Krugman at the New York Times WHO IS ABSOLUTELY ALWAYS WRONG ABOUT EVERYTHING, yet they still trust him because … well, because he works for the New York Times and has an economics degree. How could he be wrong?

It’s all part of the ignorance that our media and government masters exploit so well. Ignorance and evasion are impoverishing us and, on our current road, are going to kill literally millions of us.

Michael J. Hurd, Daily Dose of Reason

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