Prices charged by businesses for goods and services purchased in the U.S. rose 9.6 from a year ago in November, their highest annual pace in records going back nearly 11 years, the Labor Department said Tuesday. [Breitbart News]
Inflation is scary. But what’s even scarier is that the people in charge don’t understand what causes it; or, worse than that, they don’t care.
At the root, prices are a result of supply and demand. As demand increases for a product without increasing supply, then prices will go up. As the market provides more of that product, and demand stays the same, then prices will go down. It’s a constant fluctuation, in most cases.
High or low prices are not simply a function of whether people charging for their goods and services are “mean” or “nice.” It all boils down to supply and demand. Everyone, to one degree or another, wants to get the best price possible for their goods or services.
If you own a restaurant or a store, and people are lined up around the block every day, then you know you don’t have to lower prices; in fact, you probably need to raise them. Or get a greater supply of your product or service, if you can. Or both.
In a government-run currency, which we have, the actions of government officials and politicians are very important. Starting in 2020, the government shut down the economy. The economy shut down because the government (I would argue) massively overreacted to a flu. Regardless of what you think about that, the government did it. But at the same time the government shut down the economy, the government injected trillions of dollars into that stalled economy. This had to create pent-up demand. And it did. So now the demand cannot keep up with the supply. What do you get? Rising prices.
It’s complicated, but that’s part of the story. The other part of the story is what free market economists have said for decades. When the government puts “too much” money into the economy, because they think that by doing so they can stimulate economic growth, then you get inflation. Inflation is not defined by rising prices. Rising prices are a symptom of inflation. The definition of inflation is government giving more money to people than the market (i.e., real people) want or need. The ultimate extreme of this example was in 2020, and into 2021, when the economy had shut down yet the government injected trillions of dollars into the economy.
Given the big spending policies of Trump/Congress in 2020, and later the Democrats and Biden on a much bigger scale, inflation was inevitable — according to everything that would have been predicted by free market economics. The problem is that nobody in power subscribes to free market economics. They subscribe to monetarist and other socialist-leaning policies which say the solution to every problem is to inject more and more and more government dollars (fiat currency, it’s called) into the economy.
Give people money they don’t have and that nobody has actually created — and you get inflation. It’s spiraling out of control. Yet nobody seems to care. Biden minimizes and laughs at it. He’s demented and creepy, but he speaks for the powers that be. These powers that be do not care what happens to the vast majority of us. That’s our biggest problem: Even bigger than inflation. But make no mistake. Inflation, especially hyperinflation, will ruin us all because nothing we have will be worth anything.
Big government is not free. And inflation is the price we’re paying.
Michael J. Hurd, Daily Dose of Reason