Americans are now facing the highest inflation in 30 years. People are even starting to talk about the “misery index” again — and I haven’t heard that term since the Carter administration. Unfortunately, inflation hits low and middle-income Americans the hardest. You can bet that Speaker Antoinette and President Asterisk aren’t feeling the pinch. Maybe that’s why they’re not acting very interested in the problem. But the rest of us are sure interested.
Inflation isn’t a simple matter to control. It is a complex issue that is affected by many factors.
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Whenever the government lowers the value of our money, inflation goes up. When our geniuses in Washington put more money into circulation by either borrowing it or printing it, the value (buying power) of the money goes down. It is simple supply and demand economics. The more there is of something, the less valuable it becomes.
Venezuela has tons of money — and it takes a ton of it to buy bread. The Venezuelan currency is the Bolivar, and they’re issuing it in 50,000 Bolivar notes now — because that’s what it takes to buy anything. Venezuela proves that you can’t print your way out of inflation. Our federal government currently has over $29 trillion in borrowed money. What does President Gremlin want to do? Borrow $5 trillion more for his various spending boondoggles. Because he simply doesn’t understand this principle.
Product scarcity also factors into inflation. Gold and diamonds are valuable for one reason, and one reason only — they’re rare. If we had to sweep diamonds off the sidewalk every day, no bride would want one on her engagement ring. It’s simple supply and demand again. If there’s not enough of something to meet the demand, people are willing to pay more for it and prices go up.
Which brings us to our failing supply chain. If there aren’t enough products on the shelves, the remaining products get a bit pricey. COVID restrictions and work disincentives have starved the country of skilled workers. Democrat-sponsored emission standards in California have created a shortage of trucks to move products inland from West Coast ports. Further, California’s AB5 killed private contracting in the state and is creating a shortage of drivers to pilot the trucks that aren’t available anyway. And just like that, we have over 100 cargo ships parked off the West Coast, unable to unload, empty store shelves nationwide, and skyrocketing prices for those scarce products which are available.
What is President Gremlin’s plan? His Build Back Better program of course. A massive deficit spending program which will:
- Borrow enough money to further devalue the dollar
- Fund the Green New Deal to impose further environmental restrictions on an already failing system
- Expand AB5 nationwide and exacerbate the supply chain labor shortage
Like every Democrat, his only solution to any crisis is to do more of the same thing that created the crisis.
We can’t talk about inflation without also talking about production costs. I know this is a hard one for liberals to understand. If Joe’s reading this, he needs to pay attention. When it costs more to make and deliver a product, prices go up. Who knew?
So, what’s Joe doing to lower production costs? Well, he’s extended unemployment benefits — paying people to not work. Businesses across the country are suffering from labor shortages. They’re overcoming that by offering higher pay and passing on that increased labor cost to their customers.
A big piece of the processing expense is the price of energy. It takes a lot of electricity to turn a raw hunk of aluminum into a shiny new rim for your car.
Therefore, skyrocketing energy costs are also contributing to inflation. When the price of fuel goes up, Americans don’t just feel it at the pump. They feel it when they buy rims for that car — and every other product as well. So, what is President Gremlin doing to help with spiking energy costs? He’s canceling pipelines, closing others, restricting fracking, and canceling drilling permits. That should do the trick.
But let’s not forget about those overhead expenses — of which taxes are a big one. President Gremlin’s Build Back Better program also includes massive tax increases — especially for businesses. That’s why Senator Kyrsten Sinema is fighting the program. Those taxes will increase the cost for every company to stay in business.
They will pass those costs along, and prices will go up.
But inflation isn’t only driven by scarcity and costs, it is also driven by expectations.
When buyers (of anything) expect prices to go up, they try to make their purchases before the increases take effect. In so doing, they increase demand and drive prices up.
For example, when investors expect a commodity – like, say, oil — to go up, they buy oil futures. Futures are a contract to buy a certain amount of oil in the future at an elevated price. They’re hoping the price goes up even more than their contract price.
If it does, they can sell their contract and make a profit.
But by buying the futures, they’ve already driven up the future cost of oil and triggered inflation. That’s why gasoline prices went up so quickly when good ole Joe went to war with the oil industry. President Gremlin’s policies convinced everyone that the price of oil was going up, investors jumped into the futures market, and they drove the price up — fast. Average Americans are worried that they may not be able to heat their homes this winter, but it’s been a real party for the big dollar investors — most of whom are donors to the Democrats. You don’t suppose there’s a connection there, do you?
Is there anything Joe can do to change that investor behavior? There sure is. He’d simply need to announce that he’s opening up drilling, endorse fracking, and give the green light to pipeline projects. Investors will expect prices to drop, and they’ll bail on the futures market like rats from a sinking ship. But that would require admitting that Donald Trump was right. That’s not going to happen with this administration. Sorry Americans, your wallets aren’t as important as Joe’s pride — at least not to Joe.
If there’s anything that President Gremlin has failed to do to make inflation worse, I can’t think of it. But then, I’m not an economist. But know this: The next time President Asterisk assures us that inflation is only transitory — it’s only as transitory as his administration.
By John Green
John Green is a political refugee from Minnesota, now residing in Idaho. He currently writes at the American Free News Network (afnn.us). He can be followed on Facebook or reached at email@example.com.
This article was first published by American Thinker.