You have heard inflation is rising. You have seen prices going up at stores, the pump, in energy bills. Take a serious look – and you will see what most do not understand: Inflation is a serious threat to our way of life, standard of living, peace of mind. Here is why, why it is occurring, how to stop it.
Look at the data. Forget politics and media. Here are the numbers. The price of gas in early 2020 was 1.96 dollars a gallon; the average price today is 3.38 dollars per gallon. Similar jumps are everywhere. See, PETROLEUM & OTHER LIQUIDS.
Look closer, and you see dramatic price hikes in all commodities, things we buy to live, a so-called “average basket of goods,” or what economists call the “Consumer Price Index,” CPI. What is this?
The CPI is a rolling record of how fast prices are rising. In a word, they are exploding. The 12-month percentage change in prices for November 2019 was .01 percent. The change in prices – across the entire basket – in October 2021 was 6.1 percent. That is a 610-fold increase in pace of rising prices.
Broken down, data is illuminating. The percentage change in prices for food, apparel, electricity, and education all rose, with some changes, are stunning. The October 2021 price change for vehicles was up 9.8 percent, while “change in energy costs” went from negative 18.9 in May 2020 (that is, 18.9 percent drop from the prior year) to a 30 percent jump between May 2020 and October 2021.
Objectively, we have not seen such price acceleration for decades. In 1980, President Jimmy Carter’s policies produced 13.5 percent inflation. In 1990, after Iraq invaded Kuwait and foreign oil rose, inflation hit 6.3 percent. Since then, prices have been relatively steady.
Now we have Biden-Harris-Schumer-Pelosi. What is causing all this inflation? Answer: Mismanagement of the economy by Democrats – at a time of high national debt.
Start with basics. Democrats say this inflation is “transitory.” They say more spending allows hand-outs. That is bunk, a head fake. Inflation, by definition, is not transitory – but a sustained rise in prices. More federal spending accelerates inflation. Theirs is a Rube Goldberg machine, all about power.
Truth: Prices rise when demand exceeds supply. They also rise with excess federal spending – debt without production, too many dollars chasing too few goods, which lowers each dollar’s value.
When federal spending goes wild – more debt or dollar-printing occurs without real growth, so the ratio of dollars to real things rises, making each dollar earned and saved less valuable, so things cost more.
If wild federal spending is Cause One, there are others. These also flow from Democrat policies.
Second cause: Reduced labor participation, people deciding not to work. Why does that matter? When people are paid by the government not to work – as Democrats did with federal top-ups of unemployment insurance and in their pending “Build Back Better” legislation, the price of labor rises.
Businesses must compete with the government for workers. With fewer available employees, labor prices rise. That is basic supply and demand. Wages are driven higher artificially by the government.
Add Biden’s unconstitutional federal mandates demanding all employees get vaccinated or employers punished. That, too, drives up labor costs. People quit, retire, or get fired. Labor availability shrinks. Wages rise – and employers must pass costs to the consumers – in higher prices.
Third cause: Reversing US energy independence was a triple kick in the teeth. Energy prices are sky-high, will go higher this winter with foreign dependence. A thriving US energy sector was crippled. And employment dropped all down the chain – on imaginary alternate energy jobs.
Fourth cause: Failing to restore supply chains damaged by restrictions. Federal vaccine mandates, excessive benefits, intentional no-work inducements – prolong the labor shortage, keeping supply chains broken. Watch as Christmas comes – things do not move with no one to move them.
Fifth cause: When the government is incompetent, and inflation takes hold, “inflationary expectations” follow. Psychology says, if unions think prices are headed up six percent, they negotiate a wage hike – then passed to consumers.
When they see accelerating inflation – imagining prices could jump by double digits in two years, they counter with double-digit wage demands. This fans inflation’s fire, and now you have what economists dub “irrational inflationary expectations.” That is what Democrats are delivering – fear.
Finally, the kicker. Democrat-driven inflation was avoidable – with less federal spending, fewer restrictions, no induced unemployment, no federal vaccine mandates, keeping US energy independence, opening our economy, not killing life-saving businesses, jobs, income, and security.
Barring a return to sanity, expect “stagflation,” high inflation with high unemployment, taxes, penalties, and interest rates. History teaches Democrats tend this way toward socialism and a utopian fool’s paradise. By 2022 elections, most Americans will understand stagflation – and be sick of it. Until then, buckle up.