George Rebane
Evidence rolls in daily that Americans in the large do not have a clue about what is inflation and how it affects their financial wellbeing and quality of life. This wholesale ignorance is constantly being reinforced by our news media of all political colorations and the Democratic Party. The egregious journalists mostly congregate on the Right since they have no hidden agenda to hide the meaning and impact of inflation today spawned by Bidenomics.
The confusion arises from the use of the single misleading ‘inflation’ to variously describe three distinct and separate attributes of inflation – inflation level, inflation rate of change, and the change in inflation’s rate of change. (Mathematically these are known as simply the first three derivatives of inflation’s price curve – respectively the zeroth, first, and second derivatives.) The figure below illustrates.
Today we hear all kinds of reports citing inflation numbers that totally confound the average American – ‘inflation was xx% under the previous administration’, ‘inflation is now higher/lower, ‘inflation is going up/down’, ‘inflation is slowing’, and so on. What almost no one understands is that claims that 'inflation is going down' is a bald-faced lie designed to fool the light thinkers. Whatever the current level of inflation - i.e. Biden's 9% increase in market prices (here) - it is already baked in. You will continue paying them and they will NOT go down as long as demand increases and supply does not. So Team Biden's propaganda that they are 'reducing inflation' (#1) is utter BS; even if they reduce the inflation rate (#2), the current level of inflation will remain and prices will still go up.
Nobelist Milton Freedman and his forebears long ago advised us that inflated price increases are always a monetary phenomenon in which the government ‘prints’ and releases more fiat money into an economy to chase the same amount of goods and services, hence prices increase and we call the whole thing inflation. The overall impact of inflation has always been that prices only ratchet up (increase monotonically) over time, and consequently the dollar in your pocket inevitably buys less stuff tomorrow than it does today. But that is only the beginning of the story of government misuses of inflation to abuse and steal from its citizens. Historically, great empires have inevitably laid themselves open to collapse and/or invasion by diluting/cheapening its money to the point that people no longer want to use it as the medium of exchange, unit of account, and store of wealth. Hence, the economy’s wealth generation grinds to a halt and tax revenues can no longer pay for implementing public policies including maintaining its sovereignty with secure borders and an able military.
The real story of inflation is much more opaque. Inflation is really a multi-level tax levied by governments that can no longer openly increase tax rates, so instead the steal money from their own citizens. Notice that over the years the general level of people’s wealth has not increased much, if at all. To be sure, enormous wealth has been generated in our economy by the commercial/industrial sector due to the invisible hand of market capitalism and ever-present competition. And along with that, the quality of life for the broad population has increased by the introduction and affordability of all kinds of new products and services generated by corporations and entrepreneurs to whom justifiably the overwhelming majority of the new wealth accrues, since they are the ones who successfully invest their own monies and undertake the risks such ventures demand. In spite of that, a large share of the population still lives paycheck-to-paycheck and has precious little saved for discretionary spending, investments, or a rainy day. Increasing their debt and succumbing to more government welfare is their only alternative.
Looking under the hood of our economy and taking note of how our government inserts itself to gather tribute from the unsuspecting masses, it becomes clear that it is Big Brother run by sleazebag politicians and their deep state bureaucracies that effectively and continuously scrape off any ‘excess wealth’ that may accrue to the unsuspecting on main street who are lulled by a constant stream of bread and circuses from our political betters and their elites. The whole program of mollification begins with a public education system that guarantees our young will be carefully taught to believe in the largess of government and the evils of private enterprise.
Two years ago I presented RR readers with the chapter and verse of how all this perfidy is executed in the public square. You can and should review ‘Inflation Tax – Silent Rape by Government’, it will put some scary meat on the bone of the above arguments. Unfortunately the bottom line here remains immutably unchanged. We witness no awareness of all this by our friends and neighbors – you have yet to see protesting throngs with pitchforks and torches demonstrating in front of government buildings across the land. (Also check out this post's comment stream.) No one is aware of what is being quietly vacuumed from their wallets by the various levels of government ranging from local to federal. All is well, just reduce your carbon footprint and embrace DEI wherever it may next be introduced – behave yourself.
Funny how Paul and the other lefty-looney Biden Butt-lickers haven't swooped in to point out the deficiencies in this post. Maybe it's too long and they fell asleep after the 2nd sentence.
And yet -
They'll show up later in some other post to claim total knowledge of economics.
Hilarious.
Posted by: Scott O | 20 June 2024 at 09:27 PM