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Look in Mirror for Primary Cause of Inflation

Inflation is an economic phenomenon, and economic phenomena are influenced by all participants in the economy. It thus makes sense that, as Neil Irwin writes in the New York Times, the “primary culprit” driving the current inflation is all of us:

We shifted our spending toward stuff, rather than services. Americans purchased 18 percent more physical goods — cars, washing machines, furniture — in September than they did in February 2020, while their consumption of services fell a bit. Because demand for such goods is off-the-charts high while supplies are limited, they are more expensive.

And many of us elected to stop working, or work less. (The number of people working remains smaller than it was prepandemic.) The shortage of workers has led employers to offer higher wages to attract employees. That fuels price increases even in services experiencing underwhelming demand, like restaurant meals [Neil Irwin, “Who’s to Blame for Rising Prices,” New York Times, 2021.11.16].

I don’t like higher prices any more than you do. But you and I are driving prices higher with our own decisions as actors in the marketplace. We are buying more things and working less, thus increasing demand and reducing supply. We could reduce inflation by buying fewer things and working more hours for lower pay. But do any of us want to do that?

22 Comments

  1. Porter Lansing 2021-11-16

    q ~ What happens to the extra money we’re spending on luxuries and necessities?

    a ~ It’s being absorbed by our suppliers, to offset the losses the pandemic created.

  2. larry kurtz 2021-11-16

    The rise of companies like Amazon suggests many people are simply too afraid to go into town to shop so last year an interested party called for a general strike to sink the Trump Organization. Now, the movement has morphed into what Anthony Klotz, an organizational psychologist at Texas A&M University, is calling The Great Resignation.

    It’s not about laziness, it’s about equity or Maria shrugged, if you will. Just because we’re Democrats doesn’t make us subjects, it makes us powerful: a reverse “Who is John Galt?” Some believe it could last well into 2023.

  3. Eve Fisher 2021-11-16

    One thing I do is refuse to ever, anywhere, use a self-check-out lane. Why should I help a corporation take jobs away from human beings?

  4. jerry 2021-11-16

    The pandemic is not to blame for greed. Corporations are bleeding us with a fake clarion called “inflation”. They are the ones driving costs due to a delivery system that could be corrected in a short period of time by raising wages for delivery people like truck drivers. Simply put, we have enslaved the truck drivers along with other delivery personnel. Take a look at the side of a FedEx truck and you will see that it is a contract truck by a third party. That third party does not pay benefits nor does it pay wages that you can live on. Penalize the corporations that are causing the bottlenecks and you will see that “inflation” is nonsense.

    Rising wages, affordable housing, childcare will solve a lot of issues, but delivery greed is still the culprit. Now if only we had an “infrastructure week”…

  5. Porter Lansing 2021-11-16

    @Eve @Jerry @InterestedParty – agreed!

  6. jerry 2021-11-16

    US, us’ins, Retail sales surge 1.7% in October. Why was that? Methinks “infrastructure week”. Keep it going Democrats, keep it going. Make ol’ Dirty, Looney Thuney and EB5 Rounds exhaust themselves denying the projects that South Dakota will be getting. to improve thingy’s here. Funny business when you actually do things for all of the people. Booyah

  7. Porter Lansing 2021-11-16

    GETTING SERIOUS!

    Why modern socialism is right for America:

    Cory’s blog post shows why this “pithy adage” is reality.
    “If the rich gave all their money to the poor, within three years the rich would have all their money, back.”
    It isn’t just a joke.

    The rich lost a bundle during Covid but through raising prices and blaming it on the “unknown causes of inflation”, they’ll have all the money (we’re holding) returned to them (with a tidy profit), in short order.

    *It’s time to kick the rich when they’re down and get our fair share of the wealth (that we earned) for those who’s only skill is being greedy, selfish and cold hearted, risk embracers.
    – Demand Biden’s social spending bill be passed, as written.
    – If we don’t, the screwin’ we’re gonna get will be just like the one we’ve gotten, since Reagan.
    – No increase in wages over 40 years, while the really rich became the super rich.

  8. jerry 2021-11-16

    Bezos just purchased $78 million dollar home in Hawaii, that is in addition to the dozens he also owns. Meanwhile, we taxpayers gave him millions to pay for his help. The list goes on. Bill Ackman made 2.6 Billion dollars in one friggin day with his hedge fund on a covid bet. https://www.theguardian.com/us-news/2021/nov/15/new-york-billionaire-seeks-permission-for-temple-for-a-titan-bill-ackman
    How is this logic? These guys and gals got too damn much money, they need to be taxed like the old days 60% real tax for these emperors

  9. O 2021-11-16

    Jerry, or the REAL good old days when the top tax rate was 94% (on incomes over $200,000: $2.5 million in today’s dollars). Back in the good old days when taxes were increased to pay for wars. Now we just don’t pay for decades-long, expensive wars.

    The United States HAS to rectify it’s wealth concentration policies; tax policy is the jet fuel for wealth inequality.

    Porter, the wealthy did NOT lose money during COVID. In fact, US billionaires got 62% richer during COVID — amassing $1.8 trillion more over the pandemic.

  10. ArloBlundt 2021-11-16

    Eve–I’m with you on avoiding the “self check out” lane…also, I do not bus my table at McDonald’s.

  11. O 2021-11-16

    Cory, I have to disagree with this universal responsibility premise of new spending. Since the stimulus checks, I (and I will argue most Americans) have not had extra cash to spend. The unemployed have had benefits cut. There is a bit more money for necessities with the child tax credit, but overall, I don’t see a spike in income that would allow a spike in spending — not from the 99%.

    Rising gas prices happen outside the simple cause-effect of supply and demand. The other lesson to learn now is that the US needs to get away from energy policy centered on oil. Destroying the planet, killing our people with pollution, Middle East intervention, sinking our economy . . . how many more reasons do we need to abandon bad energy policy?

  12. mike from iowa 2021-11-16

    Cattle producers, especially the smaller ones, are not cashing in on 6 bucks a pound hamburger. Landlord, who raises and sells a couple hundred head of cattle each year says packers are making 7-800 bucks per beef carcass.

  13. Porter Lansing 2021-11-16

    O – Not to be contrary but you’re wrong. The billionaires are not the rich. Billionaires are the super rich. The rich are the business owners and middle men in South Dakota who are raising prices and claiming it’s Biden’s fault.

  14. grudznick 2021-11-16

    Almost out-of-state scary, indeed.

  15. larry kurtz 2021-11-16

    Well, considering all the US farm land is unceded and taken through genocide it might be prudent to outlaw foreign land ownership then honor what countries like Zimbabwe have done and reconcile with Indigenous through land repatriation.

    The South Dakota Democratic Party should advocate for paying the tribes and settling the Black Hills Claim, dissolving the Black Hills National Forest, moving management of the land from the US Department of Agriculture into the Department of Interior in cooperation with Bureau of Indian Affairs Division of Forestry and Wildfire Management. Mato Paha (Bear Butte), the associated national grasslands and the Sioux Ranger District of the Custer/Gallatin National Forest should be included in the move.

    Clear the second growth conifers and eastern red cedar then restore aspen habitat, prescribe burns, begin extensive Pleistocene rewilding using bison and cervids, empower tribes, lease private land for wildlife corridors, turn feral horses from BLM pastures onto other public land to control exotic grasses and buy out the welfare ranchers Tony Dean warned us about.

  16. grudznick 2021-11-16

    And also, release the captive dinosaurs held in secret near Provo on a private preserve into this new, expanded Mato Paha Park. Of course all the private property within the Black Hills will need federal grants to build extensive walls, and watch towers like the one near Pringle, so landowners can enjoy the wildlife and watch the re-wilding of the west.

  17. Porter Lansing 2021-11-17

    Bitcoin was designed to resist inflation via a fixed supply — only 21 million BTC will ever exist.

    Inflation is the process by which a currency like the dollar or Euro loses value over time, causing the price of goods to rise.

    Bitcoin (and some other cryptocurrencies) are designed to experience predictable and low rates of inflation.

    PS – “Buy the dips”

  18. grudznick 2021-11-17

    This is why grudzcoin is what you need to buy. There is not a fixed supply, however the grudzcoins will never be subject to inflation. If you have a grudzcoin that buys a meaty, gravy-laden breakfast today, your grudzcoin will buy a a meaty, gravy-laden breakfast in 5 years. The same number of sausages, same crispy bacon, even the same number of marmalades for your toast.

    It is the cyber currency that grows with the price of your desired objects. Plus, if you’re nice to grudznick I can set you up with some commemorative grudzcoins as well.

    Side note: It is even accepted in Minnesota, where the COVID bugs are at the hottest in the nation. The buying power is not diminished in Minnesota.

  19. Porter Lansing 2021-11-17

    You’re a born salesman, g-nick.

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