Government Watch / Politics

What is Inflation? Causes, Effects, Solution

Inflation

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. 


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Robin Walter Boyd
1 month ago

Today’s inflation has to be an orchestrated one. There is just no way so many factors could be affecting the economy at the same time as is happening right now. The Xiden administration is doing everything it can to force citizens to be more dependent on government.

Herman
1 month ago

I read a lot of the comments before I wrote this post. The issue of “inflation” is not “mismanagement of gov’t policies” All the the factors mentioned are on “purpose” to change America into a third world country. I don’t know who is behind Biden, maybe Obama or Soros or the “Deep State”. Biden himself is not smart enough to think up all this by himself. Any red bloodied American would not have done what Biden did in Afghanistan. And to open our borders to everybody in the world; that’s not bad policy, its on purpose to change America to a “one party” dictator country like Venezuela. There are very sinister people in Washington; greed and power rule the country now.

Joanne 4 justice
1 month ago
Reply to  Herman

Trust me all those people are guilty!!!.
AMERICANS ARE GUILTY FOR PERMITTING THIS SITUATION TO HAPPEN !!!!
AMERICA NEEDS TO ACKNOWLEDGE , AND CONFRONT , AND .
END EVIL !!!!!!

GTPatriot
1 month ago

How about a constitutional convention ? Are we afraid of it or do we welcome it ?

Stukahna Sandbahr
1 month ago
Reply to  GTPatriot

It seems to be growing. I’m a donor and get regular updates from them.

GTPatriot
1 month ago

Only 33 comments ? This isn’t a hot topic

GTPatriot
1 month ago

There are southern US cities that are experiencing 26% increase in home prices in the last 12 months. This absurd increase is expected in San Fran or NYC or DC but not in the south which has always been the retirement target for northeners who expect to sell to sell their homes for ka-zillions and buy a much better home in the south for less than $200K. Look again. There are southern cities that have had 26% home price increases in the past 12 months. The future of housing is in Costa Rica, and non-US areas. Better make your move now, Yankees. But please go
direct to Florida and not North Carolina. But, oh yes, our federales will believe they can spend their
way out of this problem as usual.

GTPatriot
2 months ago

Forget a balanced budget. Will never happen as long as China keeps us afloat. Then, when they choose, they will pull the plug on us. They own us. So by passing Bidens $2 trillion social spending program we are asking the Chi-Coms for another loan. Joe checked with Chee last night
to make sure our credits good. Does anyone ever wonder what the interest rate is on these
China loans ?

Hal
2 months ago

INFLATION IS the Federal Governments way of TAXING by political subterfuge. The only way to make the politicos honest and responsible in the fiduciary management of the budget is to have a balanced budget amendment. But history has shown the politicos will NOT cooperate in this way. When in “power” it allows them to pay back to their supporters without having to justify the level of spending. It allows them to dump millions or dollars in cash on a pallet in Iran and without having to test its popularity and justify the reason and the wisdom of such a financially incompetent action (I’m glad no POTUS has every done such a thing, but I guess it could happen … and the News Media would maybe use its propaganda skills to justify it ……. if it was a Democrap POTUS.

Roger
2 months ago

How do we get Joe Manchin to change party and become a Republican? That would stop the Senate from doing what Biden wants them to do. I cannot see how Democrats, even many in office now, want this country to go the socialist route which will lead to communism and why do CEO’s of major companies who supported Biden want their companies to be taken over by the government as probably will happen if things don’t change? And let’s face it – most of the Democratic party are being influenced by Satan. There was a trial drone over a power plant in PA recently. They may not need a hypersonic missile to knock out our electrical system – only a lot of drones. If the U.S. is the Babylon in Biblical prophecy an EMP would fulfill that prophecy.

Mohican
2 months ago

Why do people comment on this site, and act like Armchair warriors … We already Know what is Happening in the United States.. Why not comment on What TO DO…

Cause :The Communist Administration of this Cognitive Retarded puppet joey robinette biden

solution: get the Communist Criminals out of the Peoples House, Line them up against a wall..

George Washington of the Continental Army destroyed these kind of people..

and we do Noting.. but remark on what 80% of the country already knows..

MOCountry
2 months ago
Reply to  Mohican

Yeah, that might be appropriate, considering what obiden and his minions have done to this country since January 6th. But since our military have ignored the many constitutional violations committed by these idiots, and refuse to intervene by honoring their oath……………..it ain’t likely to happen!

Mohican
2 months ago
Reply to  MOCountry

I am willing to die defending my country.. Vietnamese had nothing, why do you think they did so well.. they may have the guns we have the numbers.. 69/73

Elena
2 months ago
Reply to  Mohican

Okay. They need to go. But HOW and WHO will do it? I’m frustrated and angry too. This B Admin is pure insanity. I want America back for us, our children, our grandchildren, and so on ….

Mohican
1 month ago
Reply to  Elena

that`s the problem, agree.. to many Sheep wagging their tails in lock step Scared.. of the Government .. We are the Employers the Work for Us.. Start to Fight back..

a start to fight back, is called

Interposition:

States Constitutional Checks on Federal Power

Interposition is built into our Constitutional System

Republicans did this during the Clinton, Obama administrations reign of Terror..

write your Congress and Senators push it on them if need be.. what do we have to lose

Stukahna Sandbahr
1 month ago
Reply to  Mohican

I seriously doubt it’s 80%… Americans are pretty damn ignorant.

R Barbour
2 months ago

I couldn’t blame him for not wanting the job, but I think Robert Charles would make a good president. He’s smart, knowledgeable, has military and government experience, and he’s not too old.

Barb304
2 months ago

I see inflation as making the rich richer and the poor poorer! That is the goal of this reigning administration, right?

Garye
2 months ago

Wow – what GREAT explanation of the problems and ALL of it caused by democrats failed policies and destruction of America.
THROW THESE USELESS FAILURES OUT!
DEMAND any democrat currently in office stand AGAINST this marxist activity.
peters and stabenow are Michigan useless failures being led by their noses without an intelligent thought of their own.
Totally good for NOTHING except playing politics and ignoring the interest of Citizens!

anna hubert
2 months ago

There is not a record on this planet of a government policy and an attempt at improvement that was a success but there is evidence aplenty of its ineptness and incompetence one big record of a complete disaster

J Cline
2 months ago

And the solution was never given , I know the solution , however since you wrote this article it is incumbent upon you now to inform the general public how they can avoid losing their homes and winding up sleeping in a car.
I am somewhat irritated that the author could not give out any sound basic financial information to AMAC members on how to prevent loss and protect a persons worth including the goals to grow despite the stagflation ….Everyone knows by now what is coming down the pipe, Gas in California is $5.15 a gallon already , and miraculously the Dollar is gaining strength which shall be short lived ,,So what’s a member to do to protect themselves from the policies of Joe Robber Biden ?

Roger
2 months ago
Reply to  J Cline

I agree with you about methods to help us survive. You mentioned Robber Biden. I prefer to call him Butcher Biden – Afghanistan, abortion etc.

Roger
2 months ago
Reply to  J Cline

I forgot to add something to my previous reply to your comments. A Jonathan Toebbe was arrested for trying to sell military nuclear secrets to any company that would pay him for them but was caught in his attempt. So how is that different from what Biden did in giving the Taliban all of that military equipment he left behind in Afghanistan which I think was purposeful since it looks like he is someone’s puppet. If Toebbe’s action was treason isn’t Biden’s also treason with all of the military secrets the Taliban has and now China also has them since they are now involved with the Taliban?

Hal
2 months ago
Reply to  Roger

You have a pregnant point on Joe Hidin’ Biden’s actions in handling the Afghanistan situation. A total foul up … except in his case it was intentional. He should be impeached for his actions in that matter, but the Democraps would eat fecal matter before they would do it!!

Ruth A Lance
1 month ago
Reply to  Hal

We have a chance to impeach when the Republicans retake the senate and the house. Right now, there is not chance of a successful impeachment given the make up of the congress now.

Elena
2 months ago
Reply to  J Cline

I live in an itty bitty town in the country. I drive 50 min to work, at the hospital, 50 min back home. Gas is $4.59 a gallon. I’m thinking I might have to sleep in my vehicle just to keep working. That’s a lot of money every month just to go to work.

PaulE
2 months ago

RBC,

The current inflation we are experiencing is directly related to the series of deeply flawed ideological policies this administration has decided to pursue. Anyone with any background in business, macro economics or finance could have accurately predicted our current state of affairs would result, if these policies were implemented. There is more than enough historical data from the last 50 to 75 years to back up that conclusion. So this isn’t about an administration making an error, based on some theoretical economic model that has never been tried before. Rather this administration simply chose to ignore proven economic theory and reality and instead pursue an ideological agenda for the sake of ingraining that ideology, in this case socialism, into the fabric of our country.

Put simply, this administration had a crystal clear understanding of what the economic outcome would be of if their policies were enacted and they chose to implement them anyway. All to achieve a larger more lasting outcome. Which is the transformation (towards socialism) the Democrats keep endlessly referencing in their speeches. If you look at all socialist countries, one of the key attributes they all have in common is high, persistent inflation. So this is a feature of the governance model they seek to achieve.

I don’t expect the Democrats will change course or moderate their positions. They are achieving what they want. That most Americans will be fed up with them by the time the mid terms roll around is of course correct. However, if the Democrats are allowed to continue their destructive policies unobstructed until then, there will likely be very little of our republic left to save. These policies are creating lasting changes to our country, that will be nearly impossible to reverse. I agree with you that people had better buckle up, if they are just going to continue to do nothing. The ride is only to get significantly more bumpy and painful as time goes by.

Elena
2 months ago
Reply to  PaulE

Correct. It is intentional. The B Admin know exactly what they are doing. Paul, why can’t some people see this is all done intentionally, with a corruptive, destructive purpose in mind? How can some be oh so very blind?

Chuck
1 month ago
Reply to  PaulE

The communist arm of the “progressive” democratic party is gleefully purposefully promoting their typical pattern that has been followed in all other countries where they achieve a democratic revolution (aka communist revolution). You need to create chaotic conditions in as many areas as possible so the people clamor for/accept change. Every communist dictator achieved success with it. A constitution convention will play directly into their hands accelerating change. The congress already has all the constitutional power they need to balance the budget. An amendment will not bolster their resolve to challenge people’s thirst for socialist freebees. Do you really want the street crazies of today influencing the convention? Legislation will only follow Americans giving up socialism. But weaning babies off mother’s milk comes with much crying and changing the babies’ habits in all species of the animal kingdom. Probably more so with humans. The change starts with us followed by constitutional minded elected representatives.

Eddie Van Halen
2 months ago

I was a UAW member. Every time we got a new contract / pay ‘raise’ then the car prices went up.
MANY years ago, you could take a $20 bill ( Gold Certificate ) into a bank and ask for a $20 St. Gaudiens Gold piece. Now you need 90 – $20 bills. Inflations roots are in GREED. Also –

( D ) communists have 4 tenets:

TAX
SPEND
LIE
CONTROL ( every aspect of your life ).

Think about that.

Hal
2 months ago

Hmmm. You have caught on to the policy of the Democrap Party!!

Wayne Peterkin
2 months ago

When businesses see their costs rise, no matter the reason, they are forced to raise their prices. The only exception is when wages rise and are accompanied by a corresponding rise in productivity sufficient to offset the higher labor cost. Many things cause business costs to rise and most are affected by government policy. Taxes are the first, regulatory burdens are another, material costs and energy are others, and we could name a few more. When the cost of a loaf of bread (as well as other things) is higher today that yesterday that’s inflation, and nobody benefits.It cannot be honestly spun to be a good thing. It’s a bad thing and can destroy those on fixed incomes including most retirees who spent a lifetime trying to build some financial security for their later years. That security can disappear very quickly due to inflation, and from what I’m seeing and hearing from this current administration, they really don’t care. Their policies are largely to blame for the inflation we are seeing today, not COVID, and they propose nothing to mitigate the problem. They don’t care! Solutions are not complicated but take too much space to cover here. .

gen.patton
2 months ago

Democrats are clueless–Jimmy Carter taught us everything NOT to do, and Biden is doing it!!!

Eddie Van Halen
2 months ago
Reply to  gen.patton

Gen. – these are not demo’s these are ( D ) communists. Every last one. Joe “Mansion” included.

Robert
2 months ago

Everything they touch goes south. Purposely south I might add. This kind of thing does not happen so quickly unless unless it is planned. Continue to vote for your own demise America. Continue to vote Democrat to your own misery.

David Spade
2 months ago

Inflation is like a tax, seriously affecting people’s standard of living, ability to put food on their tables, and slowing the ability to pay for homes and transportation. Coupled with all of the other government plans (like the green new deal), the people in the middle class just get crushed. That is part of the O’Biden Marxist Democrat control plan…..hit the people when they’re down. Whether it is government induced inflation or it’s higher taxes, the people who can least afford the awful impacts are the ones who get slammed the hardest.

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