After the Consumer Price Index surged last year to its highest level since 1982, politicians are feeling pressure from constituents to do something about it.
On Monday, President Joe Biden announced $1 billion in grants, loans, and other assistance for small meat producers. Another costly government program will, supposedly, help tame rapidly rising beef and poultry costs.
Massachusetts senator Elizabeth Warren has been on a tear lately, and there is a startling commonality between all these ideas:
And there’s more:
This is your brain on fiat monetary systems and central banking: price inflation is caused by everything except for printing loads of new money.
If Senator Warren believes that prices increase because of the greed of price-gouging companies, does she believe that when prices fall, it is the result of corporate benevolence?
Businesses obviously have an incentive to contain their costs. But when they have to pay more for raw materials, transportation, and labor, they have no choice but to pass those rising costs on to customers.
Supply chain disruptions and other factors can contribute to rising retail prices in specific categories. The oversupply of the currency itself, however, is at the root of the inflation problem. Too many dollars chasing too few goods translates into broadly rising price levels.
The White House doesn’t seem to grasp this basic lesson either.
When asked about a recent Consumer Price Index report, press secretary Jen Psaki immediately shifted blame to the greedy corporations raising prices on poor, unsuspecting Americans so they can line their own pockets.
Surely these increases in prices have nothing to do with the fact that, according to the M2 money supply, 40 percent of all US money currently in existence has been printed in the last twenty-four months!
Americans of all stripes have felt the impacts of price inflation and are growing increasingly concerned. In a November press briefing, Secretary Psaki was asked, “Why should Americans not be concerned that injecting another $1.75 trillion or more would further raise inflation?”
She answered, “Because no economist out there is projecting that this will have a negative impact on inflation.”
These economists should have spent more time reading Ludwig von Mises. In “Inflation: An Unworkable Fiscal Policy,” he explained why acts from benevolent government actors tend to worsen the problems they purport to fix.
As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar.
With no sense of irony, politicians frequently champion expensive and wasteful policies and programs, without a moment’s consideration to how their own policies and programs could be harming those they seek to help.
The answer to price inflation isn’t subsidies, bailouts, or price controls. To attack the root of the evil, sound money must mend a broken monetary system.