Blame the guy sweeping up the glass for breaking the window.It ain’t that everything getting more expensive, it’s the dollar that has lost purchasing power; and that’s why everything’s cost is going up. Why is it losing purchasing power? Because more dollars were printed to provide the emergency support needed because of a DEADLY WORLD-WIDE PANDEMIC!
Gee, I wish the covid hadn’t come along, and I wish we hadn’t suffered the worst economic downturn in modern history, and I wish I was a foot taller, 20 lbs. lighter, and 40 years younger. So much for wishes!
Reality is we absolutely needed that help and now the bill has come due. As usual some folks always something for nothing, but it never works that way. And it is true that additional spending will increase the money supply BUT: spending money on infrastructure that has an economic payback is different from spending money on debt – and debt was exactly what the public was facing without the government’s help. Without income family debt would rise from missed car payments, mortgages, etc.
“Most of October’s inflation was driven by soaring energy and food prices — a gut punch for cash-strapped families and a political nightmare for the Biden administration.
“The costs for low-wage households to cover their commuting costs, grocery bills and rents are eating into the jump they have seen in wages,” wrote Diane Swonk, chief economist at Grant Thornton, in a Wednesday analysis. “The public is angry.”
Why? Angry at whom? Covid? Yeah, okay, that makes sense, but that means we took the medicine but now don’t want to pay the doctor, or how about picking out a face or a name, someone, oh I don’t know … Maybe the president? Let’s not blame the former president who for months ignored the spread of covid and thus making it obviously a much more pervasive, costly, and deadly catastrophe than it needed to be. But instead let’s blame the guy sweeping up the glass for breaking the window. It worked in Afghanistan.
That said, the idea that the increased cost of products will stabilize a few months hence are probably correct, but I doubt they will fall back to pre-covid levels. The rate of increase will modify over time, but the idea that these prices won’t be the new normal is unrealistic. As basic material resources diminish in grade, increase in cost, or found to be inaccessible the smaller supply will obviously result in higher prices.
What only adds to the general confusion and irritation of the public is the resistance to the idea of permanent price inflation for fear of giving birth to a inflation psychology that could spin out of control and cause real damage. As metal investors we can’t afford to be misled on the cost of things and can operate with the knowledge that inflation will
- Increase our cash flow
- Increase the rate of return
- Reduce the effective price of past expenditures
b.