Why, Really, Is Everything So Expensive? - The American Spectator | USA News and Politics
Why, Really, Is Everything So Expensive?
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Don’t blame Domino’s for altering its $7.99 chicken wings carryout deal from 10 to eight pieces. Blame Washington.

Don’t blame Cedar Point, the Mecca for people who worship rollercoasters, for raising its admission fee from $75 to $85 for 2022. Blame Washington.

Don’t blame Dollar Tree, of all retailers, for shifting its price-point to $1.25 (maybe blame it for not calling itself Dollar-and-a-Quarter Tree). Blame Washington.

And certainly don’t blame McJak Candy, dubbed the “Willy Wonka of Medina, Ohio,” for hiking customer costs, as Fortune reports, by 12 percent. Blame Washington.

“We always put out a price list and say, ‘Here’s our 2022 price list,’ owner Larry Johns tells Fortune. “That’s always how we’ve done it. For the first time this year, we’re saying, ‘This is our current pricing effective this date, subject to change,’ because I can’t lock things in for a whole year. I don’t know what’s going to happen.”

But anyone with a basic understanding of the rules of supply and demand knew what would happen as a result of the Federal Reserve suddenly creating a massive amount of money.

Look at the trendline for M1, the measurement of the money supply pertaining to cash or assets easily made liquid. It skyrockets in early 2020. The Federal Reserve’s balance sheet sat at under $3.8 trillion as recently as September of 2019. Now it approaches $8.8 trillion.

What, really, did the hundreds of economists at the Fed think would happen when the Federal Open Market Committee decided the economy needed an unprecedented cascade of new money?

Duh.

The United States, along with many other countries, opted to neither tax nor borrow but print during the pandemic in part to offset the damage lockdowns inflicted upon economies. Inflation comes as the cost of central banks creating huge amounts of money to pay for the profligacy of politicians. Someone always pays. Inflation appeals to spendthrift solons because unlike taxes, which politicians pay for on Election Day, or debt, which burdens another generation, the people suffering do not always know how they ended up with the check or what it even funds.

“The semantic revolution which is one of the characteristic features of our day has also changed the traditional connotation of the terms inflation and deflation,” Ludwig von Mises pointed out in Human Action. “What many people today call inflation or deflation is no longer the great increase or decrease in the supply of money, but its inexorable consequences, the general tendency toward a rise or a fall in commodity prices and wage rates. This innovation is by no means harmless.”

Only morons deny, to themselves at least, the connection between flooding the market with money and the market then devaluing money. But politicians with vast schemes requiring the creation of Monopoly money to bankroll them disorient the true cause of price spikes with talk of monopolies and supply-chain crises.

Elizabeth Warren last week cast blame on big supermarket chains for the high prices.

“What happens when only a handful of giant grocery store chains like @Kroger dominate an industry?” Warren asks of a chain so dominant that it refrains from opening a store in her native Massachusetts. “They can force high food prices onto Americans while raking in record profits. We need to strengthen our antitrust laws to break up giant corporations and lower prices.”

In similar fashion earlier this month, Joe Biden described the “meat industry” as “a textbook example” of big corporations “giving themselves free rein to raise prices.”

The demagoguery, aimed at the place (the checkout line) where consumers receive the most regular reminders of inflation, ignores that the increase in food prices actually lags behind the overall rate of inflation and, in December at least, prices at the butcher shop actually fell.

“The index for meats, poultry, fish, and eggs declined in December, falling 0.4 percent after rising at least 0.7 percent in each of the last 7 months,” the Bureau of Labor Statistics reports. “The indexes for beef (-2.0 percent) and pork (-0.8 percent) declined after recent sharp increases.”

How to put December’s seven percent annual rise in the consumer price index into context?

The last time Americans experienced worse consequences from currency inflation the Apple MacIntosh, Barney Clark’s artificial heart, Knight Rider, and Ilhan Omar did not exist. Licorice Pizza the retailer, the NBA’s Kansas City Kings, Gimbel’s, Saturday Review, Leonid Brezhnev’s eyebrows, and Pickfair of Beverly Hills did.

Some countries that presently hit the Federal Reserve’s two-percent inflation target: Switzerland, China, Saudi Arabia, Vietnam, Ecuador. If rising prices were the result of global supply chains beyond the control of central bankers and world leaders, then why does it remain at manageable levels in many countries, out-of-control in such locales as Zimbabwe, Turkey, Iran, and Venezuela, and somewhere in-between in the United States?

The variables across time and place indicate that policy influences price spikes to a great degree. Supply and demand on the side of the good exchanged matter. So do supply and demand on the side of money exchanged for the good. When prices spike across the board, the problem almost always pertains primarily to the currency supply chain.

Pizza parlors, amusement parks, discount retailers, and confectioners did not conspire to jack-up consumer costs. Greedy politicians and imprudent central bankers depreciated the currency.

Appreciating that reality requires first distinguishing between the consequences of inflation (devalued money, i.e., higher prices) and inflation itself, a trick conducted where central bankers create money and not where a businessman collects it.

Daniel J. Flynn
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Daniel J. Flynn, a senior editor of The American Spectator, is the author of Cult City: Harvey Milk, Jim Jones, and 10 Days That Shook San Francisco (ISI Books, 2018), The War on Football (Regnery, 2013), Blue Collar Intellectuals (ISI Books, 2011), A Conservative History of the American Left (Crown Forum, 2008), Intellectual Morons (Crown Forum, 2004), and Why the Left Hates America (Prima Forum, 2002). His articles have appeared in the Los Angeles Times, Chicago Tribune, Boston Globe, New York Post, City Journal, National Review, and his own website, www.flynnfiles.com.   
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