Don’t Blame ‘Greedy Corporations’ for Inflation. Blame the Government.

The worst inflation in over 40 years.

Prices for cars are rising by 37% Gas prices are up by 49%

As politicians spent increasing amounts of money over the years, experts advised us not to be worried.

Jerome Powell was the Federal Reserve’s chair. He said that inflation is “transitory”.

Janet Yellen (treasury secretary) stated, “I don’t anticipate inflation will be a problem.”

She says now, “I’m ready for retirement the word transitory.”

How did it go wrong?

“Big corporations have taken advantage,” says Rep. Ted Lieu (D–Calif.).

Sen. Elizabeth Warren (D–Mass.) Tweet: Sen. Elizabeth Warren (D-Mass.) It’s “price gouging.”

It is absurd.

In my latest video, economist David Henderson says that “Greed Is Constant”. How can we explain the prices if it is greed? The falling?” Why do oil prices plummet?

The supply-demand relationship affects the price of goods and services.

Henderson explains that inflation is caused by too many goods being chased and too little money. If the government is spending more money it means that they’re spending too much money on goods.

In recent years, the government has borrowed money from the Fed and used it. Much moreThere is more money. The national debt rose by $7.8 trillion under President Donald Trump. It has grown by $2.2 trillion under President Joe Biden in just one year. Biden wants to spend even more—a record $6 trillion this year.

How will they raise the money? The government has no money, and so it must spend more.

That’s exactly what they did in recent years. The Fed has printed more money in the last few years than any other institution, but this experiment is not yet proven.

The economy is losing money because of all the new money being pumped around. While you might notice price rises, inflation can cause damage to savings.

You can put 10,000 under your pillows, and 7 percent inflation will make it to $2342 in 20 years.

Too bad if your savings were for retirement. The majority of your savings will disappear.

Yet, today’s politicians desire to spend even greater.

Biden says his spending bills will reduce inflation

Henderson replies, “Biden is wrong.” It is not an economic theory that suggests prices will fall if the government spends huge amounts of money.

Many people would like government to prevent inflation and impose price controls.

Henderson says that would be “horrible.”

Before price controls had been tried. Nixon, the President of the United States ordered that all prices be frozen in 1971.

This sounded plausible. Too much inflation Inflation? Our intuition says that a price freeze can help. Henderson says that this is where intuition can go wrong.

False because prices don’t just represent money, they also contain information.

“Prices are signals…that guide people,” explains Henderson. You’ve really screwed up the economy if you do that.

The price changes indicate to buyers which products to buy and to sellers which ones to avoid. The price of facemasks increased sharply after COVID-19. Producers made even more immediately. New Balance moved from manufacturing footwear to mask-making.

Flexible pricing allows suppliers to make the goods that customers really want.

COVID-19 disrupted supply chains, causing some product shortages.

Prices controls could make shortages even worse.

There was a shortage of gasoline soon after Nixon frozen prices. I searched for fuel stations with it, and wasted gasoline, as I drove about looking for them.

Henderson states, “Price controls make it seem really cold. I will solve the problem by breaking my thermometer.” It’s worse because the temperature doesn’t drop, but price controls can cause shortages.

Venezuelan price controls have led to food shortages. But inflation kept getting worse. Inflation at 270 percent and 700 percent respectively, then finally to 400,000 percent!

It’s difficult to stop inflation once it starts.

Zimbabwean President Robert Mugabe could not collect enough tax revenue to finance his extravagant plans. So he created more money.

A few more years later, Zimbabwe began printing. 100-trillion dollar bills.

We haven’t seen such drastic inflation. Because the Fed recently reigned in, it is unlikely that this will happen.

However, Democrats and Republicans are eager to spend more. could happen here.