Inflation
First: E. Jean Carroll Won
her civil lawsuit against Donald Trump for sexual abuse and defamation of character. She was awarded $5 million in this unanimous verdict. I hope she publishes a picture of the check.
Trump responded to the verdict on his imitation of Twitter, “I have absolutely no idea who this woman is. This verdict is a disgrace — a continuation of the greatest witch hunt of all time!”
Might be, but it’s sure great when a witch hunt uncovers and punishes an evil witch.
While it doesn’t always happen on the timetable we’d prefer, what goes around often does come around. Watch for this same sentence following each of the guilty verdicts against Trump.
Now On To Inflation
Ever since we started fighting inflation following the pandemic I’ve wondered about how this has been handled.
First there was the supply chain craziness, with container ships anchored outside our ports unable to unload because there weren’t enough trucks to move the goods, so supplies of many things shrunk. That was made worse by our decades long insufficiency of truck drivers. And all of that was just a small piece of worldwide supply challenges, including raw material shortages due to the Russian invasion of Ukraine.
That was happening as we were coming out of pandemic lock downs. Those kept us from consuming as we did before Covid and that caused a pent up demand for goods – stuff we like to buy. Once the pandemic was receding and lock downs were over, demand became un-pent up and soared.
Let’s see: greatly increased demand occurring at the same time we had greatly constricted supply . . . PRESTO! Adam Smith’s invisible hand shoved prices way up. That’s called inflation, but it was made worse.
At the same time those things were happening our oil industry started raising prices faster than anything propelled upward by that invisible hand. That has often been labeled “price gouging.” Gas prices at the pump rose day and night, even though there were no oil supply shortages or supply price hikes of any kind to justify those prices at the pump. The result was huge profits – some would say windfall profits – for the oil producers and a huge financial hit to ordinary people every time they filled their gas tanks. And gas was a major player in spiking inflation.
Click me
The Fed is limited in what it can do to counter inflation. Its most powerful, albeit indirect, tool is to raise interest rates. Doing so makes borrowing, and really everything, more expensive, so demand drops. That’s the theory. And that’s what the Fed has done. Over and over.
This year the Fed rate went from near zero to over 5% in short order. Sounds great for fighting inflation, but along with the decreased demand due to higher prices came job layoffs, small business disruptions and a stick in the spokes of the wheels of new construction. Workers were laid off.
In other words, the pain of fighting inflation has been dumped entirely onto the backs of we ordinary folk and the pain for some of us has been enormous. But that isn’t the only way to fight inflation.
Government can create price controls to stop the gouging by industries that are reaping huge rewards just because they can get away with otherwise unjustified price increases.
Yes, I know that’s heresy to our absolutist market economy proponents, but this isn’t a pure market economy and it never has been. Example: we have rules to prohibit monopoly. Not the board game. They’re called anti-trust laws and they are designed to protect competition, smaller businesses and consumers from unfair monopoly power.
Another example is that we subsidize fossil fuel companies with the depletion allowance, farmers with gimme money and many more. More on that in a future post. Politicians may bloviate about the free market, but they’re all too happy to deliver non-free market paychecks to their constituent corporations and benefactors.
We know that people will act in accordance with their perception of their best interests. That alone led to the profiteering of oil companies and others in different industries in this opportunistic environment of overall rising prices. In some industries that becomes moderated by buyers choosing to refrain from buying overpriced goods, perhaps switching to cheaper alternatives. But that’s nearly impossible to do in some areas. People need to fill their gas tanks for all the usual reasons, like getting to and from a job, regardless of the price of gas.
It’s much like the hospital bill for heart surgery. Nobody decides not to get life saving healthcare and instead decides to die because of the price of the service. Healthcare and fuel are examples of inelastic demand, in that demand doesn’t adjust much based on price.
So, we can impact inflation by reducing demand by means of raising costs, which is what the Fed has done. That also causes workers to lose their jobs. Or we can impact inflation by controlling certain prices, which cuts corporate profits a bit. Perhaps there are other things government can do. But I can say with certainty that even as the fat cats aren’t listening to them, the people who are shouldering the bulk of the burden to fight inflation now aren’t any too happy about things as they are.
Quote of the Fiscal Year
- “We shouldn’t even be talking about a world in which the U.S. doesn’t pay its bills. It just shouldn’t be a thing.”
- – Jerome Powell, Federal Reserve Chair
- Note: If Biden were to submit to Republican extortion over paying our debts, he would be dooming us to extortion in every year to come.
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In Other News
There’s a test strip that can identify contamination with fentanyl in drugs like heroin. Because fentanyl is such a powerful drug and is so often lethal, being able to test for its presence can be life saving (as in: death avoiding) for users. But tough-on-crime legislators (read: Republicans in red states) have insisted upon seeing these test strips as illegal drug paraphernalia and have criminalized them. That seems to be changing.
Several states are decriminalizing the test strips. Indeed, there appears to be a shift from criminalizing illegal drug users to harm reduction. That will put a dent into the number of users going to prison and also the number of users going to graves. Here’s what’s interesting about that.
Over 100,000 Americans die from illegal drugs every year and over 67,000 of those are from fentanyl. There is a significant change, though, in the population that dies from overdoses. Now opioids are used a lot more and many more White people are dying from drug overdoses.
I’m sure that shift in the race of the corpses is unrelated to red states’ drug policy changes. Aren’t you?
Today is a good day to be the light.
______________________________
- Our governance and electoral corruption and dysfunction and our ongoing mass murders are all of a piece, all the same problem with the same solution:
- Fire the bastards!
- The days are dwindling for us to take action. Get up! Do something to make things better.
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JA
Copyright 2024 by Jack Altschuler
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