We likely have only begun to experience the dangerous pattern of high inflation feeding on itself. Price increases of the current magnitude are something unknown in the lives of most of the public, and the trend of rising costs is proving stubborn.
Food prices were up 0.8 percent month-to-month despite a slight fall in energy prices, according to August’s Personal Income and Outlays Report from the Bureau of Economic Analysis. Consumer prices may have been up only 0.1 percent, as President Joe Biden made a point of touting on CBS’s “60 Minutes” last month, but it was paired with an overall inflation rate of 8.3 percent.
A large chunk of the public is apparently only dimly aware of the economic hazards surrounding them. For instance, the Gen Zer take on inflation is, naturally, self-absorption. One 25-year-old recently lamented to NPR: “I’m not going out to eat like I would like. I’m not hanging out with friends like I would like. It’s a Saturday night, and I’m here at home because it’s free.” The chances of individuals such as this holding the right politicians accountable are slim to none.
What is most frightening is the prospect of Washington continuing to “fight” inflation not only with more of what caused it, but with policies that will launch a chain reaction of sustained high inflation—or even hyperinflation—in the years to come. It will only end when we recognize that government is the problem and economic freedom is the solution.
This big-spender president, who loves to call himself a capitalist in an “only Nixon could go to China” kind of way, blames capitalism for today’s inflation, issuing in the wake of Hurricane Ian “a warning to oil and gas industry executives” not to “use this as an excuse to raise gasoline prices or gouge the American people.” This scolding comes despite the fact that a needle in a haystack is far easier to find than any evidence of the oil industry gouging consumers at the pump. But a public who is so ill-educated in basic economics upon hearing such bullying via the bully pulpit is likely to imagine hordes of greedy oil men itching to charge above-market gas prices—presumably the way they were doing two and a half years ago when the average price per gallon was under $2, or in the late 1990s when at times it was below $1.
These conniving billionaires charged an average of a little under $1.20 in the first half of the 1980s. However, they were still charging about the same in nominal dollars at the end of the 1990s—which, in inflation-adjusted terms, was a decrease in the price of gas of approximately 50 percent over that long-term period. If they’re Scrooges, they’re acting like the Scrooge after the visits by the ghosts, not before.
Unfortunately, some capitalists like to stick their designer alligator shoes in their mouths. Last month, William Meaney, the CEO of the Fortune 1000 corporate information management firm Iron Mountain, told stock analysts that he was “doing my inflation dance praying for inflation.” Several years ago, Meaney said much the same, that “I pray for inflation every day I come to work because … our top line is really driven by inflation” and “every point of inflation expands our margins.” In April this year, during an earnings call, the firm’s CFO, Barry Hytinen, had said, “We do have very strong pricing power,” and so for Iron Mountain, inflation is “actually a net positive.”
One irony here is that Iron Mountain’s clientele is no Joe Sixpacks. The company was founded in 1951 by a mushroom mogul who converted his fungus-growing mines and caves to storage facilities and convinced banks and other institutions to secure their vital records underground and well away from major cities that would be targets of Soviet nuclear attack. By the early 1970s, it was bankrupt, but after many acquisitions and reiterations, it now counts almost all of its fellow Fortune 1000 firms as clients. When your customers are that wealthy, high general inflation can mask it when you overcharge them.
Iron Mountain is obviously proud of such practices. Still, they doubly disserve their customers by lending legitimacy to the class warfare charges of greed so often launched against them, when the truth is that companies with customers of more modest means simply don’t succeed in a competitive marketplace when they ask too much for their wares.
Government profligacy; the resulting inflation; the passage of “inflation reduction” measures that are actually inflation expansion spending sprees; then the specter of tax increases from the Biden administration and Congress’s Democrat majorities, supposedly designed to soak the fat cats but which end up being passed down to consumers—the result is bound to be a dangerous inflation snowball that could go on growing for years.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.