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The Political Uses of Inflation

Confusion plays a major role in politics, much of it intentional. The variety of confusion is more various and destructive in the modern period. Benjamin Disraeli is reputed to have said, “There are three kinds of lies: lies, dammed lies and statistics.” Lying, as he understood it, has been much improved since the late 19th century.  

By way of example, take the mass confusion surrounding inflation. The tendency in modern politics is to confuse the general public by conflating inflation and high prices. Though increases in the price of goods and services and inflation – a product of government spending, borrowing and currency devaluation – are related, they are not the same.

Inflation is caused when the federal government prints and borrows money, thereby reducing the purchasing power of the dollar, therefore making goods and services more expensive. The classic definition of inflation is: too many dollars chasing too few goods. When the federal government over a long period of time prints too many dollars or borrows too much money to pay for improvident spending, the purchasing power of the dollar is commensurately reduced, and it will take more dollars to purchase the same amount of gas that, years earlier, was far less costly.

Making a sharp distinction between inflation and price increases helps us to understand why President Joe Biden and most Democrats are wary of talking publically about inflation. Just at we regard Typhoid Mary as the precipitating cause of typhoid, so we may regard Democrat big spenders as the precipitating cause of inflation.

The word “inflation” does not fall trippingly from the tongues of any of the seven Democrat U.S. Congresspersons in the Connecticut’s U.S. Congressional Delegation.

Why not?

The answer is disarmingly simple: inflation is a creature of political flimflammery, and a price increase is a creature of a public marketplace reacting reflexively to the flimflammery.

Inflation, the reduction of the purchasing power of the dollar through the excessive borrowing and printing of currency by the federal government to pay – or not to pay, as it pleases the government – outstanding debt, is wholly and preeminently a political choice.

Price increases, on the other hand, are the result of economic choices sometimes forced upon businesses through excessive taxation, regulation and free market disturbances.

Neo-progressive legislators – Bob Duff and Martin Looney in Connecticut are two prime specimens – find it expedient during election periods to condemn redundantly rich CEOs for acquiring excessive profits they then stuff under their high priced Sferra Utopia Eiderdown Medium Pillows – Cost  $4165.00.

Shouldn’t these CEO grifters be sent to a Gulag?

This is not the way the free world works. Profits across the fruited plains are used by companies to cover the costs of production, to pay workers’ wages and salaries, to produce new products in an expanding economy, to contribute, sometimes lavishly, to state and national treasuries, and to shuttle campaign offerings to precisely those politicians who are hobbling businesses.

Recently, Senate Majority Leader Bob Duff and Senate President Pro Tem Martin M. Looney, both Democrats, have enlisted the help of Connecticut’s Democrat Attorney General William Tong in intimidating Connecticut grocery businesses.

The duo “plans to seek expanded authority for the Attorney General to investigate profiteering throughout the food supply chain, from distributors to producers. (Currently, Tong’s authority to conduct such inquiries only extends to retailers.) The expansion will be proposed as an amendment to Senate Bill 3, which calls for several changes to consumer protection laws, Democratic leaders said,” according to a recent piece in the Hartford Courant.

In a neo-progressive economy, only government will be allowed to expand and earn excessive profits – i.e.  surpluses.

Martin Looney, the Bernie Sanders of Connecticut politics, tells us, “There seems to be some indication that the price of groceries has stayed artificially high in the wake of [the pandemic] even though the crisis justification for it has passed. So it’s another case of corporate opportunism to add to profits at a time when it’s really not justified.”

A compassionate Tong is on board with the extension of his power and authority, “Every single day, people in Connecticut, families are getting squeezed,” Tong said. “Our job, collectively, is to push back on that squeeze and to give Connecticut families just a little bit of breathing room.” Reducing taxes on Connecticut families through spending reductions has never been for Tong a useful means of giving Connecticut families breathing room.

Inflation marks the gap between the United States’ Gross National Product (GDP) and the nation’s accumulative debt. When state and national spending per year exceeds state and nation’s GDP, inflation, the devaluation of the nation’s currency by a government that prints and borrows money to fill the gap, increases. Despite continuing assurances from big spenders that inflation has been tamed by ringmaster Biden, the annual inflation rate in the United States prior to the possible reelection of Biden is about 4.1%. The cumulative inflation rate is about 18%.

Inflation can be painfully diminished only through tax increases, the bane of most politicians who find themselves in the heat of an election campaign, or spending cuts or both. Because it is a hidden tax, inflation – always is a hideous, thief in the night.

Tong cannot control the retail prices and services. He can, and should, advise his state and national governments to discharge their debts by reducing spending and augmenting the political courage necessary in our too confusing economy to permanently settle the imbalance between the state and nation’s GDP and the state and nation’s debt.

Political problems such as inflation demand political solutions. And price increases, like any market problem, should be settled by self-correcting free and independent buying and selling arrangements. Freedom and liberty allow more breathing room to citizens than does the incubus of high taxes, imprudent spending and a busybody attorney general. 


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