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An opinion piece has been published on the Atlantic news platform positing that inflation is the fault of Americans. Is this the new narrative that the US government will now run with?
2% inflation is best for everyone
Everyone knows that inflation is a devil, and when it gets out of hand it can cause havoc for consumers as well as businesses. Central banks around the world have been printing currency with gay abandon for decades - isn’t this the real reason for inflation?
Perhaps it’s best to look at the mantra put out over many years by these same central banks, that 2% inflation is what is best for everyone. When you look at it, 2% inflation isn’t good for anyone, at least not for consumers. This equates to rising prices year over year. Even averaging 2% per year, inflation will rob an entire generation of half of its purchasing power.
Americans spend too much
The Atlantic article blames people for spending too much money. It says that over the Thanksgiving weekend “online shopping jumped 7.8%”, and that “sales of new cars, dishwashers, cruise vacations, and jewellery remained strong.”
The Atlantic article also made the following claim:
“People just have a lot of money on hand. More broadly, they seem to be less likely to change their purchasing habits in response to price shifts”
The author also wrote this:
“It should be good news that Americans are better off than they were pre-pandemic. It should be good news that people can afford more, even if prices are high. But then why is everyone so mad about prices?”
Readers don’t need anyone to pick any of this apart. It seems rather odd to think that ordinary people shouldn’t be mad at the prices they are being forced to pay.
Friedman tells it as it is
World famous economist Milton Friedman summed it up perfectly when he said:
“In the modern era, the important next step is to recognise that today governments control the quantity of money. So that as a result, inflation in the United States is made in Washington, and nowhere else.”
Neither the businessman, nor the trade union, nor the housewife have a printing press in their basement on which they can turn out those green pieces of paper we call money. Only Washington has that printing press, and therefore only Washington can produce inflation.
Inflation is an inherent part of the monetary system to which we are subordinate to. Therefore the consumer needs to look for a way to protect themselves. Bitcoin anyone?
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.