Inflation: A non-economist view

Richard Koritz
Posted 2/22/22

Inflation: A non-economist view

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Inflation: A non-economist view

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I’m one of those guys who is on a pension, drawing social security and working part time. I’m not broke, but my dollar isn’t buying what it used to.

Gasoline is a killer. Groceries have gone way up. I certainly don’t blame the local vendors that are passing their costs along.

The current annual rate is now at 7.5 percent. I don’t see income matching that rate. The public is simply hurting. What concerns me is the national direction. COVID appears to have a great bearing on all of this. Both Trump and Biden have had to deal with an unprecedented public health crisis. No one really knew how to deal with it and both appear to have done the best they could have done. With the conflicting medical advise both presidents received, one can empathize with their decisions.

Regardless, COVID shut down much of the economy and screwed up supply and demand. COVID has a bearing on current inflation. The demand for services was still there, but many of those services were not available due to COVID restrictions.  COVID  seems to be receding and that will help the economy and inflation.

Both presidents took the position that they could buy the country out of the financial crisis that ensued with the COVID lockdowns. A short term loan after a crisis can be a very positive occurrence for either a family or nation in distress.

The problem is that you can only live on borrowed money for so long and then you have to either pay it back or you get shut off from the money.

What hurt the economy was throwing out all of that federal money. There were no goods or services to back up the money. The government simply printed the money and gave it to us, businesses and state and local governments. It was great for a few months, but the money has to be repaid.

Many will say the government has forgiven those loans. That is both a truth and a lie. An individual loan may have been forgiven, but the government still has the debt. For you and me that means increased taxes at the federal level. The federal government simply put too much money into the coffers. When you have an excess of “cash” available, that money actually decreases in value. When the dollar has a reduced value you get a main cause of inflation.

That short term assistance also had a bearing on the labor market. People were getting more money to be unemployed than if they were working. It is very natural for people to say why work, if the government is going to pay me to sit on my backside. I get their position, but it is troubling to those who believe one has to work to make it in this world. It is going to take a long time for this country to work itself out of the debt it incurred from the COVID stimulus money.

Add to COVID was Biden’s dislike of Trump’s oil and gas policies. With Trump we had become a net exporter of energy. Biden changed that with stopping the Keystone pipeline construction and greatly reducing oil and gas leases on federal lands. The government slowed production as the public increased demand. Costs rise on the basic law of supply and demand. Today the Biden administration is asking the Saudis to increase production compensate for our lack of production. The logic of the administration’s position makes no sense to this country boy.

Russia’s economy is based to a large extent on its oil production. Today, Germany has almost completed its pipeline to Russia oil deal. Russia is now very aggressive as it finds itself on the energy power seat. Russia is flexing that power in Ukraine and Germany is losing power as it has no energy. The U. S. could have met that European demand for energy, but the administration curtailed American production by its policies. The end result is that prices go up and we may soon be looking at $7/gallon gas prices. For rural America that will be catastrophic. Urban America will feel the increase also in the increased costs that farmers and truckers will pass on for the goods and services they produce and transport.

For those of us who remember the gas lines of the 1980s and the absurd interest rates of that time period, there is a fear of history repeating itself. America has the resources to feed, clothe and house its citizens, provided we are stewards of those resources.