The Root Cause of U.S. Inflation and Policies to Ease It

Understanding the current state of U.S. inflation involves delving into economic policies, corporate behavior, and government spending. While many have suggested various reasons for the rising costs, the true underlying cause is often overlooked. This article explores the non-traditional reasons behind inflation, analyzing the motivations of corporations and the role of government policies.

Understanding Inflation: Natural vs. Artificial

First, let's clarify the concept of inflation. Inflation is defined as 'a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.' However, it is widely debated whether inflation is truly an inherent economic action or a man-made phenomenon.

Economists often discuss two types of inflation: natural and artificial. Natural inflation arises when demand for goods increases, leading to price hikes based on the laws of supply and demand. On the other hand, artificial inflation is caused by regulatory measures, taxes, or supply constraints imposed by the government or other entities, which do not reflect genuine demand or scarcity.

Corporate Profit: The driving force behind inflation

A critical factor in fueling current inflation is the quest for egregious corporate profit. By examining the annual reports of U.S. registered companies, one can see the relentless pursuit of high profits. Corporations often manipulate the market through strategies that artificially inflate prices, making it easier to report higher revenue and profits. This practice not only benefits the companies financially but also contributes to rising inflation rates.

Government Spending and Currency Circulation

Another significant contributor to inflation is government spending. As more currency is printed and circulated, the value of each individual dollar decreases. This concept is rooted in the law of supply and demand: rare items have higher value than common, abundant ones. With the government printing trillions of dollars, the purchasing power of our existing currency diminishes.

Politicians often prioritize spending over fiscal discipline, as it enhances their power and influence. However, this short-term gain comes at the cost of long-term economic stability. By cutting government spending, the government could significantly curb inflation. Nevertheless, the political inclination towards increased spending often overshadows the need for fiscal responsibility.

Historical Context: The 1991 Inflation Journey to Russia

A pertinent historical example to illustrate this point is the 1991 trip to Russia by American businessmen. Their goal was to demonstrate to the Russian government how to initiate an inflation cycle. This event underscores that inflation is not a naturally occurring event but a tool that can be controlled and manipulated.

By understanding that inflation can be artificially created and managed, we can address current economic challenges more effectively. The key is to differentiate between natural and artificial inflation and work towards policies that prioritize genuine economic growth, fair competition, and responsible money management.

Key Takeaways

Current inflation in the U.S. is largely driven by corporate greed and artificial market manipulation. Government spending and currency printing contribute to devaluing individual dollars. Cutting government spending could significantly ease inflation. Historical economic events highlight the conscious manipulation of inflation levels by governments and corporations.

Ultimately, addressing the root causes of inflation requires a shift in economic policies and a greater emphasis on fiscal responsibility. Only then can we achieve a sustainable and stable economic environment.