MCViewPoint

Opinion from a Libertarian ViewPoint

Prices rising? Guess whose fault it is

Posted by M. C. on March 24, 2022

It’s worth recalling: the United States became the world’s greatest industrial power at a time of generally falling prices.

Incidentally, don’t let them convince you that the rise in other prices is being caused by the rise in oil prices. That’s an easy fallacy to fall into, and (not coincidentally) it serves to divert responsibility away from them.

Here’s why it’s wrong.

Tom Woods

Now that prices are rising, the lizard people are devoting time they once spent writing nonsensical things about COVID to writing nonsensical things about price inflation.

Of course they’re blaming it on anyone and everyone but themselves. Oh, it’s Russia (even though these price trends began before Russia had taken any military action in Ukraine), or it’s corporate greed, or it’s actually a sign of a robust economy!

Actually, falling prices generally indicate a robust economy.

In an economy with a stable or slowly increasing money supply, this is what happens:

Business firms invest profits into capital goods, which make possible the production of an ever-greater quantity of consumer goods.

This greater productivity, yielding a greater supply of consumer goods, pushes prices down and increases everyone’s real incomes as a result.

That ten dollars of yours, instead of buying a hat, now buys you a hat and some socks.

We don’t observe this phenomenon of productivity-driven price decreases anymore (except in particular sectors like consumer electronics) because it is obscured by the constantly increasing supply of money, thanks to the Fed.

The point is: falling prices are generally a sign of a progressing economy that is investing in capital goods, becoming more productive, and producing more goods less expensively. A general rise in the price level, by contrast, doesn’t necessarily indicate any such thing. It indicates only that the central bank is creating money, which in itself doesn’t improve our standard of living at all.

It’s worth recalling: the United States became the world’s greatest industrial power at a time of generally falling prices.

Incidentally, don’t let them convince you that the rise in other prices is being caused by the rise in oil prices. That’s an easy fallacy to fall into, and (not coincidentally) it serves to divert responsibility away from them.

Here’s why it’s wrong.

People have only so much disposable income. If prices at the gas pump go up, people don’t suddenly have extra money to pay those higher prices and also keep up the rest of their usual consumption. Something has to give. If they continue to buy as much gas as before, then they have less money now to spend on other things, and that in turn puts downward pressure on the prices of those other things. So it’s a wash.

The only way for all prices to rise, therefore, is for there to be an increase in the supply of money that can keep all those prices high simultaneously — and in the present system, only the Federal Reserve can do that.

So the present problem is caused by the Fed, period. No other alleged cause makes any sense. (If “corporate greed” were the issue, why weren’t those companies greedy a year ago? Why do they suddenly stop being greedy?)

Bloomberg is recommending, as advice for navigating rising prices, “Don’t buy in bulk.”

Now that’s some dumb advice.

If you expect the price inflation to continue, of course you want to buy in bulk in order to lock in present prices. Better to be in real goods (i.e., not money) than in a money you expect to keep losing its value.

We went from “there is no inflation” to “there’s inflation but it’s ‘transitory'” to “inflation is good for you” to “inflation is caused by Russia” pretty fast.

As always, the regime wants to divert the blame from itself onto something else, and it’s hoping you’re enough of a dope to blame “greedy rich people” instead of them.

The best rule of thumb, as we have learned through hard experience, is: don’t trust a word these people say.

Even better than that: don’t trust them even when they’re silent.

This week I’ve been on an Internet privacy kick — I’m the exact kind of person the bad guys would want to destroy, so why hand them what they want on a silver platter?

There are simple things you can do to improve your privacy right away, and our old friend Glenn Meder is going to walk us through five of them tomorrow night.

Don’t trust these people. Reserve your spot at the link below, and I hope to see you there:

http://www.tomwoods.com/privacy
Tom Woods

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