Government Greed Caused Inflation, For the Record

by | May 24, 2022 | Headline News | 9 comments

This article was originally published by Hannah Cox at the Foundation for Economic Education. 

Government policies fail and create problems in the real world every day. But most Americans are so busy in their daily lives and so detached from the political system that they do not notice…or at least they don’t know enough to point to the root of the problem.

Such is not the case with the current skyrocketing inflation, which has gotten everyone’s attention. Gas is topping $7 per gallon in some regions. Beef prices are up 20 percent since last year. Meanwhile, rent jumped an average of 14 percent across the nation. Americans of all political persuasions rank inflation as the most pressing problem they face, and many are demanding answers for why they are suddenly unable to afford rent or buy meat. Rightfully so.

While there’s a shortage of basic necessities in the country, there’s also a shortage of actual leaders in DC who will take responsibility for the failure of their ideas. Instead, we see a bunch of elderly representatives essentially trying to say that their dog ate their homework. While Democrats have tried to blame Putin, “ultra-MAGA” supporters, and other random strawmen for the inflation, it seems most are beginning to coalesce around the weakest scapegoat of all: corporate greed.

This is a convenient narrative for a party whose ideas rely on the demonization of success and class warfare. But there is absolutely nothing to back up such claims.

As Senator Rand Paul (R, KY) and many others recently pointed out, companies and business leaders did not just all of a sudden become greedy in the past two years.

The persistence of this line of attack reveals a few things. First, it shows these people are not interested in getting to the root cause of inflation or preventing it from occurring again.

For those unfamiliar with the real causes of inflation, there’s actually a basic recipe that tends to repeat in cycles in the US. The government gets greedy and wants to live beyond its means, promising all manner of special favors and services in exchange for votes that enshrine the political power of politicians. They pass spending bills we don’t have the money to afford. And then, in response, the Federal Reserve prints new dollars. This leads to more dollars chasing fewer goods—fewer goods, in this case, thanks to lockdowns, trade wars, and tariffs that have stagnated the economy. Boom, inflation.

It is unsurprising that the left and many on the right do not want to cop to this fact and discuss the true causes of inflation. It is, after all, their pet projects that created the problem. Instead, they’re still trying to convince Americans that legislation like the $1.9 trillion “American Rescue Plan” helped Americans. (It actually kicked inflation into high gear).

Besides being a flagrant attempt at hoodwinking the American people, the narrative that corporate greed led to inflation also reveals an even deeper problem with the left’s ideology: these people have no idea how markets work or what conditions actually create prosperity.

Corporations and individuals should be driven to make money, that’s a positive incentive under capitalism. Profit-seeking ensures companies stay afloat, are able to provide goods and services people need, and provide consistent employment. It ensures our GDP continues to grow, that we see more innovation and competition, and ultimately, as a result, we continue to see our quality of life improve.

As Adam Smith famously pointed out in The Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Capitalism mandates that in order to make a profit, corporations and entrepreneurs must provide a valuable service or commodity to society in order to succeed.

This is what ultimately makes capitalism the most moral system. It recognizes that human nature is self-interested. And it finds a way to wrangle that reality and direct it in a way that actually benefits everyone.

It is silly to be mad at corporations for wanting to make a profit. But in this case, it’s actually demagoguery meant to convince the masses to carry their pitchforks to the wrong castle.

The blame for inflation should be laid directly at the feet of the federal government. Don’t let them distract you from that.

Inflation is Running at 40-Year Highs!

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    9 Comments

    1. Anonymous

      Taxes to pay off government debt reduces inflation by removing money from general circulation changing the money/ goods ratio.

      Taxing the rich only removes money from the sectors where the rich spend (invest) their money, not from general circulation so it has little effect by itself, especially if the government, instead of paying off debt with it, re-spends it into the general circulation where it ends up causing inflation.

      Essentially, government debt and how it is handled is at the root of inflation.

      • Frank Thoughts

        On top of this most of the rich don’t pay taxes themselves. They file a zero: they file their taxes but they use every legal route available to reduce their income to zero. When their income is zero, the amount of tax they owe is zero.

        Be smart and learn how they do it.

        The wealthy spend vast sums getting legal advice that works. Follow what they do. Don’t fight the government (they have much more power than you can ever marshal). But you can benefit by following the rules they write for the rich.

    2. Between Three Centuties

      All of the problems that the American people are suffering under were caused by one man, and that POS is Mike Pence. He could have decertified the election and he would have been a hero. But he is a fake Christian and a coward. It has now been shown that the people were right all along about the election and him. His actions may result in the destruction of the whole world and he may be remembered as the Antichrist.

      • YEAH RIGHT LOL

        YOU PEOPLE DON’T GET IT THERE IS NOT A GOVERNMENT BUT AN ILLUSION. IT TOOK ME A LONG TIME TO WAKE UP TO SEE THIS WAS NEVER A GOVERNMENT BUT A CORPORATION. I SAY THE HECK WITH THEM ALL. BECAUSE IT’S ABOUT COMING OUT OF THE BEAST SYSTEM THAT IS STILL BLIND FOLDING PEOPLE WORLDWIDE

      • Anonymous

        What specific language in the Constitution gives the Vice President the authority to decertify the election?

        What part of it makes the Vice President the one that selects the President by overriding the vote of the Electoral College?

        And remember, I asked for specific language, not a bunch of twisted conjecture pretending the words and phrases mean something other than what they clearly say.

    3. Frank Thoughts

      Governments pursue policies, not individual interests. Policies and politics always come before economics or individual liberties. For example, the Vietnam War, which was a war to contain China, was fought at all cost to the point it bankrupted the US. At that point the US government unpegged the US dollar from gold and created the petro dollar.

      The Cold War, to contain the Soviet Union, was fought at all costs, including arming the crazy jihadis in Afghanistan. On September 11, 2001 that policy created blowback.

      Since 2001 we have been in the war on terror, which has now morphed into a global new cold war. Either of these conflicts has been fought at all costs. And the result is always inflationary.

      We have a new generation of proxy wars – Yemen, Ukraine, Syria, Lebanon, Mali, Somalia – and these will cost a ton to keep going. All good for Raytheon, Lockheed Martin etc. and the politicians who write the checks.

      • Anonymous

        All of these things are the result of progressively ignoring the clear meaning and intent of the Constitution for the last 75 or so years.

        There is no way to correct this, prepare for more.

    4. Darth Skippy

      greattrib.com/geo-political/10-planks-communist-manifesto-america

      The argument is not against the 1% of entrenched elites but against the 99% of demoralized betas whose work is turnkey.

    5. Genius

      This is all bullsheet. It is the plan in fruition of the NWO. Tank the dollar and make yer buddies rich so they can buy what they want while they can with dollars. The dollar is going down and the plan is to escalate that devaluation asap. The sheep eat shit and the “club” makes out buying gold or whatever to come out unscathed on the other side. A 6th grade kid can see this ffs. Its just the NWO stepping on the gas pedal. Greed? Not so much as positioning for the great reset. The author needs to grow a brain and see what it really is! You will own nothing and be happy (if you survive what they have planned for you). Politicians are just tools for the real masters, if you think otherwise your a moron….

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