Why Do We Have Inflation?
May 12, 2021 12:55pm
This morning, the Bureau of Labor Statistics released the Consumer Price Index figures for April 2021. They showed a leap of a whopping 4.2% over April 2020. It was the biggest annual jump since September 2008 during the financial crisis.
Some economists tried to shrug off today's report as an invalid comparison because 12 months ago we were in a pandemic shutdown; never mind that in many blue states we still are. But even the month to month CPI increase was 0.8% which, if annualized, would be a little over 10.03%. And that month over month gain was the highest in forty years. Since 1981!
Today, I analyzed five years of commodity price data. While it is true that most prices were unusually low one year ago, they are still at historic highs now. Here are a few examples of how some commodity prices have increased over 12 months:
Crude Oil +143.56%
Gasoline +55.24%
Diesel +25.55%
Coal +84.25%
Copper +84.3%
Steel +120.51%
Aluminum +69.83%
Lumber +162.21%
Beef +30.16%
Poultry +77.72%
Wheat +12.71%
Corn +48.63%
Sugar +76.57%
Milk +20.83%
Coffee +40.32%
Cotton +52.26%
I hate to be the bearer of bad news, but it will get much worse.
Only Democrat politicians and the economically illiterate say inflation is caused by greedy millionaire business owners raising prices so they can make even higher obscene profits.
The textbook definition of inflation is an increase in the money supply without a corresponding increase in goods and services. So the government's $4.8 trillion in so-called "coronavirus relief spending" ($2.0 trillion in March 2020 + $0.9 trillion in December 2020 + $1.9 trillion in March 2021) has poured massive amounts of fiat money into an economy that did not grow anywhere near the rate of increase in the money supply. Have you seen the March 2021 M1 chart? It nearly tripled in 13 months! See the chart in the photo above.
That is a recipe for near-term euphoria and long-term devastation. It's like partying with a credit card. Everyone's having fun until the bill comes due. We need to quit this ridiculous and dangerous spending and get the country back to work by terminating unemployment bonuses and ending the lockdowns that still exist in so many Democrat-run states.
But the Democrats are calling for more welfare spending and $2.25 trillion in additional spending (with more fiat currency) for the deceptively labeled infrastructure bill. It's as if the Democrats WANT to destroy our country.
Oh, wait. They do. It's called the Cloward-Piven Strategy; something the Democrats have been aggressively pursuing since the late 1960s.