The lead story on CNBC’s Fast Money Show Wednesday was about Dollar Tree.
That chain of low-cost stores, where you never had to ask the price – everything was $1 — is being forced to up prices to $1.25, $1.50 or more per item. The reason is inflation.
It’s a seminal moment for the inflation story, which has been under-reported and understated for several years, but now is gaining widespread visibility and acceptance
Our economic masters have been open about their pursuit of price inflation. This is despite the fact that there have been sustained periods throughout history with minimal to no inflation, as measured by rising prices and declining currency values, yet most were happy.
But the economic setup in 2021, with monumental debt loads both public and private, requires inflation to work out things in the long run. With inflation, those borrowed dollars get paid back with less valuable currency units. Debtors, the largest of which is the U.S. government, get bailed out by inflation and live to borrow even more.
The incentive to pursue inflation is great.
In an extreme case, the inflation graduates to hyperinflation, defined as price rises of 50 percent or more per month over a sustained time. Then debts literally are paid back at the rate of partial cents on the dollar.
But hyperinflation, as witnessed in post-World War I Germany, destroys a nation and its economy. Imagine the entire world beset by hyperinflation, which could happen since the U.S. dollar still is the world’s reserve currency and if we debase it to the point of hyperinflation, the world can’t remain immune to the problem.
This is the kind of pandemic no vaccine can halt.
It’s not like we haven’t seen sustained inflation since the Federal Reserve was created in 1913 to manage our nation’s monetary policy. You would need about $27.63 today to buy what a single dollar bought in 1913.
I’ve seen it happen. As a child of eight or so in 1963, I could buy a typical candy bar, Three Musketeers or Milky Way, for five cents. Almond Joy and Mounds were the high-priced stuff at 10 cents each.
These days, you are likely to play $1 for the candy bar. You shell out more in sales tax now than the bar used to cost.
Corvettes when I was in junior high school in the mid-1960s, right next to a Chevrolet dealership, were priced in the mid-$4,000 range. That isn’t even the down payment these days.
I could go to the Dale Theater as a young man for 35 cents (adults paid 50 cents).
The local newspaper was less than a dime a copy. Now it’s $1.50 on weekdays, $2.50 for the weekend edition.
People argue that while prices have increased, so have wages. This is true, but our tax system charges a higher percentage the more money you earn, so inflation is eating away at your lifestyle even if you are making more money.
For a time, families were able to combat this by having both the husband and wife work. Now that this is almost universally the case, should we put the kids out to work to make ends meet in the face of rising costs?
The Fed mouthpieces speak of “transitory” inflation, but that has no real meaning. As an English counterpart to our Fed members said today on social media “Transitory doesn’t have a fixed time point.”
The government admits to 5- or 6-percent inflation, and is expected to gift Social Security recipients approximately that amount in cost-of-living increase for 2022. But real-world inflation is much higher and, if economic policy continues on the current path of Biden insanity, 5-6 percent inflation fast will become the good old days.
It’s like Biden is Jimmy Carter II. The original Carter was a moral person, but a boob when it came to instituting policy as president.
Carter presided over double-digit unemployment and inflation, which meant he was swept out of office in the 1980 election by Ronald Reagan, before Democrats learned how to subvert the will of the people at the ballot box on a massive scale.
Now we have Biden, or his puppeteers, who are short on morality but long on the boob policy factor. You’re already being punished by Biden’s crazed energy policy. According to AAA, average retail prices for regular grade gasoline are at 7-year highs. That didn’t take long.
Biden and his gang of incompetents will continue to hamstring the economy, while ratcheting spending to the moon on all the various giveaway projects. It’s a recipe for rampant price inflation.
Dollar Tree held the line against price inflation much longer than reasonably could have been expected. But now the retailer has thrown in the towel, signaling that rising inflation is here to stay and you’d better get used to it.
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