It doesn’t matter where you look. Everything we use costs more. The price of a gallon of gasoline is up 50% since this time last year. The price of energy in general is up 30% during the same time. The Energy Information Administration predicts the price of natural gas could rise another 30%, and heating oil 40%, during this winter. Perhaps more if we experience a cold winter. It will absolutely cost us more to stay warm this winter. Meat, eggs, and dairy products, cost 20-40% more today than last year. New cars cost 10% more, while used car prices rose 26% since last year. Inflation rose 6% from October 2020 to October 2021, representing the largest one year increase since 1990! Price hikes hurt a lot people. Unfortunately they are crushing lower middle class, and poor Americans.
We should all be tired of hearing the feeble excuses being given by the Biden administration concerning skyrocketing prices. Honest adults understand that reasons are different than excuses. There is only one Biden administration explanation that qualifies as a legitimate reason for higher prices. That is that the economy is picking up and people are spending more money. That is true, as far as it goes. The uptick in the economy, and subsequent inflation, seem to have caught our government brainiacs by surprise. It shouldn’t have. There is a simple definition of inflation, it is: Too much money chasing too few goods. With millions of Americans not working, where are people getting the money to spend? From the government. If the Build Back Better legislation is approved, our government will have dumped between 7 and 8 trillion dollars into the economy in just the last 15 months! This should have been anticipated.
Remember the most elementary lesson from Econ. 101. That is the law of supply and demand. It is basic, simple, and rarely fails. Starting last spring, because of COVID, our government put an immediate halt to the greatest economy in the world. Businesses were shuttered, factories were shut down, and multiple millions of Americans were put out of work. That put an immediate halt to supply. Federal programs, stuffed with trillions of dollars, were made available to sustain the innocent victims. That maintained the level of demand. Too many people began receiving government checks that were LARGER than the paychecks they earned while working. They continued receiving these outsized checks for many months, even as businesses and factories began to reopen. These checks continued stoking demand. Instead of going back to work, millions of Americans decided to stay home and play their new video games. This continued to constrain supply. People who stay home aren’t making products. One of the reasons, the government claims, for higher prices is that people have a lot of money and they are buying lots of things. When people with excess income, demand, chase products that are not being produced in ample quantities, supply, it creates inflation. The largesse being provided to slackers from a plethora of government agencies continues today. Until the incentive to stay home ends, the supply side of this equation will be problematic. Inflation will continue unabated.
Another pathetic excuse for higher prices came from our clueless Secretary of Energy, Jennifer Granholm. Secretary Granholm was asked if she had a plan to help the American people by reducing the price of gasoline. She laughed uproariously and said something about a magic wand. She insisted the problem wasn’t a U.S. problem. She said, “As you know, of course, oil is a global market. It is controlled by a cartel. That cartel is called OPEC.” That caused me to laugh uproariously. She is either a dimwit, or a liar. She was the Governor of my home state of Michigan for 8 years. I can tell you she is no dimwit. Of course it is a U.S. problem! The energy policies put in place by her boss have completely stifled oil and gas production in the U.S. When Biden was inaugurated, the U.S. had become energy self sufficient for the first time in more than 60 years. We were actually exporting fossil fuels! That excess supply kept prices low here and abroad. Because of Biden’s ill advised energy policies we are now, just 11 months after he took office, producing between 2 and 2.5 million fewer barrels of oil a day. This is a real reduction on the supply side of the equation. There has been a similar reduction in the production of natural gas. Combine that with the increase in demand created by businesses and factories reopening, and people traveling again, and what do we get? You guessed it, inflation. There will be continuing declines in production unless Uncle Joe regains consciousness and reverses his job killing, inflation feeding, policies.
There are only 2 groups who are not begging the President for relief from skyrocketing inflation. The first is the wealthy. Most of whom don’t pump their own gas, or go to the grocery store. They have people do that for them. They are not bothered that it costs them 40% more to heat their multiple estates, to fill up their fleet of expensive cars, or fuel their private jets and yachts. The second are the Biden apologists. These people refuse to recognize that Biden’s policies have anything to do with the sky high rise in prices. (By the way, these are the same people who believe our southern border is secure). Biden has a looming problem with this latter group. Most of them are not wealthy. Many are struggling with the crippling price hikes in every segment of our economy, just like those of us who are lucid. At some point they will stop defending the policies that are responsible for crippling their family budgets. They will seek relief wherever they can find it.
It’s not too late to bring inflation under control. We simply must address both sides of the supply/demand equation. Let’s look at how to get control of inflation on the consumer goods side first. 1. We have to stop dumping trillions of government dollars into this economy. As mentioned earlier if the Build Back Better bill is passed, the government will have approved between 7 and 8 TRILLION dollars of government spending in the last 15 months. That is an amount equal to the spending approved under the Obama administration in 8 YEARS. We must pray this ridiculous boondoggle gets defeated. 2. We can’t continue incentivizing people to stay home. If government checks get reduced, or stopped, people will return to the workforce. Those workers will begin producing goods again. Supply will increase. As supply and demand begin to align, prices will start to recede.
We can begin to reduce the costs of energy with a couple of simple decisions. 1. Biden must reverse the Executive Orders that reduced production of oil and gas all over the U.S. 2. He must remove the restrictions he put in place that hinder energy companies from exploring for, and drilling, new wells. It takes months, and millions of dollars, to replace depleted wells. We can’t expect companies to expend the time or the money if they believe they have little chance to recoup those expenditures. As existing wells come off line they will not be replaced. Every group responsible for measuring future energy needs agree that the demand for energy will continue to increase. Given this scenario it is axiomatic that the cost of energy must go higher. 3. Biden needs to reinstate construction of the Keystone XL pipeline. These are simple decisions if you are a normal person. Not when you are a politician. Politicians abhor admitting their mistakes. Even if in so doing it would help the American people. I can’t see President Biden following any of the above recommendations.
I said earlier it is not too late to rein in the horrible inflation monster. But there isn’t a lot of time. I also understand the fixes are not exactly as simple as I wrote. They are good starting points. Once inflation rears its ugly head, and gains traction, it starts feeding on itself. It can easily get out of control. It is time for us to demand that our representatives stop dumping money we don’t have into the already raging inflation fire.
I hope you found this post interesting and/or informative. If you did please tell your friends about it. Thank you, Bob