Inflation is not the act of businesses raising prices. Inflation is the act of increasing the supply of dollars faster than the economy is growing.
This opinion has been updated.
Affordable housing. It’s the disease that is never cured.
And now it’s like a pandemic virus, spreading uncontrollably and taking an ever-greater toll — not on the elderly with comorbidities, but on healthy 20- and 30-year-olds.
When the Economic Development Corp. of Sarasota County surveyed its members recently on their top concerns, the issue that topped the list for business owners and CEOs: affordable housing for employees.
Indeed, in our own company’s case, we have had newly hired employees from out of town unable to find livable, safe, affordable and available apartments — and then decline to take the job. Existing Observer associates are experiencing 30% increases in their monthly rental rates.
This problem is especially acute in the city of Sarasota, but it is spreading regionally and happening all over the United States. It’s not the perfect storm; it’s a horrible storm.
Why? As President Joe Biden, Vice President Kamala Harris, White House Press Secretary Jen Psaki, Sen. Elizabeth Warren, Sen. Bernie Sanders and the rest of the D.C. dopes would say: It must be those greedy landlords. They’re like the meat conglomerates, oil companies and grocery store owners.
The whole lot of those D.C. imbeciles always blame the rising prices that follow inflation on what Sanders’ tweeted: “corporate greed, collusion and profiteering.”
They never, never, never take responsibility for their own actions.
They are to blame for all of the rising prices. No one else.
But they are clueless that inflation is not the act of businesses raising prices. Inflation is the act of increasing the supply of dollars faster than the economy is growing.
Apartment landlords aren’t the bad guys, nor are the oil company executives, beef packers or grocery store owners. Take the apartment owners:
For the past two years they endured COVID-19 forbearance policies forced on them by Washington. They were forbidden from collecting rent from many of their tenants while still having to pay their mortgages and maintenance and operating costs. Now landlords are trying to recover lost ground — pushing through three years of rent increases at once and at the same time inflation is raising the cost of everything.
Greed? You mean all these businesses all of a sudden just decided to become greedy? How dense can they be in Washington?
What did the Washington politicians think was going to happen when the federal government printed $5 trillion of new money and handed it out to everyone in 2020 and 2021? All of a sudden people had money to buy at a time when there were shortages of goods. Demand outstripped supply. Duh. Prices go up.
The big question now is: How will the rise in prices stop?
The great economic journalist Henry Hazlitt (1894-1993) wrote a book published in 1960 called “What You Should Know about Inflation.” Chapter 6 is entitled: “The Cure for Inflation.”
On paper, the cure is simple. The politicians, however, don’t have the courage to do it. Hazlitt wrote:
“The cure for inflation, like most cures, consists chiefly in removal of the cause. The cause of inflation is the increase of money and credit. The cure is to stop increasing money and credit. The cure for inflation, in brief, is to stop inflating. It is as simple as that."
But then Hazlitt goes on to acknowledge reality: politicians.
“Let us begin with the federal budget. It is next to impossible to avoid inflation with a continuing heavy deficit. That deficit is almost certain to be financed by inflationary means — i.e., by directly or indirectly printing more money.
“The remedy for huge governmental expenditures is therefore not equally huge taxes, but a halt to reckless spending.”
Ha! Good luck with that. Hazlitt goes on:
“On the monetary side, the Treasury and the Federal Reserve System must stop creating artificially cheap money; i.e., they must stop arbitrarily holding down interest rates.
“The Federal Reserve System, if it is determined to halt inflation and to live up to its responsibilities, will abstain from efforts to hold down interest rates and to monetize the public debt.
“Inflation must always end in a crisis and a slump, and that worse than the slump itself may be the public delusion that the slump has been caused, not by the previous inflation, but by the inherent defects of ‘capitalism.’
“Inflation, to sum up, is the increase in the volume of money and bank credit in relation to the volume of goods. It is harmful because it depreciates the value of the monetary unit, raises everybody’s cost of living, imposes what is in effect a tax on the poorest (without exemptions) at as high a rate as the tax on the richest, wipes out the value of past savings, discourages future savings, redistributes wealth and income wantonly, encourages and rewards speculation and gambling at the expense of thrift and work, undermines confidence in the justice of a free enterprise system, and corrupts public and private morals.
“But it is never ‘inevitable.’ We can always stop it overnight, if we have the sincere will to do so.”
The chance for that? Zero under Joe Biden. Likewise, Federal Reserve Bank Chairman Jerome Powell does not have the guts of former Fed Chair Paul Volcker. Surely, some of you remember mortgage interest rates at near 20% in the early 1980s.
We are destined for another economic disaster that is indeed inevitable and can be stopped, but won’t be.
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