The Drama Behind the Inflation Story
We spent the four years before President Joe Biden took office in a drama-laden dystopia authored by an incompetent, irresponsible president. America’s press became so addicted to the reality show aspect of a man who had more lies than answers that real stories gave way to Kabuki theatre. Chasing the inflation numbers avoids the story of how over a year-long health pandemic, disastrous tariffs on imports, the loss of tax revenues, and avoidable job losses affected inflation. Most important to the scenario is big business’s purposeful raising of prices using the real but convenient excuse of supply chain shortages. Retailers have decided that the best way to recover profits quickly from the pandemic downturn is to stretch the limits of price hikes betting that consumers will go along.
“We have not seen any material reaction from consumers,” P&G finance chief Andre Schulten said last week, referring to a string of price increases that went into effect in September. “So that makes us feel good about our relative position,” reporter Sharon Terlep wrote in the Wall Street Journal on October 24, 2021. Price increases have been on the rise since September and because the trial balloon floated, expect companies like Proctor and Gamble and Nestlé SA, two of the world’s biggest suppliers of consumer goods, to continue price hikes into mid-2022. I am not sure where I heard it and pardon the bastardization, but prices are like stamps; the people will pay whatever you ask because they have no choice.
Sure we will grumble and harrumph, pay the prices and wait for the press to tell us to whom we point a finger. AAA predicts a 13 % travel season increase to near pre-pandemic levels. Over fifty-three million of us, including me, will hit the roads, skies, and railways going over the river and through the woods to feast on turkey and fixings with family and friends. About 90% of us will travel by car, despite the average gas cost being up a dollar per gallon. Presidents have negligible influence over short-term gas prices than almost any other industry in America, aside from tapping into the strategic oil reserves. I may be naïve, but Shell oil reported a revenue loss from 2019’s 16.5 billion to 4.85 billion in 2020, a 71% drop. The apparent reason was lower demand, so what happened to the oil stockpiles if that is the case? With this year’s higher demand, lower prices should accompany market demand, not higher prices, unless we place blame where it should be, supply manipulation by oil companies.
Of course, my simplistic view leaves room for more complicated analysis, but the fundamentals of any business remain the same, supply and demand. Amid the Covid-19 pandemic, the former President reportedly intimidated the Centers for Disease Control to adjust their numbers for political purposes. That manipulation put us behind the world’s recovery and consequently did irreparable economic damage. Recently we found out that Mr. Trump not only sabotaged his administration with his ineptitude and ego, but a holdover from his regime, William Beach, head of the Bureau of Labor Statistics, underestimated Biden’s job growth recovery summer by more than 600,000 in 2021 from June through September—Draw your own conclusions. America’s press needs to reset its radar and look below thirty-thousand feet a lot is going on at lower altitudes.
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