Tom Riggins: Everything is going up

How long can we continue to make excuses for rising prices? Oh, it’s just transitory. It’s just the normal operations of supply and demand. There are a few problems with supply chains, right? Stuff goes up in price, but look what happened with plywood, up one day and down the other. It will be the same with other things. Don’t sweat it.

It’s a mark of inflation that it does not affect all prices of all goods and services at the same rate. Excess money floating around acts like a heat-seeking missile, finding the popular thing and injecting its price-push energy on it, and then moving on to the next thing. If you are looking for some mythical inflation index to rise in tandem, you will never find it.

What is important is sector-specific tendencies in order to observe the effects of monetary policy on prices. Aluminum, for example, is up 10 percent year over year. Recycled aluminum is up 50 percent. This is absolutely crushing producers, especially those who give us canned drinks.

We normally don’t think that the price of drinks is impacted much by its packaging. The reality is that costs are affecting contents, packing, shipping, and marketing. All of that will be passed on to consumers. Perhaps it is time to stock up.

We didn’t notice effects on prices last year because producers were able to absorb those costs. They are no longer able to do so. And one reason is that prices are generally being pushed up due to the vast amounts of money that the Fed has dropped on the U.S. economy.

The same economic factors are hitting computers, steel, housing, education, groceries, gasoline, rents, hospitality, flights, and just about everything else too. We aren’t getting hyper-inflation yet, but we are experiencing a level of inflation that is highest in the memory of many. Remember the inflation of the 1980s? Many don’t. The Dollar
Store will be no longer be able to offer dollar prices on many items.

The stories about individual commodities going up in price hit and then disappear from the business pages, as if they are one-time events. Have you seen charts on the percentage change in the CPI year over year? We are looking at trends that are now higher than anything we’ve seen since the World War II! Why is this not significant?

It’s because this is politically explosive. The last time the American people dealt with such a phenomenon was 1979. No matter what else the Carter administration did in those years there was no saving the administration from disgrace. Inflation tends to discredit governments no matter what else they do.

This is what we are looking at today. An already weak Biden administration will be dealing with an insoluble problem. The mainstream media remains traumatized by the Trump administration and hence wedded to the idea that the Biden administration is the saving grace. A discredited Biden administration is also a discredited media apparatus and government, more generally. That is something that the national press in general cannot allow.

For this reason, there seems to be a conspiracy of silence. But it is not going to solve the problem. Americans can see for themselves what is happening at the store. They can observe the values of their houses. Already, prices in general are rising much higher than wages are increasing, so what’s called the “wage illusion” will become obvious soon enough.

The last time we dealt with this problem, the general issue of The Federal Reserve was not well understood. But that seems to have changed in the 40 years that have passed. Ron Paul has had bestselling books and the Wall Street Journal’s editorial page is publishing on the topic all the time. Also, The Fed no longer operates in the shadows as it once did. They will continue to try to “pass the buck” but this will not be believable at some point.

It is probably time to call it what it is and prepare. We’ve got a serious problem on our hands. It’s not a few sectors, it is very nearly everything. It is time to stock up on things that may be hard to get and will only get more expensive. The Fed will do nothing about inflation until it is too late. Oh, and The Fed chairman will fix the problem of the 2 percent inflation target by moving the target. Happy Labor Day, you get to work longer for less buying power.