Understanding Inflation.

Finally, a thread about raising the minimum wage mentions inflation. Those on one side claim that raising the minimum wage causes inflation. Those on the other side says the minimum wage should be raised because of inflation. It shows that few people understand (a) the definition of inflation and (b) the cause of it.
(Don't feel so bad. In the late Seventies, Gerald Ford had a campaign called WIN (Whip Inflation Now), as if the masses had anything to do with it. There were public service ads on television accusing people who want to spend money as being "PIGGY" and causing inflation. And these misleading campaigns were carried on by government and mass media, so don't necessarily blame yourself for not understanding this problem.)

Inflation is basically TOO MANY DOLLARS CHASING TOO FEW GOODS. If you have to tattoo that definition in your brain, then do it.

It helps to take a few macroeconomics courses in college to fully understand the economy. In this country (and I only mention America because I don't give a rat's ass about other countries) there is such a thing as the MONEY SUPPLY. There's a certain amount of dollars out there and the federal government (usually the Treasury Department) keeps track of that amount.

It is tied to output. If the government decides to flood the market with more and more dollars without output increasing, you get INFLATION.

How did UNELECTED JOE create the RECORD HIGHEST INFLATION IN THE HISTORY OF AMERICA, when he inherited an expanding economy with record LOW inflation? Very simple. He flooded the economy with a lot of unnecessary dollars, in the form of those "stimulus checks."

That's what did it.

Need a reference to follow this? (I don't expect blue state liberals to grasp this because their public schools barely prepare them for the fourth grade in a red state.)
https://www.heritage.org/budget-and-spending/heritage-explains/the-real-story-behind-inflation

What do you know about inflation? Milton Friedman famously said: “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” Of course, we all know the driver of the quantity of money is government spending priorities, and recently the government has been spending a lot. So what does that mean for the American people?

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whowasthatmaskedman · 70-79, M

Interesting points and not totally inaccurate. But there is one step before this. Assuming the goods available and the money supply match at the start. Something has to be removed from the goods to throw the balance off and start the ball rolling, or be added to the money supply without justification through goods. Maybe build a Ship you cant afford.. or maybe reduce the tax levels on a group and dont reduce the government services..Notice I am not taking a side here. Just sayin'😷

Reason10 · 70-79, M

@whowasthatmaskedman In many ways, economic theories go the route of scientific theories. Galileo was persecuted for his scientific views.
For as long as inflation has been around, it's strange that it wasn't properly defined before the Reagan administration. It's not surprising that people haven't learned from that experience. While Reagan was able to sort of cut spending and return tax revenue to taxpayers, the economy flourished and inflation was held to a bare minimum. In fact, it took Bush41's tax increases and KKKlinton's economic policies to bring us closer to Carter-ish inflation.
But I gotta admit, the Biden Inflation was spectacular. No president in history has EVER managed such a massive sabotage of the American economy in such a short period of time. Yes, there were inflationist presidents before (Johnson, NIxon, Carter, KKKlinton) and their spending habits created little inflationary shocks.

But it was those UNELECTED JOE stimulus checks that flooded the money market with excess dollars, while his incompetence at supply chain issues prevented an automatic economic recovery.
That is spectacular. No other president can come close to such ruin of the American economy in so short a period of time.

whowasthatmaskedman · 70-79, M

@Reason10 See, now you have drifted back into whose fault it was and we arent going to agree on that. Not becausse of politics. But because of the delay between a policy decision, an economic event, and the fallout expressed as i shift in inflation or some other measure. Then of course there is what i term "the Alamo" effect, where you take a step, even though its not going to end well, because its the least worst thing you can do at the time. And those stimulus checks are a perfect example.. As for supply chain issues. they were real everywhere. Ships were queued up for a month, waiting to be unloaded at American ports, which meant they were delayed in being reloaded and returning, to return yet again.. Anfd those crews still had to be paid and the ships maintained in working order..😷

Reason10 · 70-79, M

@whowasthatmaskedman Unelected Joe has no excuse. Trump inherited a rotten economy from Obama and he fixed it.
Reagan inherited one of the WORST economies of the 20th Century and he fixed it with sound fiscal and tax policy. He basically turned the economy loose and kept tabs on the money supply. It's easy to find fault. Democrats have NEVER given a good economy with their policies. They have always been on the wrong side of that equation.
Supply chain issues were ENTIRELY JOE'S FAULT. He's not exactly a crossing guard in that office and he DID appoint a Cabinet secretary who made things a lot worse simply out of incompetence.
Democrats are woefully inadequate in matters of economics.

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