Inflation. Why? Not Government Spending.

Corporate greedflation; Corporate profiteering ‘significantly’ boosted global prices, study shows

Consider a single consumer. That person is given money by the government. Now he or she goes out and buys something they need. Because they bought an item, did the cost of manufacturing that item increase? No. Because the government gave them the money to buy the item, did the cost of manufacturing go up? No. Two factors that don’t cause inflation.

So, now with the government giving people money, the demand for the item has gone up. Did the increase in demand cause the cost of manufacturing to go up? No. According to free-market theory, the more products that are made to meet the increased demand, the more the cost of manufacturing should go down. Therefore the price to the consumer should go down as “economies of scale” are realized. Here, because government gave people money to buy things and economies of scale are achieved, inflation should be reduced.

But, in reality this doesn’t happen. Corporations are making record profits, and this drives inflation. So as costs of manufacturing go down as “economies of scale” are realized, the corporations are raising prices to consumers. And with the advent since Reagan of huge corporations, where no anti-trust laws are enforced (the Milton Friedman Chicago neoliberal ideology), huge corporations can do as they please without competition. Recently, as we see record corporate profits slightly fall, we also see a slight fall in inflation.

Where does all that profit-realized cash go? The rich no longer pay much tax (about 3%), so it goes into the hands of the wealthy, not to things that support the middle class as previously happened before Ronald Reagan cut taxes for the wealthy, and deregulated and privatized almost everything. The few taxes that the wealthy must pay can be avoided by a number of schemes, including stashing the cash overseas in the corrupt country of Switzerland. Other tax avoidance schemes used by the wealthy, such as Elon Musk, include not making any income, but receiving personal “loans” from banks that want his business, and the personal “loans” neither having any interest payments, nor does the loan ever become due – the loan is never called. The term, “loan” is a euphemism for a tax dodging bribe.

So if you think government spending drives inflation, think again and don’t allow yourself to be a right-wing Republican stooge who ignorantly repeats the rich man’s self-serving, exploitive narrative. The ever decreasing, struggling few in the middle class, thanks to Reagan, depend on it.