Inflation: Euphemism for Theft
In 1950 a soft drink cost about five cents, bread about 15 cents a loaf
and a new car about $2,000. Today, these items cost ten times more.
Economists euphemistically call these increases inflation; but retirees,
who have watched their life savings shrink, are more likely to call it
theft. Sure, the number of dollars in their savings accounts may have remained
the same, but they know full well these dollars are worth far less and
will buy only a fraction of what they would have bought when they started
saving. Look at it this way. If their money buys only 10% of what it would
have bought in 1950, then 90% of their purchasing power has disappeared.
Imagine, $900 out of every $1,000 of their savings gone…stolen. In essence,
$100,000 deposited and saved down through the years is now worth only $10,000.
Euphemisms are little comfort to these individuals who saved all their
working lives in hopes that they might enjoy their later years. Theft masquerading
as inflation has destroyed their future.
Retirees are not alone. The businessman, the young professional, and
the factory worker are all victims of this constant erosion of our currency.
Inflation steals from us all. The money we earn today always buys less
tomorrow… next year.
But is it inevitable? Is it an inherent defect in the market? Pose such
questions to most all economists, and they are likely to answer in the
affirmative. They support their views with theoretical concepts, explaining
that inflation results from too many dollars chasing too few goods, from
deficit government spending, or from low unemployment. They may say that
an overheated economy leads to excess spending and that is what drives
prices up. The inference here is that natural economic forces at work in
a free-enterprise system will, as a matter of due course, produce inflation.
That may sound impressive in the classroom, but it obfuscates the real
causes of inflation and sidetracks all efforts aimed at solving the problem;
for if we accept inflation’s inevitability–if we base our strategy for
combating it on nothing more than theory–we have lost the battle before
We prefer to take a more positive and constructive approach. When we
look beyond the smoke and mirrors of esoteric economic theories, we see
that the real cause of inflation is not an inherent defect within our system,
but a fault lying within ourselves. That fault is raw greed…human avarice,
the desire to gain the most profit from the least effort…that starts
an inflationary spiral.
Just talk to your fellow citizens. Ask retailers why they raise prices
on merchandise, and they’ll answer that they were forced to do so because
wholesalers raised them. Ask the wholesalers why, and they’ll say the manufacturers
increased prices. Apparently everybody blames the other person and we’re
left to wonder who started it all, who’s responsible.
The guilty party is the person or company who is not satisfied to make
a reasonable profit and who wants more and more. Consider this scenario
from the real world: Big companies manufacturing the same product are enjoying
a dramatic increase in the sales of their products. Gross income is up
significantly. The company executives are pleased, of course, but are hungry
for more. So they decide to take advantage of the situation by increasing
prices. After all, they reason, the demand for their products is high enough
that they can get away with an increase of 10-40% and still maintain their
high sales volume. They smugly admit that they are going to get whatever
the traffic will bear. And this is for them the best part: Since they incur
absolutely no increases in the cost of their operation, all these price
increases are going to be pure profit, an enormous windfall. Bonuses for
everybody. Going a step farther, they decide to seal their upcoming good
fortune by informing competitors of their plans. Naturally the competitors
hike prices as well. Now all products cost more and the poor consumer has
no choice but to pay up–an example of blatant arbitrary and simultaneous
price gouging and illegal price fixing.
The company executives should be content to earn additional income from
a higher volume of sales alone, but they allow greed to dictate policy.
They raise prices. They raise them for one reason and one reason only…to
make more money over and above what is reasonable or necessary. Here is
the root of our problem. Here is where the theft of inflation begins. All
along the chain, from wholesaler to retailer, the increases are passed
along. And who gets stuck with the higher prices in the end? Yes, the consumer,
who has no one to pass them on to.
It’s true, big oil companies, big paper companies and other companies
like them are the real culprits. Just as the greed of thieves compel them
to steal from their victims, so does the unbridled greed of company executives
compel them to steal from the public by imposing higher prices. But what
can be done? Apparently, we cannot depend on big companies to control their
own selfish impulses. However, they can be controlled by requiring all
those who have gross sales of over $100 million a year to report any proposed
price increases with justification to the Federal Reserve, the Treasury
Department, the Commerce Department and the Justice Department at least
30 days before making them. Companies would not need approval to make price
increases, but the Justice Department could and should sue companies when
they deem price changes to be unjustified. It should also be a crime for
a company to notify their competitors before submitting proposals for price