One of the biggest mistakes cultivated in our culture- by very important special interests- is
the notion that there's some unique relationship between the amount of money in circulation and
prices. Let me be clear with you. There isn't. There's no necessity that prices go up. Let me
give you the simplest example I know of. Let's imagine that the money supply is increased.
The federal reserve increases the money supply, and let's assume, just to make the story simple,
it goes into the hands of the bank or if you don't like that, let me imagine with you
that helicopters fly over the American cities and drop the money. And, we all run out with baskets
and collect the bills floating down. Okay. Now, there's a lot more money in the economy,
and you know who knows this? Business. They know that the public has more money to spend
because they know what the federal reserve is doing- whether it's increasing the money supply
or not. And at this point, the employer makes a decision. The manufacturer/the company that sells
any service, they know people have more money to spend so here's what they decide. Either,
the way you deal with that is to raise your price. Why? Because people have more money to
spend and so you can reasonably expect to get the higher price. Or- here comes the key issue folks-
or you can decide that the way you want to respond to the extra money in the economy
is by ordering more goods to sell for that extra money. The second one gives people jobs
making the extra goods, and we tend to like that. But the first one- jacking up the price-
that's not getting anybody a new job. That's just getting the seller
more because there's more money in the economy. Why am I stressing this? The answer is simple.
Employees, the vast majority of us, we don't set prices, but employers,
a tiny minority of us, they do. They're the ones who decide what price gets put on
that tag connected to the software program, the haircut, the hamburger or anything else we buy.
It's a decision of employers. That is the cause of every inflation. Employers set the price. Make
sure you understand that. That's how a capitalist economy works. The employees have nothing to say.
The government, in most cases, has little or nothing to say. It's an employer prerogative,
and they hold on to it. But it has its problems, and here we go. To understand
the difference between the reality and what you're reading in the newspapers or watching on TV,
when employers raise prices, they do it for the same reason they do everything
else. They want to make more profits. That's what they're in business to do. That's what
they got their MBA at business school for being good at- getting more profits,
and if you can charge more for whatever it is you sell, bingo! You're on your way to higher
profits. The problem is it doesn't look good. To whom? To the vast majority of us, the employees.
Because we've got to spend more. So, our employers long ago learned when you raise your prices
to make more profits, never say that's why you're doing it. Always come up with a story- preferably,
a plausible BS that will get people to grudgingly accept your higher price rather than saying, "Gee.
You're gouging me. You're ripping me off!" This is not about government printing money. It's not
about any of the things you hear. It's what you're not supposed to hear. That's the key issue here:
profit driven price increases. You and I have to pay so that the employer makes sure that
this capitalist system works for them. And for us, we get to watch headlines that tell us nonsense.