By Nick Giaumbruno
There are kids receiving economics degrees this spring who will know less about economics than they would learn from this article. From Nick Giambruno at internationalman.com:
Rapidly rising food, housing, medical, and tuition prices are squeezing Americans, and many do not understand the real cause of their falling living standards.
That confusion opens the door for opportunistic politicians who promise supposed freebies to ease the pain of inflation. Many, unfortunately, succumb to this siren’s call.
Perverse as it is, the policies offered to people suffering from inflation create even more inflation. In other words, inflation has a way of perpetuating itself, much like a heroin addiction.
We are already seeing cockamamie schemes in the US, like “inflation relief checks,” which attempt to solve the problems of inflation by creating more inflation.
The political-inflation cycle follows a clear pattern:
Step #1: In a fiat currency system, the government will inevitably print an ever-increasing amount of currency to finance itself.
Step #2: This makes prices and living costs rise faster than wages.
Step #3: The average person feels the pain but doesn’t understand what’s happening.
Step #4: More people support politicians who promise freebies to relieve the pain inflation causes.
Step #5: The government prints more currency to pay for the freebies.
Step #6: This creates even more inflation, and the cycle repeats.
At this point, we have to ask ourselves whether the political situation in the US will improve.
Unfortunately, the data points to a troubling but inevitable answer… “no.”
The reason is simple: a growing majority of US voters receive government money.
When you count everyone who lives off political dollars instead of free-market dollars, we’re already well north of 50% of the US population.
In other words, the US has already crossed the Rubicon. There’s no going back.
The growing majority of voters who collect net benefits from the government is a built-in constituency to perpetuate policies financed by ever-increasing inflation. That’s why I think the US has entered an unstoppable inflation death spiral.
The notion that people living off government largesse and political dollars will come around to a libertarian way of thinking is a pipe dream.
In short, there is simply no hope for positive change from the political system. That means one thing is sure: an ever-increasing amount of inflation to pay for all these government programs.
For many decades, Argentina has infamously been trapped in a perpetual cycle of hyperinflation and socialism from which it cannot escape. And now, the US has entered that same inescapable cycle.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of Citizens Journal
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