Price Controls Ahead

If an economic recession or depression is akin to a stroke or a heart attack, then inflation can be described as cancer, which kills its host slowly and painfully.

Milton Friedman said, “inflation is always and everywhere a monetary phenomenon,” and its real victims are the poor with few hard assets to protect them. While inflation increases workers’ wages, these increases are rarely enough to cover the increase in the cost of living.

Digging a level deeper, one realizes that inflation is a tax on the poor, with its social roots firmly planted in the liberal belief that we can tax and spend money we do not have by making the printing presses work overtime. With the national debt at ~$30 Trillion dollars, and inflation at 8.5% and rising, the tax-and-spend crowd is looking for someone to blame, and solutions to promote, even if the cure is worse than the disease.

From President Franklin D. Roosevelt to Richard Nixon, the government’s urge to centrally plan and control prices has no limit. But now that spending trillions of dollars on such things as building bridges to nowhere has caused the biggest inflation in 40 years, we can start hearing the dog whistles for price controls, such as in President Biden’s declaration that “Oil and gas companies shouldn’t pad their profits at the expense of hard-working Americans,” or “Cut the cost of prescription drugs,” or else?!

Most economists realize prices set by producers are signals to consumers who respond billions of times in an infinite closed feedback loop. Trying to centrally plan and control prices is akin to cutting this crucial feedback loop.

From rent control in New York to striving for passage of the “Ending Corporate Greed Act,” with a 95% windfall-profit tax on “pandemic profiteers,” central planning via price controls has never worked, and never will.

Watch out for the pending economic pain and human suffering ahead. The midterm elections can not come soon enough.

— Sina.

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