• Deja Vu All Over Again Part 4: Democrat Inflation And The Compounded Damage Of Politically Generated Economic Stupidity

    May 26, 2024
    Inflation, US Consumer Prices (2002 - 2022).
    Screenshot FRED Economic Data, St. Louis Fed

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    Over the past three years, we have had excessive runaway inflation in our economy. The political explanations for this phenomenon have been farcical, if not frightening. Over the past three years, my students have asked me on numerous occasions to explain what is happening in our economy to cause inflation. To this, I have always defined Inflation as is a sustained increase in the overall price levels of consumer goods and services. In other words, an item that used to cost $1 now costs $1.50 or has increased in cost by 50%.

    It is simple. In an inflationary environment, consumers, families, and businesses must pay more to purchase the same items. Where does this money come from? Consumers have limited options that include cutting back on their purchases, buying these same items using credit cards and having to pay back that amount with interest over a longer period, cashing in savings to help pay for these items and/or not buying the item and doing without. Businesses must now cope with raw material cost increases, higher transportation costs, higher insurance costs, higher taxes at all levels of government, and more useless and hurtful government interference during a period of inflation. Consequently, this situation leads business to either increase the costs of the product, good or service that is sold.

    Of course, it is important to realize that based on our somewhat free market economy, businesses need to make a profit to remain open. How can they stay in business if they do not? Can any elected official explain this to us? Can business stay open only if government says it's okay to stay in business via Taxpayer funded subsidies and or political contributions to elected officials’ campaigns? Look at the contraction in businesses in Connecticut since the illegal shutdowns implemented by the Lamont administration during the Covid-19 debacle.

    To get to the roots of inflation, we unfortunately must start at the top. The Democrat Biden Administration has engineered a massive overhaul of the works and functions of our economy since it took office in 2021. The voodoo policy of “Bidenomics” has tortured the economy with disastrous results, including runaway inflation. From a pure economics view, many of the policies it embarked upon defy economics (if not gravity), and are economically incoherent to anyone with the least sense of logic or reason.

    Examples include an open border with Mexico that has led to Taxpayers paying for illegal migrants coming in from other countries for their clothing shelter, food, transportation, and medical care, among other things. This policy has placed an exceptionally high burden on Florida, Texas and their border communities while increasing numbers of illegals flee to Democrat run cities like Chicago and New York City thereby causing massive social and economic problems such as crime, murder, illegal drug trafficking, human trafficking, a housing shortage and much more in these places.

    The economic costs of all the social welfare programs to pay for these multi-millions of people here illegally are estimated at $42 billion dollars a year. In my opinion, these costs are underestimated since we have no idea how much the "gotaways" or those illegal immigrants who cannot be found are costing the economy. My economic guess is that Taxpayers are paying roughly $60 billion dollars a year at a minimum for this economic nightmare of the Democrat Biden administration.

    This extra $42 to $60 billion dollars is a massive drain on our economy. Illegal immigration is a massive drain on housing costs in cities, medical care, social welfare services and our public education system. It is now common for legal Taxpaying American citizens to be ignored while illegal immigrants are getting a blank check and free hand in their "needs". With an increase in consumption and a decrease and supply and production, inflation soon follows.

    Of course, the Democrat-led economically clueless Connecticut State Legislature (and its presiding Paterfamilias, King Ned Lamont the Unaccountable) are not to be undone in continually throwing good taxpayer money after bad, with such disasters always leading to increases in taxes, fees, useless and painful regulations, and the ceremonial hiring of politically connected cronies. As a case in point, I was saddened this week by the closing of a Bob’s Furniture Warehouse in Meriden, CT. However, in 2018, I had written a blog about the serial handover of taxpayer dollars to this same organization through the oxymoronic Connecticut Department of Economic and Community Development, a Cracker Jack box of favors for the politically connected. But to the inflation matter at hand, wasted money and increased expenses invariably lead to tax increases, which lead to greater inflation. Even so, no one in our legislature ever makes a proposal of either gutting or abolishing this tax-consuming and grossly incompetent organization as more taxpayer-financed debacles soon to follow.

    Are you interested in learning about more money-burning follies? Green energy and the hysteria and paralysis against the use of fossil fuels have led to massive increases in our energy costs in our economy. Why is fossil fuel bad? Can this be explained? Why is there a massive regression racing to an unsustainable green energy plan with undesired electric vehicles due to their cost and lack of range one can drive on a battery charge? Our economy cannot magically retool our driving capabilities for electric vehicles without serious issues in finding raw materials to manufacture their car batteries, deal with their flammability, and managing an electrical grid incapable of keeping up with the demand for electricity with these vehicles being forced into the economy. No amount of Taxpayer funded subsidies will create this Utopian clean energy concept that seems to be the Job No. 1 concern of Socialist/Democrat acolytes.

    In addition, there will be long-term damage to our environment with the constant demand of large wind turbines that upset our oceans and seas and murder sea mammals. Much more, our country could dramatically reduce energy prices with the reopening of the Keystone Pipeline, more natural gas use and the use of safe nuclear and hydrogen power options. Instead, the political system races to the disaster of a new stone age due to these incoherent policies.

    In addition, higher energy costs contribute dramatically to higher food costs. My good friend Tony De Angelo stated on his segment on 5/21/24 on the Lee Elci Show 94.9 correctly that higher transportation prices have led to much higher food prices. He is correct in his cause-and-effect analysis of these increases which are causing massive issues for families trying to feed themselves. Still, the entire political system turns a blind eye and a deaf ear to the simplest and most practical inflation-fighting tool, being the cost of cheap fuel.

    If you observe, you will see that the size of some products has gone down, and the prices have increased. The new term made up by woke economists "shrinkflation" blames businesses for this new type of inflation. Sadly, businesses must remain competitive, therefore they have to cut costs. These same businesses are also being hammered by green energy zealots to make all packaging eco-friendly, non-polluting, and recyclable at all costs. This mantra and mandate have increased costs for all food products and in some cases has shrunk the size of the product being sold to meet this unrealistic and fantastic goal of green energy. Instead, Democrats choose to blame grocers for "excessive profits" and "greed". However, these Democrats should be continually reminded that their political system, fundraising activities and promotions are the genuine source of "excessive profits" and "greed" since that money is taken out the economy and placed in nonproductive and programmed uselessness doing little to benefit the economy except for the ruling political class of both the Democrat and Republican parties. Connecticut is an excellent example of this buffoonery in its politically elite system.

    America has declined economically and socially since the irrational Democrat Biden administration has taken office, aided by the ineptitude, recklessness, and cluelessness of states such as King Ned Lamont The Unaccountable’s Connecticut. Our country has seen a massive rise in the blatant discrimination of Jewish people, conflicts with the axis of evil, Iran, China and Russia, a damaging open border policy, a fanatical and economically irrational green energy plan, campus unrest and violence, a fixation on proper nonsensical “woke” terms meant to divide and cause hate and derision, and the serious, far reaching impacts of insane government policies by a pathetic and corrupt Democrat President hell bent on destroying our economy through runaway inflation. Legal Americans should not be forced to forage for food like animals, be dictated to by a political system leading from behind without common sense and be subjected to crime, rape, and murders thanks to an unconstitutional open border policy.

    Inflation is a major problem that has turned into a political game of cat and mouse with the losers being the American Taxpayers who must just grin and bear this incomprehensible destruction of economic freedoms and our country as we once knew it. Inflation can be stopped but not by our current elected government and state government and the collective disrespect and hatred they hold for America.

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    Author

    Bob Swick

    I am an Adjunct Professor of Business and Economics and have taught for 41 years for several different colleges and universities. I have a Bachelors of Science in Journalism and a Masters of Science in Economics. I have written about economics and political issues in my blog "Swick Speak" since 2006.

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