Summary

The article discusses the complex interplay between inflation and price gouging, emphasizing the need for public understanding of economic principles to distinguish between the two.

Abstract

The author presents a nuanced view of current economic conditions, arguing that while inflation is a real concern driven by supply chain issues and pandemic effects, it is often conflated with price gouging, which is rooted in corporate greed. The piece suggests that political rhetoric obscures the true nature of price increases, with examples from the lumber and meat industries illustrating how supply and demand dynamics, as well as market monopolization, contribute to rising prices. The author also criticizes the lack of honest discourse from politicians and the media, advocating for better public education on economic factors to empower consumers to differentiate between inflation and exploitative pricing practices.

Opinions

Inflation is a genuine economic challenge, exacerbated by the pandemic, but it is distinct from price gouging, which the author views as an unethical practice driven by greed.
The oil and gas industry's price hikes during peak demand periods are seen not as supply and demand adjustments but as strategic price increases unrelated to actual supply costs.
The author disagrees with the notion that increased demand should automatically lead to higher prices, suggesting that this perspective is a form of price gouging.
Politicians are accused of oversimplifying economic issues for political gain and failing to educate the public on the underlying causes of inflation.
The article points out that concentration of market power in certain industries, such as meat processing, can lead to price gouging.
There is skepticism about the government's and politicians' commitment to serving the best interests of citizens, with allegations of dishonesty and self-serving actions.
The author believes that consumers are often misled by political claims and media coverage, lacking access to factual information that would help them understand the true nature of price increases.
The piece argues that if consumers were better informed about economic principles, they would be less susceptible to political manipulation and could make more informed decisions.

Inflation or Price Gouging?

A Simplified, Non-Expert Opinion — From The Mountain

Inflation

Inflation is very real and is very much affecting our nation. It has primarily been tied to the effects of the pandemic over the past two years. The historical monthly inflation rate has been .2%. Last month it hovered around .07%. To better understand inflation rates and percentages in a historical context, go here to read a Wall Street Journal article.

Supply chain issues, a result of the pandemic, have driven prices up. As our economy ramped up from the 2020 shutdown, consumer demand ramped up in some cases as well. Businesses couldn’t keep up with the demand. The sale of wood products and lumber are perfect examples.

Many lumber retailers carry large inventories. As those ran low, inventories became harder to replace. This is inflation. If other costs factor into the cost of goods to be delivered increase such as transportation, the cost of fuel, weather, the time of year… this is inflation.

Who’s Kidding Whom?

I’ve never agreed entirely with the school of thought that demand should equate to price increases. I prefer to call that what it is… price gouging and greed.

With the oil and gas industry, when summer comes, when the Holidays arrive, gas prices go up. That’s not “supply and demand”. Supplies are already known and demand is already predicted quite accurately. Prices are determined by betting on the stock exchange.

Everyday consumers, not large corporations take the hit at the pump. The large trucking companies, the airlines, purchase their fuel in advance under contract at set prices. Few people know this.

When the public is warned of dire consequences resulting from the policies of the political party in charge, by the political party that wants to be in charge, remember truth and facts are not a part of the equation.

A Simple Problem to Understand

Step away from politics. As hard as this is to believe, the cause of inflation is relatively simple to understand.

Lumber mills stopped producing lumber used for construction during 2020 and into 2021. Their surpluses ran dry. Yet sales of lumber continued. When these mills started back up, they started from scratch without reserves. Lumber was selling as quickly as it was produced.

As demand for lumber increased, the supply was limited. Prices increased driving up the cost of building and the prices of homes. There was a ripple effect. As more lumber became available to meet demand, supply chain issues increased… a shortage of trucks, a shortage of drivers. Inflation is attributed correctly to supply and demand in this example.

Politicians won’t tell you this. It’s too simple. And it’s much easier to blame others. There is a distinct probability they don’t even understand this. They’re too busy shorting the stock market illegally in Congress for millions.

Congress and the government do not have the country’s citizens' best interests at heart. Honesty and debate have been replaced with lies and posturing for power.

Price Gouging — Just an Excuse?

Recently the President blamed price increases on price gouging. Claiming price gouging as the issue without supporting numbers, without examples, minus a simple explanation that people could understand, the Democrats' claim of price gouging is now a late-night TV joke.

Since the claim by the President was entirely unsupported by anything the public could latch on to, Republicans mocked the claims. The public, without evidence to support claims of price gouging, again see Democrats as sensationalists, or worse, liars.

Yet the proof of price gouging is right in front of our collective noses, every time we shop. If one understands the simple concepts of retail sales. What we are experiencing today, in some instances, are businesses using other issues to hide price gouging.

The price of avocados has gone up. Organized crime in Mexico is fighting over the very lucrative avocado industry. Shipping products to the US became too dangerous. Price gouging? Not at all. Inflation? Nope.
The price of meat has risen rapidly. The Democrats declared this is due to price gouging. No basis though. Is there a shortage of cows and pigs? No. Do we have lingering effects from the pandemic, processing plant closures, worker shortages, and supply chain issues? Yes. Possibly just pandemic-related inflation? Maybe.
When an industry (as with meat processing) is controlled by a couple of companies, so-called free-market responses often become price gouging. Large processing corporations controlling the market? Yes. Potential for price gouging? Yes.

Just the Facts Ma’am, Just the Facts

‘Retail Business XYZ’ purchases an item for $5 that normally sells for $10 and suddenly the price becomes $12, $15 or more. Is this supply and demand? No. The cost of goods did not go up due to other factors, since they were purchased months ago. That is price gouging.

A companion of mine works for one of the largest retail chains in America. Every week time is spent adjusting prices upward on hundreds of items on shelves. Pricing is based upon COG. Yet prices were doubled. Did the COG (cost of goods) go up? Nope. The products are already on the shelves. This is price gouging.

There is no reason for prices to be raised on most products other than greed, yet they are all being raised. This is what consumers are experiencing now in retail stores. Too many don’t understand this. They only hear (know) what politicians and the media tell them.

Consumers out of ignorance blame the President and his political party because that’s what they hear. Facts, numbers, explanations are all missing components. Politicians' responses are devoid of truth, facts, and logical explanations people can understand and the media lacks true journalism.

If citizens did understand the economics of business, it would be much harder for politicians and the two political parties to play divide and conquer as they have. American citizens would be the winners and not perennial losers.

If only politicians and media focused on truth and honesty, citizens might better understand what is inflation and what is not.