The Solutions to Inflation isn’t Wage Increases

Inflation is a hidden tax. By having monopoly control of the money supply the state is able to devalue a currency by simply releasing more of it into the market. The Federal Reserve, which controls the United States money supply, has been releasing an imperial (because we don’t do metric here) shit ton of currency into the market. This has caused the value of the dollar to continue dwindling.

According to mainstream economists constant inflation is necessary for a functioning economy but the rate of inflation must be kept low. Economists that actually know what they’re talking about, that is to say those of the Austrian tradition, point out that inflation is bad because it constantly decreases the wealth of individuals. Regardless of what school you subscribe to the current rate of inflation should be worrisome. While official inflation numbers are periodically jiggered to make them look better the cold hard fact is that the stuff people actually need to buy in order to survive is increases at an alarming rate:

It’s is not her imagination. While the government says prices are up 6.4 percent since 2011, chicken is up 18.4 percent, ground beef is up 16.8 percent and bacon has skyrocketed up 22.8 percent, making it a holiday when it’s on sale.

“Oh my god!” Singer said as she spied bacon for $3.

“The things that are going up in price are the things I absolutely need to buy,” she said. “It’s the meat, it’s the milk, it’s the eggs and it’s getting out of hand.”

The report goes on to argue that the real issue is wages not increasing. While people certainly like hearing arguments for why their wages should increase the real issue is that wages and inflation are inseparable. Increasing wages to match inflation necessitates increasing wages to match inflation. It’s an Ouroboros. The real issue is that the state is manipulating the market to favor itself and its partners at the expense of everybody else.

Legal tender laws make holding dollars desirable. If you don’t hold dollars you can’t legally pay taxes and other made up debts to the state. Failing to pay the state what it demands ends with you either being in a cage or a grave. First receivers of newly issued money are able to enjoy the full purchasing power of that money. Inflation doesn’t actually begin until newly issued money being to circulate. Therefore the state is able to give newly issued money to its partners and they get to enjoy the full purchasing power. Once they’ve used that money it enters the system and inflation begins to kick in, which makes the dollars currently being held worth less.

So long as the state is able to manipulate the money supply that we’re required to use things are going to get worse for everybody not politically connected. The issue isn’t wages it’s state monopolization of the money market. Until that problem is solved (and it will eventually be solved by an economic crash if nothing else) consumers are going to feel an increasing amount of financial pain.