According to the counterfactual claim, the blame for the broadly rising prices greedy entrepreneurswho seize the opportunity to gain unjustified advantages at the expense of consumers.
The fact that these accusations often enough come from the mouths of economists who should know better can only come as a surprise if one overlooks which political corner these “experts” come from. They are exclusive Progressivewho use this outrageous joke to explain currency devaluation in order – once again – to present a socialist command economy in a favorable light at the expense of free markets.
Economic truism: Prices are no Indicators of objective valuesbut they reflect Preference decisions of market players. A deal only comes about when both parties agree and think they are gaining an advantage. In principle, every entrepreneur is free to charge any price for his product. Of course, he has to find customers who are willing to pay this price. A baker who asks 10 euros for a roll is not a greedy price driver, but a fool who will soon face the bankruptcy judge because of a lack of demand. So the claim that entrepreneurs can set their prices as they see fit is pure nonsense.
Only monopoly holders are, at least theoretically, able to set their prices arbitrarily. The few monopolies that exist, like money, public transport and energybut are largely under the control of the Leviathan, which means that the accusation of “greedy entrepreneurs” is already settled.
It should only be mentioned in passing that the left-wing enemies of free markets have no critical word for municipal price-drivers like the red municipality of Vienna, which has no hesitation in increasing the fees and tariffs it charges.
True is: Inflation is always a monetary phenomenon, which is brought into the world solely by the issuers of money (ECB, FED, BOE, BOJ, etc.). As is well known, central banks have produced vast amounts of new money since the beginning of the “corona pandemic” and thus got the ball rolling. However, amplifying effects are currently at work:
► Production stoppage and subsequent
► delivery bottlenecks
► sanctions in the wake of the war in Ukraine and the consequent
► energy crisis
Not a single one of the inflation turbochargers mentioned was started by private companies, only by political actors. If, in view of these facts, the apostles of the planned economy still want to hold the greed of entrepreneurs responsible for the inflation, that is nothing more than transparent “stop the thief” strategyto distract from the guilt of politics.
Let’s sum it up: On the one hand, state money monopolies ensure a huge oversupply of money. On the other hand, state-enforced shutdowns of the economy lead to an artificially reduced supply of goods. You don’t need to have studied economics to understand what happens when a lot of money meets a few goods.
At the same time, the EU is interfering in a military conflict beyond its borders, declaring the main supplier of low-cost energy sources an enemy. This in turn prompts retaliatory measures that manifest themselves in a dramatic increase in primary energy prices. Incidentally, there is no political assessment of the EU sanctions against Russia at this point, since this is merely an analysis of the phenomenon of general inflation goes.
While governments gave the impression during the “Corona Pandemic” that the status quo could be restored and maintained by making changes to the future of the younger generation, the last dams have been broken since the energy crisis: Expensive new ones are being built almost every day bailout and relief packages without considering for a moment who will ever pay the additional debt that will result.
But what is even worse: Instead of letting the price signals sent out by the market take effect, which are a clear incentive to consumption restriction are given, the state stimulus programs support the claim that it is not even necessary to forego consumption. This, on the one hand, fuels inflation and, on the other hand, distorts the economic system, which is still essentially a market economy, in favor of state-related actors. Current problems are transferred into the future and thus burdened with young people who are the least able to deal with them.
In addition, the extremely high level of the ongoing wage negotiations will further intensify inflation: an inflation cascade, because the increased wage costs will of course continue to drive prices up.
The brake rockets fired two years late by the central banks cannot put a stop to the current price inflation for the time being. It is also foreseeable that this will lead to a recession, the extent and length of which cannot be estimated at this time. Regardless of the Ukraine war, the world is heading towards “interesting times”.