Government infrastructure expenditures are not inflationary. Government deficits, trade deficits, debts, etc., are not inflationary. The oil price shock of 1973 wasn't inflationary. If all prices and wages rise equally, you can't say there has been inflation. Since the effect of rising oil prices is distributed over time, it appears to the casual observer that inflation is in place due to rising oil prices. That isn't inflation. That price change has a finite horizon. True inflation has no finite temporal horizon. For ten years we have had almost no nominal inflation, yet the bonds still carry a heavy inflation premium. The bond players know that there is nothing between the pseudo-deflation now and the rekindling of inflation, so they demand the premium.
Inflation occurs when people demand more than the worth of their output. God balances the books by taxing everyone to compensate for the theft. The tax is indiscriminate. Inflation is the proof that there does not exist a free market in labor. Labor is monopolized. Isn't it interesting that the universities have spent the entire 20th century asserting the evils of business monopoly, but not one word has been spoken about the equivalent of the labor monopoly. What is the maximum percent of the US corporations that were considered monopolies at the business monopoly height? 1 %? 2%? Something less than .1%. Further, business monopoly is inherently inefficient and will cause the business to self-destruct. The only thing that preserves monopoly is government's law creation which has the intent of destroying monopoly but has the opposite effect. You never see universities or government ever address labor monopoly. Labor monopolies never benefit the people they represent except to a small extent over the short run. The long run has been a historical disaster for the "little guy", but you won't hear anything about that in the university text books and you sure won't hear a word in high school either. Why is there this asymmetry in the reporting of the truth when the asymmetry hurts the purported beneficiaries of its hiding more than it helps? The answer is the need to do good and the problem is the pretense to knowledge: the belief that anyone has the power to make anything good. You never know the outcome of all your do-gooding and no one ever even looks. They are mentally satisfied by their beneficence.
You'll hear the counter-arguments about how the labor monopoly could only be of the scale of 15% of workers and therefore has no power. It wouldn't take but 5% to set a nasty precedent. The only thing standing between bond market bust and the ugly labor monopoly is the FED. To do the ultimate good, to protect their own money, they would bust you into the Stone Age. It can't be said any politer than that. |
