My goal in this post is not to get into the guts of inflation because this information is found elsewhere on this website, as well as within numerous commentaries from libertarians and adherents of Austrian economists ’round the web. Rather, I am perplexed that such simple facts of inflation often go disregarded by not only the mainstream media (which is to be expected), but from those in the freedom movement.
The Wall Street Journal recently published a piece noting that inflation is only “grazing” most items. Other than commodities and oil, there’s not much to worry about, according to the US government and its Federal Reserve henchmen. Gas and food, the two things we depend on most, are “temporary concerns,” as Bernanke has stated.
The mainstream media has been running several pieces over the last year or so that focus on shrinking food packages. The New York Times recently ran a piece called, “Food inflation Kept Hidden in Tinier Bags.” Also, Seeking Alpha just last week ran a piece on the ten signs that food inflation is alive and well. Neither piece lends credence to the government’s official figures; instead, they focus on the downsizing of food packaging. The New York Times predictably refers to this as “stealth downsizing” while Seeking Alpha properly calls it food inflation.
In the freedom movement, over at a survivalist blog, we see an analysis that embraces some serious discombobulation. While the writer recognizes the Fed’s role and points to the “devaluation of the currency,” in the same breath he asks, “How long can food companies continue to hide inflation using their food packaging schemes?” He then states that “corporate scheming, trimming, squeezing, downsizing, profit optimizing, is nothing new.”
Over at Zerohedge.com, WalMart is condemned for dealing with inflation to compete and survive. Yep, WalMart has been printing money like it is going out of style while it pushes down interest rates and distorts the economic indicators for purposes of keeping the masses under its spell! This writer notes that WalMart is “masking inflation” by using “price masking gimmicks,” and the writer goes on to cite WalMart packaging schemes and price-per-ounce confusion from the survivalist blog. (Note: it took me several readings from this jumbled writing to understand that the zerohedge writer, like the survivalist, understands the government’s role in inflation and covering up for it, but still, he condemns WalMart for dealing with the effects of inflation in the only way the company can deal with it.)
Across the board, the one thing that seems to keep being ignored is the real culprits in this scheme — the Federal Reserve and government policy that is econospinning the numbers while holding you captive to its invisible tax so it can command-and-control the entire economy and create its own winners and losers of its choice. Corporate America is merely reacting to the ever-changing economic environment, and its numerous players are fighting for survival. Yes, amazingly, the people who run businesses like to stay in business, maintain profitability, and keep their jobs. As we know, consumers are far more sensitive to price changes than quantity changes, so companies are doing what they have to do in order to compete against everyone else in the market with substitute products.
Should Walmart keep its old package sizing on its own brand of coffee, with a glaring 20% price increase, while its competitors shrink their cans and re-package and re-market similar products to try and retain their customers? They should? Really? As rising costs crush us, they also crush the companies that produce and distribute the products we desire. Food manufacturers, therefore, are scrambling to keep their heads above inflationary waters.
Over a two month period, the Buffalo meat I buy (when I have to get it in a grocery store) stayed in its one-pound package and the price went up from $6.99 to $9.99. I won’t buy it again. I am very sensitive to price increases of that magnitude, especially considering there is a slaughterhouse nearby that sells wild game and Buffalo.
My point in all this is to throw attention to the real band of criminals while pointing to the fact that, in spite of the current state of the economy, corporations have to continue to pay employees, cover their fixed costs, keep up with variable costs, and maintain profitability. So why aren’t folks — especially those who purport to understand the government’s role in this – taking out their wrath on the felons who have control of the monetary policy, the banks, and ultimately, your prosperity (or lack thereof)?
