Inflation is skyrocketing over the past several months. While this is bad news for the economy, some economics are trying to say that inflation is actually a good thing.

Here’s a transcript of our conversation:

Brittany: Hi, Connor.

Connor: Hey, Brittany.

Brittany: So I just went home for Christmas. I know our listeners are listening to this probably a little further back, but it is the beginning of January, the longest month of the year, that we’re recording this. So I went home and my family was talking, even though every year we’re like, no politics, we always end up talking Paul. Most of us agree like most of us are actually on the same page. However, my baby brothers in college, and that, you know, as we’ve talked about before, comes with a whole bunch of strings. So my family was having a discussion about, just everything going on. I was telling them that in DC you frequently see things missing from shelves. Now it’s very scary and when you can get something, the price is just skyrocketed. I buy a lot of heavy cream cuz I’m keto, so I do a lot of full-fat stuff. and the cream went from $5 to $10. Really? Yes. And so, like, it’s outrageous what we’re spending now. So I was, you know, pretty upset about this and how just grow our grocery prices across the board are raising. And my sweet precious baby brother chimed in to tell us that we shouldn’t worry because his economic professor at the University of Utah explained to him that inflation is actually really great for everybody. And that he’s, you know, a professor and professors are smarter than all of us. Needless to say, I was pretty shocked. I had to bite my tongue on that one. And I honestly thought about buying my brother some when Tuttle Twins books because I was like, you know what? Your textbooks are turning you into something I don’t recognize. He also told me, trying to get some things right, I almost had a heart attack, Connor. It was terrible. So unfortunately though, my brother and his professor are not the only ones who think this. So there’s an article or a publication called The Intercept, which sadly used to be really great. That’s the one Glen Greenwald started, I believe, right? Connor? Yep. Who we’ve talked about before. He’s one of the few remaining great journalists. Used to be great, but it’s very like economically left. So they said, what’s happening is this, the inflation freak out as they’re calling it, is all about class conflict. And you’ll remember from like socialism and Marxism, we talked about classes like the rich versus the poor. So they say, in fact, it may be the fundamental class conflict. So the most important thing, and that’s between creditors and debtors and a fight that’s been going on forever. And so their thing to this is inflation is good because now it’s like making, I can’t remember the argument exactly, but they’re saying that like the people now have more money and more manpower start to negotiate for higher wages, which puts the creditors in bad positions. So they’re basically saying, this is setting us up for like the working class. And I’m saying that in, scare quotes to like, take over the rich and all these things. And it’s, I had to do a double take on that cuz I’m like, never have I ever seen anybody have like the audacity, to say like, inflation is good. You just don’t see that. You wouldn’t have seen that eight years ago even during the housing crisis that I can remember. I don’t know Connor, if you remember or not.

Connor: Oh, no, I’m trying to think right now if I can think of any examples in which that was the case. And that is like the new narrative, right? Because first, it was like, oh, a little inflation, you know, or no, first it was the inflation isn’t happening and then it was, oh, it’s just transitory, right? It’s just temporary inflation. And then it was, oh no, inflation could be a good thing actually. And then it was, well, inflation is good for poor people and you know, not so great for the rich. So those of us who think we should tax the rich, you know, you should be cheering on inflation. It’s like, what? What are you smoking? Like, that’s simply not the case. And it’s like with your brother’s professor, there’s all these people who they think they know, but they don’t actually know. I’ve seen so many articles in recent weeks talking about, oh, well we’re trying to understand where inflation is coming from and there’s lots of conflicting theories and it’s very difficult to understand. It’s a complex issue, you know, blah, blah, blah. And I’m like, it’s really not complex.

Brittany: It’s not that complex.

Connor: When you print tons and tons and tons of new money, right? That inflates the money supply, which then inflates the prices. And why do I say that? It’s not that complex. Why do I think these people are wrong? To think that It’s difficult to understand because like hundreds of thousands of kids, if not millions now who have read The Tuttle Twins and the creek from Jekyll Island can very simply understand what the heck this inflation is. And more than understanding what it is, they can understand who’s responsible for it. Because again, the government doesn’t want us to think that it’s responsible. It’s always not like you’ve seen, you know, Elizabeth Warren and all these.

Brittany: I was just gonna bring that up.

Connor: Yeah. All these socialist politicians and what do they claim? It’s not like, oh, we need to stop printing money or it’s not, oh, the Federal Reserve, we need to reform the central bank. No, no, no. They start blaming, like, it’s ridiculous. Oh, it’s the grocery store.

Brittany: Yes, I just read that today.

Connor: Oh my gosh. And obviously, we’re recording this. You guys saw this a little while ago by the time you’re hearing this episode, but she claimed that it was this grocery store cabal of this network of grocery stores that were colluding with one another to fix prices and raise prices to make more money because we could take advantage of people It’s like, are you kidding me? That is not how businesses work clearly.

Brittany: No, but you know what’s kind of funny is Paul Krugman, who we never agree with, oh, was actually saying some good things about this. And actually, like, we shouldn’t jump to calling for price controls. That’s when the government steps in and says, we have to make sure that you don’t pay more than this for an item because of the economy and cause they don’t understand how things work. But all everybody, although like libertarians or smart economists were basically tweeting at him saying, thank you for saying something sane. Like, thank you for tweeting the right thing. And then he deleted the tweet because he didn’t like that we were all agreeing. Oh, that’s funny. Yeah.

Connor: I can’t be seen to agree with the free market people that would my reputation. No, it’s so troubling because when you don’t understand who is responsible for the inflation, you’re gonna get more inflation, right? They’re the shenanigans are gonna continue. If you don’t know that the Federal Reserve is responsible, then the Federal Reserve can continue to get away with doing the same thing before. And look, the inflation rate is going up. That’s a problem. Oh yes. We’ve heard a lot of news about it. It’s very worrisome and it’s very harmful to a lot of people. But it’s also a distortion because the statistic that the government uses to determine what inflation is, is a totally manipulated statistic. It’s called the CPI, the consumer price index. And the government will say, okay, we’re gonna pick a few items, maybe beef and a used car and an apartment and video games or whatever, and they come up with a list and then they monitor the prices of that list. But if things get out of whack or whatever, they’ll swap out a price and pull in a new type of product. So it’s not a standardized thing, it’s not looking at the whole market. There are industries and products and things where inflation is going like crazy, but the inflation of that price of that product is not being factored into the government’s calculation because they don’t include it on their list. And so it’s a manipulated statistic, which means inflation is really higher than they’re claiming it is.

Brittany: So it’s scarier. Just like, It’s scarier.

Connor: It’s scarier, right? And it’s a big problem right now because like, I’ll give this example, right? The folks on my team here at Libertas Institute, their bills are all going up as are mine, right? Like everything’s costing. Like you said, your cream just doubled in price. And so it’s difficult because people are paying with higher costs and now homes are crazy expensive and all these things. Okay? So then like I feel like I want to compensate them more because they’re struggling and I need to pay them more just cuz they’re a valued part of my team and I don’t want them struggling, but like in my case, I run a nonprofit, but even if it was a normal business selling stuff if I were to just raise the prices on someone else, I might sell less and do poorly in business because customers aren’t willing to pay that high price or in my case, running a nonprofit, I can’t guarantee that all my donors are gonna give me 5% more or 10%. So It puts business owners in the middle of this very difficult circumstance because people are suffering and they’re not getting Like if you let’s say someone out there, one of the teenagers is listening, and let’s say you work at, I don’t know, Walmart or McDonald’s or some kind of minimum wage or maybe like 12 to 15 an hour job. So let’s say you get that job and for the next three years you’re working at that job and maybe you get a modest raise, you go from, you know, $12 to 1350 or something, but in the same amount of time, if inflation went up by, you know, 10% or 15 or whatever it really is, then your raise of, you know, 5% is you’re actually losing money, right? Because your wage, your salary, your earnings are not keeping up with the price of inflation. So it may look like, oh, I got a raise that’s exciting. And yet if everything keeps costing more, the purchasing power of your money is actually going down. You’re worse off than you were a year before. And so it’s very difficult because it’s hard for wages, your salary, your hourly rate to keep up with the rate of inflation. There’s a lot of people who work in minimum wage jobs. And that’s tough because if your company keeps you at minimum wage, well, the minimum wage has been pretty, you know, set for a while. I think minimum wage laws just need to be abolished. They don’t make any sense subject for another day. But if you make a minimum wage and you’ve been at minimum wage for five years, you’re losing money. You are not just staying at minimum wage and it’s not just that you’re not getting raises and getting paid more, you’re losing money because every single year the value of your dollar is going down. So if you were at 725 or whatever the minimum wage is in five years, maybe you’re still making 725, but it’s like you were making maybe $6 an hour based on the purchasing power from five years before. So it creates so many problems at the end of our Creature from Jekyll Island book, we have the drawing about the, you know, the folks who are, you know, investing wrong and it’s creating all these problems because the Federal Reserve is manipulating prices and the creature from Jekyll Island, right? This creates real harm for families and real harm for individuals because the purchasing power of their money is being destroyed. And that is wrong. It’s evil, it’s unjust. And so few people know what’s actually happening. That is the genius of all this, Brittany, is that the government and the Creature from Jekyll Island, not only are they doing all of this and causing all this harm, but hardly anyone knows Yeah. That they’re doing it and hardly anyone understands. So you cannot fight for a solution to a problem that you don’t even understand the government’s goal, and certainly, the Fed as well is for us to not know what they’re actually doing. And so then you have the media that’s very compliant and writing articles, like I said, oh, it’s very difficult to understand and no one quite understands. And you have politicians who aren’t pointing out the problem in the government. They’re saying it’s the grocery store cabal. It’s a conspiracy of grocery stores that are raising Brittany’s price for cream, give me a break. And so they want to distract our attention from the actual problem because if we all understood the problem, we would be able to quickly agree, I think on some solutions and actually address the issue. But the people in power, including the media, they benefit from the current system. They benefit from the newly printed money. They like that there’s all this new money coming in and it benefits them. They don’t want us to fight it, they don’t want us to stop the inflation. Its inflation is good for a lot of people. It’s not the rich, it’s not the poor. It’s the people in power who have access to that newly printed money at first before it, it creates all that havoc and devastation in the broader economy.

Brittany: Do you remember the statistic? I just heard this the other day. Like, it’s like 60%, maybe more of all the money in rotation today or, you know, in circulation today was printed within the last like two years. I will, you know, I’ll have to pull that stats somewhere. Have you heard the status we’re talking about?

Connor: I heard a lot of similar stats. The average number, the best research I’ve seen says it’s around 25 to 30%, that granted that same amount that was created in 20,  2020. And so if you add in 2021, I’m sure the number goes up, but, I don’t know that number exactly. It’s a lot though.

Brittany: It’s a lot. And it actually reminds me of, you know, you were talking about the people, the purchasing power, and people who lose, and that struck me as the Tuttle twin grandparents, right? I believe, oh, what book is it? I just forgot. It’s Creature from Jekyll Island Island is the book, right? Where we learn about the Tuttle twin’s grandparents who saved for their retirement. Yep. But now that retirement money is not worth what it was when they saved it. Think about everybody’s grandparents who save for their retirement and now it’s not worth as much. You know, you said the people being hurt is the real problem. And you’re right. The government is the only entity benefiting from this. It’s really, it’s not just scary, it’s sad, it’s really sad because our economy’s not doing super great right now.

Connor: It’s sad and it’s harmful when you don’t know that there’s an end in sight. Yes. And how can you plan if, you know, think, talk to your mom and dad for the kids that are listening, have them explain to you how they budget as a family, how they plan their finances? Have them talk to you about their concerns with inflation as you look towards next year and the year after that. And the year after that as they think about their retirement, right? If they save all this money and they’ve been hardworking, because when they’re old, they want to have, you know, healthcare and insurance maybe live in a nice, you know, retirement community or whatever. So they’re saving and they’re investing. So ask them how inflation affects their savings and how that impacts them. Right? What about your future for the kids out there? What about, you know, education? If you’re gonna go to college or you wanna start a business and your parents are, you know, saving to help you do that, or you’re saving yourself, it’s like you’re in a, like a hamster wheel, right? And you’re constantly like trying to move forward except you’re kind of staying in the same spot and sometimes even being pulled in the backwards direction. And it’s very tough. So parents,  talk to your kids about this. Guys have a conversation as a family. What does inflation actually mean? What are those hard conversations that we’re having to have? Because it’s happened throughout history, it’s happening all over the world right now. Even worse in cases like Venezuela, for example. Oh yeah. Where you have hyperinflation and it’s extremely problematic. So it’s not nearly that bad here, but it’s bad and it is causing problems and it could and might get a lot worse. So it’s important for us to talk about this, for us to understand it because when we understand the problem, we can be part of the solution. So if nothing else, guys, go open your Creature from Jekyll Island book. Let’s revisit the issue and share it with a friend. Let’s overturn all this ignorance and get people to understand what is actually happening in the economy, why inflation happens, who’s at fault, and what we can do to try and fix it. Brittany, great conversation is always, and until next time, we’ll talk to you later.

Brittany: Talk to you later.