What Is Inflation and How Have Americans Stopped It Before?

What are you paying more for now and how is it impacting your wallet? You know the U.S. has inflation when an Arizona Ice Tea starts to cost $1.50 instead of the 99 cents (!) During times of inflation, things start to cost more and more each time you head to the grocery store, gas station, or literally anywhere. Not everything may be getting more expensive, but as a whole, inflation means that things are generally more expensive than they were before.

So how does inflation happen when we live in a global marketplace with millions of interconnecting goods and services? Put simply: it’s the employer. The capitalists, the person or group who control the means of production, are the ones who set the prices of things, not their employees or other stakeholders. The reason these folks raise their prices is generally quite simple: they aren’t running a charity, they’re here to make money, and charging people more for goods and services is a way to make more profit. They can get away with it.

Of course, let’s not forget that we’re still in the middle of a global pandemic. This has caused all manner of goods to become more expensive as brittle global supply chains buckle under the weight of pandemic related closures, the war in Ukraine, and the other successive crises happening all over the globe.

So is raising interest rates the only way to deal with inflation on a national and international level? Absolutely not, we just don’t have the stomach for anything that isn’t a market based approach. In the 1970s, Nixon instituted price controls to deal with inflation (imagine a Republican advocating for that today), and during WWII, FDR instituted rationing to curb the price of goods. And businesses obeyed! Could you imagine Biden sticking it to corporations in the same way?

Richard D. Wolff is a Professor Emeritus of Economics at the University of Massachusetts Amherst. Follow Professor Wolff on Twitter

Recorded July 10rd, 2022

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