I heard 3 of my stockers today as they were unloading a pallet of beans etc. onto the grocery shelves
talking about what they were going to "do" with their $5,000 “DOGE Dividends.”
Not only would that give-away be inflationary, but it’s exactly the kind of handouts everyone always says the
government shouldn’t be doing…we
should be paying down the national debt so we can quit paying the HUGE amount of interest that debt creates!
That
814 billion dollar pandemic stimulus between 2020 and 2021 may have added 2.6% to U.S. inflation. (Trump paid out two of them in 2020 and Biden did the last in 2021.)
When a government gives people more money, they
use it to buy more goods and services, which
increases demand, and
raises prices. This is known as the
"demand-pull" mechanism
There are the
three main causes of inflation -
demand-pull,
cost-push, and
built-in inflation.
- Demand-pull inflation is when demand for goods and services outpaces supply
This can be caused by increased consumer spending, investment, or a low unemployment rate
- Cost-push inflation is when the cost of producing goods and services increases
This can be caused by rising wages, raw material prices, or government taxes
(including tariffs)
- Built-in inflation is when workers demand higher wages to keep up with rising living costs This can lead to a self-reinforcing loop of wage and price increases
I know everyone might like an extra 5K, but as you can see from the three causes of inflation (above)
all this stuff being proposed could jack inflation back through the roof.
As a grocer, I can raise prices if everyone else does, so my employees and I will be OK because
people have to eat, and will continue to buy groceries.
But there are huge sectors of the economy that won’t survive sky-high inflation. (again!)
P.S. The stockers were also talking about how money from the rare-earth minerals in Ukraine is going to be distributed to Americans too!
REALLY?
Who needs those rare-earth minerals? Umm, that would be Musk.
And
governments don’t do mining!
That would be private companies, who are NOT going to be sending us checks!