Crapflation, and Other Mysteries of the Monetary System

Many in the U.S. are hopeful that the incoming administration can solve the problem of inflation. This scourge continues to cause heartache for the population, particularly individuals and families with low income and without assets.

As with so many other issues, the first step in any serious campaign to resolve the dilemma is to correctly identify the problem, without political propaganda and other extraneous inputs. Our rulers can begin by admitting the extent of the damage. Government statistics on price increases (and unemployment) are nothing less than fraudulent. Anyone with two brain cells to rub together knows that prices are not rising by three percent annually, or whatever similar ridiculous figure is being proffered by the sorcerers in Washington.

Moreover, in addition to nominal price, there are other manifestations of decreasing purchasing power that need to be included in the equation. One of these is shrinkflation, the shrinking of quantity for a given item. We have all done the supermarket double-take when encountering, say, a bar of chocolate that is suddenly smaller than it had always been. The price, of course, remains the same or rises.

A related phenomenon is crapflation. This means reduction of quality for a given item. One day, out of the blue, you receive a shoddier product, or inferior ingredients, but, once again, at the same or higher price. It’s just another way to hide the erosion of purchasing power.

So what exactly is this “inflation”? It is not, as our Leftist friends would have us believe, a cabal of cigar-smoking capitalists in the back room of Kroger headquarters, rubbing their hands together and guffawing as they greedily jack up the price of milk. Rather, consider the word itself. Something has been inflated; think of tire pressure. And that something is the money supply.

This used to be common knowledge. My 1991 Webster’s Dictionary defines inflation as “an increase in the volume of money and credit relative to available goods resulting in a substantial and continuing rise in the general price level.” Today, Webster’s still conveys the general idea, but with some obfuscation: “A continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services” [emphasis mine; also note the flipping of the order, and the absence of the word “substantial”]. The American Heritage dictionary just buries its head in the sand: “A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money.”

Going further up the causal chain, the expansion of the money supply is primarily the result of “money printing” by means of an inscrutable process involving the Federal Reserve, the Treasury, and the banks. Much of this takes place to either fund the obscene Federal deficits or to goose the stock and housing markets. Incidentally, the money supply has approximately doubled in the last ten years, with the magic printing press conjuring around eleven trillion dollars into existence. Yes, that’s trillion with a “t.”

Increasing prices can never be reversed until this monetary hocus-pocus is ended. Here we have the crux of the matter. Compared to this, every other factor is minor. If they double the quantity of something, what do they expect will happen to its price? That’s right, it will be cut in half. Would any sane and honest person deny that the purchasing power of the dollar has been cut in half since 2015?

But yes, there are some other factors contributing to price increases, usually due to government overreach. One obvious instance is government regulation. Automobiles, for example, are far more expensive than need be, due to the onerous safety, emission, and mileage requirements that are now out of control.

Then there are the downstream effects of government subsidies and other market interventions, which create artificial demand and speculation, which drives up prices. Suppressing the interest rate has led to the perversely-valued real estate market, as well as a host of other bubbles and malinvestment across the economy.

Another case of market intervention is government-backed student loans. Allowed to feed at this bottomless government trough, colleges and universities can keep hiking tuition; after all, the money is always there. Incentives for competition and efficiency have effectively been destroyed. (And the Leftist propaganda machine has its ideological hatchery fully funded.)

Another factor is crime. In addition to successful shoplifiting, prevention of such is a significant expense that is passed on to the consumer. Viewing the security personnel at my local Walmart, one would think they are guarding a top-secret military installation.

Let us not forget the spreading plague of idiocy and incompetence. This leads to defective products, lousy repairs, wasted time, and other ill effects that in the end, all cost money. The deteriorating quality of the population also makes neighborhoods, or even entire cities, unlivable. This shrinks the available decent living space, driving up demand for housing and amenities in the zones with "good schools."

In summary, I hope the incoming Trump Administration has the stomach to tell it like it is. Otherwise, the world of monetary make-believe will continue on its merry way.