TL;DR: economists are still stuck in the idea of the market as a perfect force for reaching optimal outcomes. They’re ignoring the simple fact that businesses are putting prices up purely to increase profits. And that they can do this because the economic ideal of perfect competition (where many small firms compete with near-identical products) does not exist. We have a small number of very powerful businesses—oligopolies—in nearly every market for consumer-facing goods.
I’m not saying I disagree or agree, but I’ve heard a lot of friends and colleagues start to decry inflation as simply a tool of the government. I haven’t heard this argument so often before. Am I missing new data or a political trend? I’m not huge in social media or TV news FYI.
You’re missing basic knowledge, not new data or a political trend. If you live in the western world, you should know everything is about debt and inflation. How can college cost 75k a year? Access to debt. How could people but housed after 1975? Access to debt, how can people afford health care? Access to debt. Every time a large portion of society gets ahead of the curve, there needs to be price increases to increase the debt. That’s it. That’s everything in the US and many western countries. The debt has to be increased. That is where the wealthy make the most profit.
Government spend much money. Much money come from tax and borrowing. Let’s pretend there’s $100 in the economy. Gov’t takes 10% in tax. They spend $10, and the rest of the people share $90.
When next year comes, the economy grew to $110 and the government Collect $11 in tax, but actually decide to spend $20. Meaning they borrowed $9.
Year 3, economy grows to $150. Government gets $15 in tax, everyone feels “richer”, but government has to borrow to pay the $9 on last year, plus whatever new spending this year. Let’s say gov’t now owes $50.
So the next year! They create inflation and everyone has lots of money but can’t afford shit. Maybe economy balloons to stupidity like $500. Government takes $50, and pays off their debt. Or could.
In in this way, over time, inflation helps reduce the massive debt load incurred by governments because $1 is a lot easier to get in 2023 than it was in 2019.
Your analysis would be true if many people’s economies who weren’t running up debt vs GDP were doing just fine. They are not. Countries with the same relative debt are way worse off lately.