Jim’s Mailbox

Posted at 8:42 AM (CST) by & filed under Jim's Mailbox.

Bill/Jim,

Two points highlighted here are scarcity of labor and cost cutting to maintain profitability.

One of the tenets of this article is that human capital is irreplaceable.

My take? The solution will be Slavery.

It’s slowly happening now with excessive monetary taxation and asset confiscation.

People won’t have a pot to piss in.

The second is creating the illusion of price stability by providing less product while maintaining a stable price.

“Shrinkflation has reduced cereal boxes such that the boxes are not wide enough to stand up on the shelf.

For a glimpse into what’s in store for us, simply read ATLAS SHRUGGED by Ayn Rand, whose most ardent follower was none other than the former Fed Chairman and gold bug, Alan Greenspan.

CIGA Wolfgang Rech

Mr. Smith has a point or two Wolfgang!

Bill

The Sources of Rip-Your-Face-Off Inflation Few Dare Discuss
June 8, 2021

We’re getting a real-world economics lesson in rip-your-face-off increases in prices, and the tuition is about to go up–way up.

Inflation will be transitory, blah-blah-blah–I beg to differ, for these reasons. There are numerous structural sources of inflation, which I define as prices rise while the quality and quantity of goods and services remain the same or diminish. Since the word inflation is so loaded, let’s use the more neutral (and more accurate) term decline in purchasing power: an hour of your labor buys fewer goods and services of lesser quality than it did a decade ago or a generation ago.

While the conventional discussion focuses on monetary inflation, i.e. expansion of money supply, the real rip-your-face-off sources have nothing to do with money supply. The rip-your-face-off sources are scarcities that cannot be filled by substitution or globalization.

Consider skilled hands-on labor as an example. Let’s say some essential parts in essential infrastructure require welding. There is no substitute for skilled welders. But wait, doesn’t economic dogma hold that whenever costs rise, a cheaper substitute will magically manifest out of a swirl of dust? That dogma is false in cases such as skilled labor.

The only substitute for a skilled welder is another skilled welder, and while theory holds that there will be cheaper welders who can be brought in from elsewhere, this is also not true: due to deficiencies in education and a cultural bias against manual labor, there is a shortage of skilled welders virtually everywhere.

Moreā€¦