This thought came to me as I was food shopping. So I know there are things that increase the price of certain items (beer, cigarettes, sugar tax – UK) but they also increase with inflation each year like other foods such as bread.
Apparently, the average inflation raise over the last 10 years in the US is 2.37% as of July 2023. So if it is the same in another 10-years, over the space of 20 years inflation would be 4.74%, if we say inflation is the same? And so on and so on. If it continues wouldn’t prices, for say, bread just end up getting higher and higher and be like $10-15+? And as wages don’t rise with inflation the same way foods do fewer and fewer people each decade could afford it?
Now this is just random thoughts I had when shopping and I am not making any comments on any politics. All I wanted to know is, is my thinking true that prices will just go up and up indefinitely decade-on-decade, why or why not? And I am an idiot so imagine I am 5.
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Edit: Went to sleep and woke up to about 300 notifications, thanks for your explanation to a Neanderthal like myself.
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In: 4366
You get inflation because of exploitation by an elite class. We have fiat currency, so they create money with no tether to underlying energy resources and no interest, thus creating a compulsion towards growth. This creates some inflation and then growth always trends to market concentration aka rent seeking, which in the best case is called demand exceeding supply, but in all cases is built upon the lie of externality. This rent-seeking creates more inflation.
Traditional economics is built upon hiding the omnipresent effects of saying side effects don’t matter, that everything in this garden of life isn’t connected to everything else, only inputs and profits. This is the lie of externality and this lie fuels exploitation, which is the engine of capitalism.
In this way inflation is so much a measure of current exploitation, though there is a lag so it’s more like externality causes hysteresis and inflation is the impact of prior ignorance, an ignorance which again is willful because its how you normalize exploitation, its the cognitive dissonance of capital.
Now our economic engine is literally powered by energy, and so it is this market which continually drives inflation, though these days financial capitalism and it’s cancerous quest for continuous growth is the strongest driver: going on physics alone we see that constant growth is a synonym for the very act of inflating.
But back to energy, Nate Hagens points this out well on YT: all this inflation and growth and economic activity is powered by an incredibly unique and rare moment in the planet’s history: the carbon pulse. We have liberated energy via carbon fossil fuels from the earth tens of millions times faster than it was sequestered. The correlation between oil consumption and GDP using logarithmic scales is .96r², ie in lockstep , oil is the economy.
The amount of work in a barrel of oil is equivalent to 4.5yrs of one human’s labor. This is seen in the abundance of machines and the energy that powers them, this comes out to about 4.7 billion human worker equivalents being added to the economy every year. Exponential levels.
As the economy grows we are creating new nodes, city growth transpo hubs and routes new products etc, each of which requires energy to maintain. Our economy then is a huge energy dissipating structure operating at unsustainable levels, and that word dissipating is key because it points to what is being ignored, what is trying to be outrun: the physical fact of Entropy.
Externality, then, is a lie most fundamentally because it ignores the omnipresence Entropy, which to paraphrase an old saying about the Devil, you may ignore entropy but it will never ignore you. The exponential growth powered by the never-to-be-seen-again carbon pulse that powers inflation is not sustainable in an energy system like our planet. Inflation then is fundamentally a measure of debt owed to entropy and which our future generations will pay with their lives and the decreased quality therein.
The point is that a very small percentage think they will still be on top no matter what catastrophe comes and that is why we proceed headlong down this path. Inflation doesn’t hurt them and helps their profits and power, and this is why inflation will always increase, it’s built into their game they control.
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