The only reason we tolerate our economic system is that we are indoctrinated by economists to believe that ours is the best option. IT’S NOT!
Economists do not open their eyes.
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Many would listen to these two renowned economists talk about Ali Velchi and suppose that our economic system is immutable. They would have you believe that the economy follows a specific rule. We have a manipulated economy where the poor and middle class are always asked to pay the price to unravel the plunder.
The big issues plaguing Americans right now are inflation and interest rates. Businesses raise prices, which is the definition of inflation. And the Federal Reserve is using that as an excuse to raise interest rates.
The widespread inflation we see is primarily corporate greed. Take the example of gasoline. Oil companies continued to raise gasoline prices. People continued to pay the higher prices. They have not reduced their consumption substantially. The oil companies knew Americans had money in their pockets from savings from doing less during the pandemic and help from the federal government. And the oil companies legally stole that money with higher gas prices, aka inflation. Note that at no time did an American go to a gas station that didn’t have gas. There has never been a shortage. As the supply was plentiful, gasoline prices should not have increased. In fact, it is clear that as soon as the oil companies perceived the destruction of demand, a term used to indicate a permanent change in the behavior of consumers, buying less gasoline, prices exploded downwards. I discussed this on the Muslim TV Network.
Companies have pricing power. As such, we cede to them the ability to take our wealth. Supply and demand pricing only works for things we don’t need. Competition for a needed resource is not enough because firms inherently collide to keep prices high to maximize profits.
And when irresponsible corporations won’t do the right thing, the Federal Reserve penalizes the poor and the middle class by raising interest rates. It is yet another entity that dips into the pockets of Americans.
Inflation increases the price of products. Business profits increase because they ultimately sell fewer products for more money. Higher interest rates simply make middle class and poor debt much more expensive.
In short, corporations, in their endless abandon, have outsourced manufacturing, instituted just-in-time inventory, and poor forecasting. Any disruption creates shortages. These shortages provided cover to raise prices not only for items stuck in the supply chain, but for all products.
First, the poor and middle class must pay for corporate incompetence. And second, to force corporations to stop raising prices, they push the economy into a recession by taking money from the poor and the middle class in the form of interest or job losses. And who wins? Corporate executives and shareholders are winners in the long run.
There are solutions. We discuss this a lot on our show Politics Done Right. Corporations have too much power. We must define a set of services and products deemed essential and remove the profit motive from them. Pass pricing should be left to non-essentials. Some will balk because it’s different. But it will save us all from the greed inherent in our economic model.
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