March 31, 2011 Leave a comment
Wal-Mart CEO Bill Simon says inflation is going to hit hard beginning in June. Simon claims that prices will begin rising dramatically, though he doesn’t say what markets will be affected the most. We can only presume he’s speaking about markets that Wal-Mart sells a lot of such as clothing and food. This isn’t a surprise to folks who pay close attention to commodity markets. Cotton prices have doubled in the last year, corn us up 75%, meat is up 25-50% depending on animal, butter is up 25% etc.
Meanwhile gas prices have doubled since Obama took office. Gas prices averaged $1.79 when Obama took office, they now average $3.58. Here in Michigan gas is around $3.69, in California it’s over $4.00 a gallon. I’ve seen diesel for $3.99 in Michigan, which means transportation costs are through the roof. Gas prices, particularly diesel, are going to lead to the price increases Wal-Mart is concerned about. Today oil is over $106 a barrel, the highest it’s been since Obama took office. If that price holds, gas prices will go even higher.
I have been concerned about inflation since Bush’s bailout in 2008. The Bush bailout and the Obama stimulus helped launch this country into a massive budget deficit. Obama has done nothing to cut the deficit, in fact Democrats are busy declaring that Republican desires to cut a measly $40 billion from the budget are “extreme.” Worse, the Fed is busy printing money like cut rate counterfeiters. That’s what’s really killing us. For each dollar they print, the money we earn each day becomes worth less. This means we can buy less with our money when prices rise.
Obama is clearly uninterested in inflation, he’s barely discussed the matter at all. I said a couple years ago that inflation would be the biggest issue in the 2012 election. Don’t be surprised if it is right up their with jobs. Obama has ignored this problem, going so far as to pretend it doesn’t exist. Those of us who go to the grocery each week have watched inflation in action over the last year as prices for just about everything have increased substantially. Everyone has seen the price of gas increase dramatically over the past year.
What is the solution to this inflation mess? First, the Fed has got to stop printing money. The Fed has printed billions over the past two years and it’s negatively affecting prices and making savings worthless. Second, government needs to make substantial cuts in spending. Their out of control spending is part of the reason why the Fed is printing money, those two issues go hand in hand. Third, government needs to cut taxes so that the costs of inflation are offset for the middle class and in fact for all taxpayers. Fourth, government needs to reduce regulations, especially on small businesses. A reduction in regulations, including the simplification of the corporate tax code, will spur the economy and ultimately offset inflation for most Americans. Fifth, Obamacare needs to be repealed.
Instead of doing what I suggest, Obama will continue to propose more government intervention in the economy. He’ll create more boogy man bad guys like those wicked oil companies or the banks or Wall Street or pick your big business that doesn’t donate to Democrats. Those tactics, which Obama has employed for years, will not halt inflation and will not help the middle class. More government planners dictating the economy from on high in DC will not fix inflation and will not make things easier for the middle class. Only a reduction in government and stopping the Fed printing press will halt inflation and make things stable for us in the middle class.