Inflation Taints Relationships (2022 Apr)

by Barry A. Liebling

The United States is currently experiencing the worst inflation rate in 40 years. Ordinary people are distressed when they see goods and services becoming more expensive. And the increased prices do not stay at new unwelcome levels for long. The money required for food, clothing, fuel, cosmetics, and a host of essential things (but not everything) jumps higher every few weeks (or days).

There are lots of factors that can make the price of goods and services go up, but inflation is a special case. It is caused by an irresponsible and illegitimate increase of the money supply. The only entity that can cause and then accelerate inflation is the government. No private individual or organization can create dollars. Government spending is routinely accomplished with newly minted dollars, and the existence of the new money in circulation dilutes and devalues old money (the funds you already have).

Nothing about the cause and effects of inflation is new. Governments have foolishly watered-down their currencies throughout history. Competent economists (and intelligent observers) have recognized and articulated the problem of inflation for more than 200 years. Still, the catastrophic policy of government over-spending continues – possibly from ignorance and perhaps from willful malice.

There is no question that inflation makes most people feel distressed. How do you respond if whatever you have to buy gets increasingly expensive, with no end in sight? And to make matters worse, inflation puts a damper on personal relationships. It is hard to be in a good mood when your limited money is losing value.

You go to a restaurant, or a retail outlet, or a service provider and get hit with a bill that is bigger than the last time. You are sophisticated and understand that the government – not your supplier – is responsible for diluting your money. It is not fair to blame the seller for inflation. But wait, what if the supplier is taking advantage of the situation and hitting you for more money than is warranted? You wonder – how much of the price increase is attributable to government inflation and how much is due to the seller’s desire to exploit the situation for more revenue?

In ordinary, normal circumstances (without runaway inflation) this is not an issue. Vendors raise and lower prices at will, and buyers decide if it is worthwhile to make the purchase, go to another supplier, or not obtain the product at all. But if the currency is being diluted, everyone’s calculations are affected and everyone’s mood is spoiled. The default attitude is to be leery.

Note well that government boosters do everything they can to divert the blame for inflation onto others. They insist that government spending is universally benign, but “greedy businesses” are nefariously raising their prices and are the real cause of your misery. This often leads to a call for “price controls” which – if enacted – puts a legal limit on how much a vendor can charge customers. And – as history has demonstrated – price controls inevitably lead to even greater misery.

Consider personal relationships between buyers and sellers again. As a buyer, I frequently feel anxious just before I make a purchase. I am anticipating I will have to pay more than last time, which I had previously labeled as “too much.” If the price goes up again, I am resentful, even if I am personally acquainted with the seller and we have a long-term friendly history. If the price does not go up, I am relieved, but I worry that I will get hit with a larger bill on the next shopping occasion. Either way, instead of being satisfied, I worry about the next encounter.

What about the sellers of goods and services? They see that their customers are unhappy with rising prices. And they know – first hand – that inflation makes it impossible for sellers to hold the line. It is natural for sellers to feel resentment toward unhappy customers, since their clients do not fully appreciate the tough circumstances business owners face. Where previously sellers would frequently develop positive affection for their clients, a diluted currency pushes sellers to by wary and suspicious.

Here is a message to government officials responsible for monetary inflation. Your printing and spending escapades have put a damper on economic activities, and that is bad by itself. On top of the trouble you brought to the commercial world, you have made it increasingly difficult for ordinary citizens to feel friendly and benevolent toward one another. When, and if, you recognize the damage you have done you will have a lot of apologizing to do.

*** See other entries at in “Monthly Columns.” ***

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