Inflation has many ramifications. First of all, the bankers and politicians want to deflect blame from themselves, so they point to greedy businessmen who raise prices indiscriminately to milk us all dry of our monies. The above meme should put that lie to rest.
What happens when there is high or hyper inflation? The following is a list in the best chronological order this writer could muster.
1.) First, the populace will pay the increased prices.
2.) Next, loyalties to certain vendors will go by the wayside to purchase the “Cheapest” or “least expensive” of an item available.
3.) To compete, the vendor (manufacturer) will reduce the volume or quantity within the packaging while keeping the price the same. (This has been going on for several years now.).
4.) When reducing volume and quantity can no longer be effectively pursued, then the next step is to lower the quality of said product. By this time, both #3 and #4 have made it impossible for the consumer to effectively evaluate purchases through comparative analysis.
5.) Shortly following #’s 3 & 4, the consumer finds themselves strapped for cash, and they reduce their spending to necessities letting the luxuries of life go by the wayside.
6.) The manufacturer of the “luxury” items is now confronted with product that is not selling. Prices are reduced in order to recover as much of the cost of the inventory as possible.
7.) Because # 6 is a money losing proposition, the manufacturer either goes out of business, or reduces their production to a point of parity with demand, so they can still survive in business on a massively reduced scale. The ultra rich are able to support these manufacturers, but the middle class is unable to do so any more.
8.) In conjunction with #’s 6 & 7, the average consumer finds that the selection of everything is reduced dramatically (this has been going on for some time now.) An example would be a manufacturer who at one point offered a certain item in 30 colors, and now offers the same item in 3 or 4 colors. Life becomes much more drab in this scenario.
9.) If it hasn’t already happened, by now, the government is calling for price controls. Price controls were tried unsuccessfully throughout history. In America, it was tried by President Richard Nixon in the 1970’s, and was highly unsuccessful As an example, someone manufactures wallpaper. They have been told to sell it at $20 a roll. Their cost is $25 a roll, and therefore they cannot do that without running out of business very quickly. As self preservation is a natural phenomena, businesses included, they will find a way around it. The manufacturer will discontinue their selection and design a new selection that is “better” by their claim, and because we are talking aesthetics, who can argue with them? Now, the price of a roll of wallpaper is $50, and the manufacturer is profitable again. Frequently, as under Nixon, price controls are accompanied by wage contols as well.. To overcome that, some subtle nuances in the job description can justify a raise for the worker. In the case of this writer, being on commission caused sales values to rise and therefore commissions to rise – voila – a raise without formal acknowledgement.
10.) Ultimately the government thugs in charge will clamp down so stringently that there is little room for movement. At this point, shortages abound. Remember, socialism is for the rich! Socialism guarantees shortages – at least for the masses.
The above describes any form of totalitarian evil government whether Socialist, Fascist, Communist, Monopoly Capitalist etc. We, in America, are close! Price controls are currently under discussion with the Congress and the President.
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