Inflation and Its Causes

There are three different kinds of inflation. They are called, cost plus inflation, need pull inflation and spiraling inflation. These together with the laws of supply and need allow economists to predict future economic behavior. Then too, there are people who sustain a supply side economy as opposed to a need side economic ecosystem.

Within a stable economy, cost plus inflation is a normal occurrence as a consequence of cost increases of wages and natural resources. The plus part of the equation is the businesses’ expected return on investment. Also, when need exceeds the supply of certain products this kind of inflation is called need pull. That is also the second worst kind of inflation and is generally a short term condition within an otherwise healthy economy.

The worst kind of inflation is spiraling, or run away, inflation and that is the consequence of rising costs that cause rising prices which again raise costs of production. Greed and future expectations, for the most part, causes this kind of inflation.

The last time that our economy suffered the effects of spiraling inflation was after the 1973 Arab oil embargo. The consequence of that unfortunate situation caused the failure of thousands of businesses and a prolonged record rate of unemployment within our society.

The Republicans called it a recession, since they were in strength. The Democrats called it a depression because they wanted to gain strength. The end consequence was lasting price increases of as much as 1,000%, or ten times the cost for the same product. Gasoline was thirty cents per gallon and now the price is over $3.00 per gallon and rising.

Well, we have reached the level of need pull inflation and will most likely reach the level of spiraling inflation if nothing is done to stop the greed of those multinational oil companies. There is no oil shortage.

There are tens of billions of barrels of oil nevertheless untapped under the Earth’s surface. The real problem is the without of oil refineries that was produced by the oil companies. I was employed by Texaco and there was no other good reason for closing so many of their refineries.

Also, the application and use of supply side economic theory is the best way to cause a World wide depression. You see, by restricting the supply of a product you create shortages that cause the price of that product to increase. Then again, the retail price is determined by the seller and you either pay the asking price or don’t buy the product.

Competition is not a factor because the market price is being forced upward as a consequence of the speculation by greedy, get high quick, people who trade commodity contracts.

Briefly, all of these actions, if not stopped, will most certainly cause the next depression and untold experiencing of the people within our society, as it did after the last time the owners and supporters of multinational oil companies were conquer by greed.

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