A long-haul trucker took to TikTok this week to explain fuel prices in terms every American can understand: “What are y’all gonna do next month when your gallon of milk costs $11?”
Spend a lot more money on milk.
Everything else, too.
Here’s the video, including a little NSFW (but very appropriate) language:
I actually see this as a win. Food shortages cause revolutions and there's no other way outta this mess. pic.twitter.com/RlIVdIaqKu
— Brian w/ an i (@WilhelmDerErste) March 10, 2022
In my small town of Monument, Colo., we’re feeling the squeeze even though gas and diesel prices are always below the national average.
I drive a diesel SUV, so that’s the price I follow most closely.
The nearest station that was selling diesel for $4.05 on Saturday was selling it for $4.65 on Sunday and is selling it for $4.85 today.
That’s a 20% increase in less than a week, and, I’ll reiterate, Colorado has fuel prices better than most states do.
Currently, milk is going for a little over $3 per gallon, so $11 doesn’t seem likely by next month.
That’s the good news if you’re willing to let me stretch the definition of “good” thin enough to cover inflation at 40-year highs.
The bad news, as my colleague Rick Moran wrote earlier on Thursday, is that we’re now in the inflation expectations phase of an accelerating inflationary spiral:
Even if the supply chain crisis eases, the problem with prices is expectations of inflation. This means that in every transaction, every economic decision made by individuals, the prospect of higher prices will be present.
Workers will want larger raises and want them more often. The inflation “premium” will affect interest rates, which means mortgages, car loans, and consumer credit will all go up.
Also, when people believe that, if they wait until next month to buy something, it will be more expensive, they’ll push up their purchase to this month. That increase in aggregate demand — you guessed it — adds to the existing inflationary pressures.
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Short version: When people expect inflation, they engage in behaviors that increase inflation even more.
There are three different things Washington could do to put a stop to inflation. Doing one or two would be nice, but we’d enjoy the biggest and fastest benefits if Washington would do all three.
- Have the Fed jack up interest rates to rein in inflationary over-borrowing (including by Congress)
- Massive deregulation so that productivity could start catching up to the inflated money supply
- Congress start living within our means
There’s a fourth thing: If the Fed would stop printing up cash by the trillions to keep the Treasury solvent. But if we did the first three, this fourth one would take care of itself.
But the Fed can’t jack up interest rates because that would also jack up the interest paid on our $30 trillion debt. Maybe you know someone who bought a house they could only barely afford at a low-interest rate, but couldn’t afford it at all when their variable rate went up. That’s where we are now, only we’re talking $30 trillion, not $300,000.
Presidentish Joe Biden ain’t gonna deregulate anything. From what kind of car you should drive to what kind of food you should eat to how much grooming your kids should be subjected to at school, the Democrats have a regulation for that.
Congress went full Thelma and Louise on spending 20 years ago. We’ve known for a long time now that we were driving straight towards a canyon. But at every opportunity to change course, Congress has instead gripped the wheel tightly dead ahead while keeping the accelerator glued to the floor. All we’re waiting for now is the car to hit the cliff wall.
I get the feeling that someday, we’re going to look back fondly on $5 fuel and $11 milk.
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