Predictable

I am not an entrepreneur. There are two main reasons for this. The first is that I have a generally low tolerance for acknowledged risks. The second is that I have a poor track record for being able to predict what the future might hold. And, given that these are the two traits that appear to best predict success as an entrepreneur, I've concluded that it is a path that I should stay away from.

But like any blind squirrel, I do, on occasion, find a nut. Last May, I was opining about the restrictions put in place to combat the growing SARS-CoV-2 pandemic. And I noted that there was a high inflation risk associated with adding money to the economy when the overall basket of goods and services wasn't able to grow at a rate to match it. Now, a year and a half later, there's a certain amount of public heartburn over higher than normal rates of inflation. Now, I'm not going to take credit for being a seer or anything. Predicting that jacking up the money supply when output of goods and services is depressed may lead to inflation isn't exactly a difficult call to make. And I wasn't betting on the ongoing supply-chain problems that contribute to the current situation.

So instead, where I'm going with this is that I suspect that for many people, their conceptualization of money is what stands in the way of their understanding of how economics actually works. If I may be allowed to repeat myself, I'm unsure of the degree to which people understand that while modern economies work on the exchange of money for goods and services, money is not itself a viable substitute for those goods and services. And I think that the inflation worries that are driving economic unease (and perhaps worsening approval numbers for the Biden Administration) are an outgrowth of this lack of understanding.

Part of this may be the simplistic way in which people talk about inflation. National Public Radio's Greg Rosalsky, for instance, puts it this way: "We all know what inflation is. It's when prices go up. You know, companies charge you more for stuff." And while that's an easy explanation, I don't think that it really gets at the underlying mechanics of how inflation actually works, and it leads people to think that the choices that drive it are in the hands of a different group of people than they may actually be.

Given that the Trump Administration was still in office back in May of 2020, I don't know that a better understanding of what the government was seeking to do, and the potential aftereffects of those choices, would have been a reasonable expectation. Governments in general tend to be leery of openly noting the trade-offs that they make when setting policy, and the Trump Administration seemed to be downright allergic to it. And I suppose that they may have been right to have been. The general consensus is that the Biden Administration is taking the brunt of the blame for the current levels of inflation, despite the fact that very little of the causes are the Administration's doing.

I don't know that a better understanding of the causes of and contributors to inflation would have made the public more prepared for this. That seems to run counter to human nature. But even with my very shallow understanding of the economics of inflation, this wasn't a surprise to me. Perhaps people being better educated on what money is and how it functions in an economy could have made things better. But, more likely, it's just another item on the list of things that people are often too busy to think about.