One of the most repeated lessons we see over and over again throughout human history is that bumbling politicians almost invariably try to ‘fix’ inflation with price controls.
Emperor Diocletian famously imposed strict price controls across the Roman Empire in 301 AD to fight off inflation that had resulted from a massive debasement of the Roman currency.
Naturally, Diocletian’s price controls weren’t successful. They’re never successful. But that dismal record of failure hasn’t stopped politicians from thinking that they can do it better.
From Hammurabi to modern day Argentina, from ancient Egypt to Richard Nixon (who “ordered a freeze on all wages and prices in the United States” in 1971), price controls have literally never worked, ever.
But I’m suuuuuuure Elizabeth Warren’s price controls will succeed.
US Senator Elizabeth Warren doesn’t think inflation was caused by government edicts shutting down the economy, massive money printing to pay for deficit spending, or handing out free money while supply chains were restrained.
Last Thanksgiving she blamed “big poultry” and “greedy corporations” for “charging Americans extra just to keep their stock prices high.”
And now Warren is at it again, telling her Twitter followers, “The prices Americans are paying for groceries and other essentials are at all-time highs. One of the reasons? Giant corporations are price gouging & reaping record profits.”
To solve the problem, she recently introduced a bill to make it illegal for businesses to set an “unconscionably excessive price during an exceptional market shock.”
“Unconscionably excessive” is not defined.
But “exceptional market shock” could be caused by “a natural disaster, failure or shortage of electric power or other source of energy, strike, civil disorder, war, military action, national or local emergency, public health emergency, or any other cause of an atypical disruption in such market.”
In other words, we have been experiencing a constant “exceptional market shock” for at least the past two years, with no sign of it stopping.
Perpetrators will be “presumed to be in violation” if they set a price higher than the market average of the previous 120 days.
In short, the bill would set price controls.
First of all, this is obviously going to make inflation worse.
Regulation is inflationary. Instead of doing something productive, companies will have to hire compliance officers and lawyers to fight off the “preponderance of evidence” the Federal Trade Commission needs to accuse them of “price gouging”.
Second, why only care about giant corporations price gouging & reaping record profits?
The US government reaped a near-record $3.6 trillion in 2020 and then a record $4.3 trillion in 2021 tax revenue, according to the Treasury Department.
Is that not tax gouging during these years of crisis?
If Warren really cared about Americans making ends meet, she would work to cut every tax she could think of.
Because taxes are also inflationary— income taxes force companies to pay employees more, gas taxes raise the price at the pump and the cost of transporting goods, tariffs and sales taxes increase costs, and so on.
Warren also had the audacity to say corporations “get away with [raising prices] because our markets lack competition.”
But she seems to believe that her price controls will apparently stoke competition???
It is also noteworthy that in the past, Warren has denied that wealthy Americans may leave the country to escape high taxes. Wrong again Lizzie!
Just look at the record numbers of people renouncing their US citizenship, or the massive backlog of successful people moving to Puerto Rico to take advantage of the island’s generous tax incentives.
Now, history shows us that after price controls come people controls.
Emperor Diocletian of the Roman Empire, for example, imposed the death penalty on those who didn’t follow his price controls. And then he forbade anyone from quitting their jobs or leaving town.
This isn’t some wild conspiracy theory— just look at the people controls they put in place during the COVID lockdowns.
The good news is that with governments following the same thousands-years-old script, it is easy to get out ahead of their controls with a proper Plan B.
For example you can use certain retirement structures to either reduce your current taxable income, or alternatively allow investments to grow tax free— we’ve written about this a lot lately to our premium Sovereign Man: Confidential members.
You can reduce the impact of inflation by keeping some savings in real assets like precious metals. Gold and silver have held their value since long before Diocletian, but haven’t yet seen the price increase you might expect from 40-year-high inflation and stock market shocks.
And you can make sure one government doesn’t control your ability to cross borders, live, or work where you please, by obtaining a second residency, or even better, a second citizenship.
The point is there will always be Diocletians and Warrens whose solutions just make the problems worse.
And there will always be ways for intelligent people to make sure they don’t take the brunt of the politicians’ mistakes.
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Q: Are corporations, in fact, recording record profits?
Probably, but who cares? If your record profits are caused primarily by inflation, then you may be just treading water … or worse. If your profits go up 20% while the value of each dollar goes down 20%, nobody’s better off. Corporations with monetarily inflated record profits one year can be bankrupt the next.
Once most people’s “cushion” is eroded, they just stop buying shit. Get yer preps done now, the Fed’s lame rate increases may be enough to crash the stock market, but they won’t be enough to stop inflation (so we get the worst of both worlds).
‘Cushion’? Euphemism for Credit Cards Maxed Out?
hopefully not, but maybe.
I just meant that most people, even poor people, have either some savings or some flexibility in what purchases they prioritize, but at some point there’s no wiggle room and people cut out all but the essentials.
I expect that some people believing the “inflation is transitory” narrative, or having normalcy bias that tells them everything will go back to normal soon, may indeed max out CCs as their “cushion” to maintain a lifestyle.
Remember Katrina? Uncle Sam will take care of you.No need to pack a diaper bag or bring a water bottle.
Just a reminder,your own government is ususally far more likely to kill you than a foreign government.
Record profits? maybe on one set of papers, but lowes and home depot are Still basically bankrupt, and up to their eyeballs in debt. Along with a host of others. Word just hasn’t hit the street yet. Think sears or kmart or whatever the holding company is called now.
And there was one other little concern…oh yeah. the stock markets.
All these historical examples of how price controls don’t work are irrelevant. The “formula” for success has changed by adding two words; —–> Price controls will work this time!
Like Obunghole said “We are the people we’ve been waiting for.”
Is that anything like just one more time Charlie Brown?
Just like —->> Communism will succeed this time!
The last industry to have Nixon’s controls lifted was the retail/wholesale petroleum marketing industry. From 1979-89 I was Office Mgr, then GM of a petro marketer and compliance was a bitch until reagan ditched them in 1981. Plus, you had supplier rationing due to the Iran Hostage Crisis.
Still, larger marketers worked a way around it, creating a daisy chain of false fronts. You’d just sell to Company X, who’d sell to “Y”. You owned all 3 and would charge the max allowed.
Also, the only way to get more product was to file an application w/ the USG for a new C-store and request for an allocation of 100K/month, when the expected sales would be 50K. If that was granted and your rationed allocation was 80%, you’d sell the 50K at retail and sell the remaining 30K wholesale, making around $800-900 per transport load of gasoline (8,800 gals) and never “touch” a gallon of that.
If controls come, it’ll be rinse & repeat in every retail/whole sale biz.
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