Difference between price and value

Friday’s article, “Weather, economy cause inflation,” quoted local residents and the Federal Department of Agriculture as stating that adverse weather conditions and high gas prices are causing inflation in food prices. This information is incorrect, and we must understand the difference between price versus value, shortage versus scarcity and higher prices versus inflation.

Adverse weather conditions do not cause inflation, but rather, a leftward shift in the supply curve, raising the marginal value of certain foods. In free markets, such a scarcity is compensated for almost immediately by temporarily substituting complimentary goods or by importing goods until the scarcity blows over. Only authoritative subsidies and price caps will extend the shortages caused by the scarcity.

There is currently no scarcity of oil; therefore, to claim that rising oil prices are causing inflation is backwards. It is inflation that causes oil prices to rise. Inflation is the devaluation of paper or electronic money due to an increase in the paper/electronic money supply, otherwise known as counterfeiting.

Counterfeiting is the only cause of inflation. Counterfeiting is the printing of any paper money or the loaning of any electronic money that is not backed by either tangible collateral or a commensurate amount of service labor. Counterfeiting is the sole job of the Federal Reserve.

Inflation hovers at 5 percent annually, fixed by the Federal Reserve. The Rule of 69 on exponential growth tells us that American market prices double every 13 years and 10 months; any quick empirical research into accurate sources verifies this (don’t be fooled by the infamous “average growth” trick referenced in the article).

Thus, while we may be paying higher “prices” for gas and food, the “value” of sustenance and transportation in America is probably at an all time low, meaning accessibility is probably at an all time high. In layman’s terms, very few us, if any, wake up in the morning and worry about whether or not we’ll eat or make it to work on any given day, and everyone I know would readily give up $3.50 to not have to walk 25 miles.

Jonathan Bender
Maryland Graduate Student

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