They’re Lying to Us About the True Causes of Inflation

Sigh. Fine. Let’s talk about inflation. Everyone else is!

Inflation is the highest it’s been in four decades. Which you know if you’ve paid attention to the news or had the misfortune of listening to a conservative Boomer dad complain recently. If you’ve casually absorbed information from these sources in recent weeks, then you’ve probably also heard that a) there’s no end in sight, b) this is all the government’s fault, and c) nothing can be done to stop the vicious shadowy hand of inflation!

In the words of noted jelly bean lover Ronald Reagan, “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” (Join our Patreon to make our weekly newsletter Giraffes That Look Like Ronald Reagan a reality.)

Scary stuff, right? Won’t somebody please think of the [checks notes] price per barrel of crude oil????

In all seriousness, I have to work hard to make jokes about inflation. Because it has real negative effects on real people who could really use a fucking break right about now. Somebody choosing between buying overpriced milk for their kids or overpriced gas for their commute to work probably doesn’t give a shit about what’s to blame for high inflation. They just want it to stop.

Which is why today I’m going to toss out all the usual inflation red herrings—the political convenience of using inflation to shit on the current administration, for example—and distractions. And then I’m going to talk about the real struggle.

… the CLASS STRUGGLE, of course!

What even is inflation?

It has recently come to my attention (very much against my will) that “inflation”… is a sexual fetish. So let me be abundantly clear: NO NOT THAT KIND OF INFLATION.

Anyway, let’s unpack the economic meaning of “inflation.” Put simply, it’s what happens when your money has less purchasing power despite goods and services costing more. Under normal circumstances, it’s a planned economic process that occurs slowly over time. It’s why your grandpappy talks about when the newspaper cost a nickel and yet your subscription to The New York Times online is $4.25 a week. If you want to know more about why inflation is normal and necessary, we explain that in this article.

But sometimes inflation speeds up to a rapid rate—hyperinflation. That’s when it becomes super noticeable to the average person. It makes it feel like life is exponentially more expensive than it was a few weeks or months ago… because it is.

Does the thought of hyperinflation have you panicking? Local carpenter and crunchy bikevangelist Mr. Money Mustache takes an optimistic view of inflation: that it’s temporary, that over time the waves reduce to mere ripples, and in the long run we’ll all be just fine. And we don’t think he’s wrong! When hyperinflation is caused by disruptions in the normal cycle of supply and demand, it’s nothing to worry about. We all just need to batten the hatches and get through the storm, as painful as it might temporarily be. In your face, Reagan!

Unfortunately, there’s something else going on right now. We’re not merely experiencing your grandma’s inflation. We’re also dealing with something far more sinister.

It’s the pandemic right? It’s always the goddamn pandemic.

Yes. Sure.

Our global reaction to the pandemic fucked with national economies in lots of exciting ways, including supply chain disruptions, shortages of various goods and materials, mass lay-offs, labor shortages (all those lazy, entitled dead people aren’t doing their fair share), and certain industries becoming obsolete while others experienced massive booms.

Efforts to fight the negative economic effects of the pandemic have also probably contributed to inflation. Remember those government stimulus checks? A moratorium on evictions? Student loans going into forbearance? If you need your memory refreshed, check out our coverage of coronavirus and America’s nasty little problems:

All of this—the pandemic, the reaction to it, and the efforts to save us from economic disaster—contributed to our current bout of hyperinflation. I won’t argue with that.

But I am going to argue.

Can’t help it. It’s my nature! And right now I want to argue with the idea that the pandemic is the only cause of today’s inflation.

Price-gouging: It’s easier than you think!

Imagine for a moment that you are a maker of thneeds, which are made from the silken threads of the truffula tree.

Everyone needs a thneed, so business is booming. You report modest profits to your investors, and your customers are happy with their reasonably priced thneeds (which everyone, everyone needs).

Then, from out of the blue, there’s a truffula tree blight. This causes a global shortage of truffula. As truffula is the main ingredient in thneeds, this means it’s going to be harder and more expensive for you and your competitors to get the raw materials for thneeds.

So you raise the price of thneeds to recoup the extra cost due to truffula scarcity. Your competitors in the thneeds market do the same.

But then you realize… if the average thneed consumer doesn’t actually know how much it costs to make a thneed during a healthy truffula harvest… then how will they know how much it costs to make thneeds in a truffula blight? Instead of raising thneed prices commensurate with truffula tree inflation, you can actually raise prices even more. Instead of keeping profits steady… you could rake in a killing. Who’s to stop you? Your competitors? They’ll catch on and do the same.

So while bemoaning the inflation caused by the great truffula tree blight of 2022, you quietly raise the prices of thneeds to not only keep up with inflation, but to beat it tenfold.

This is called price-gouging. And it makes you a moldy cucumber of a person with few redeeming qualities.

Worse: because the truffula tree blight is decimating rural agrarian economies, leading to mass starvation, famine, violence, and political unrest… it might even count as war profiteering. Which is when someone takes advantage of a dangerous or desperate situation to make astronomical profits.

Record corporate profits hiding inside inflation

Yes I am the Lorax. Yes I speak for the motherfucking trees.

But as you might have guessed by now, when I say “thneeds,” I’m actually talking about everyday goods and services. And when I say “truffula tree blight,” I really mean the COVID-19 pandemic and its resulting economic shitstorm.

Because this is legit happening! Right now! Out in plain view! Large corporations are using inflation as an excuse to not-so-subtly inflate their profits beyond reason. They’re giddily price-gouging their way to record profits built upon worker exploitation and taxpayer sponsored bailouts in the form of (sometimes fraudulently obtained) loans. Which is pretty on brand for them, all things considered.

It’s not only on brand, it’s what they’re incentivized to do. See, corporations have a responsibility to their investors to maximize profits. How can we blame them for doing so at any cost?

The lion, the witch, and the audacity of this bitch

One of my favorite economic sociologists (do… you not have a favorite economic sociologist???) is Lindsay Owens. This human molotov cocktail and former economic advisor to Senator Elizabeth Warren raised the alarm about the role corporate price-gouging plays in inflation with an epic Twitter thread. It starts:

The tl;dr is that in earnings reports, corporate leaders are crowing about how they’re “dipping their balls in gold” while average citizens struggle to pay their inflated prices.

Inflation doesn’t have to be this high. We expect inflation to rise commensurate with the extra expense of producing goods and services during an economic disruption like a pandemic. But instead, these corporations are price-gouging us into higher levels of inflation than necessary.

And as Owens points out, they’re not even trying to hide it: companies are legally required to tell the truth in earnings reports. They’re bragging about the price-gouging in the public record. You just have to know where to look.


My personal favorite economist zaddy (yeah I’ve got one of those too, DON’T KINK SHAME ME), Robert Reich, has been trying to warn us about the disastrous consequences of corporate greed for ages now. But in this particular case, he makes it abundantly clear that this is not a normal instance of inflation.

Reich takes it a step further than Owens by drawing a connection between the current price-gouging schemes and a long pattern of corporate consolidation and price fixing dating back to (you guessed it) the Reagan administration. (Now you know why I’ve been picking on the Gipper for this whole article.) See, we used to enforce antitrust laws to prevent price-fixing and monopolies. Now we barely bother.

Let’s take a look at the receipts:

  • The four largest meatpackers reported a 300% profit increase during the pandemic.
  • Oil and gas companies reported $174 billion in profits as gas prices increase.
  • Gross soda giants Coca Cola and PepsiCo both report increased profits.
  • Procter & Gamble report $21 billion in profits on household goods.
  • Airlines nearly tripled profits.
  • McCormick reported record sales growth of $6.3 billion.
  • Known muckraker and liberal propagandist Bitches Get Riches continues to operate at a loss.

All of which is to say, if corporate America were truly suffering from inflation, they’d be reporting average or below-average profits. Instead, they’re reporting record-breaking profits that fly in the face of the inflation narrative.

Corporate greed is driving inflation

I reeled you in with an incendiary headline, just like they taught us in Blogger School. “They’re lying to us about the true causes of inflation.”

So where’s the lie?

To completely bury the lede here (I was last in my graduating class at Blogger School), this is a story about stories. It’s about the production and consumption of a narrative—what we tell ourselves and what we share. And the prevailing stories about inflation aren’t touching the idea of corporate greed with a ten-foot pole.

We need to stop perpetuating the lie. Stop pretending like this recent inflation is so…

Gas is more expensive. Milk is more expensive. Diapers and toilet paper and meat and pantry staples are more expensive. People are hurting. The least we can do is to call out one of the causes of this pain for what it is.

21 thoughts to “They’re Lying to Us About the True Causes of Inflation”

  1. I generally agree with everything posted (and love following the blog!), but this post fails to address the macroeconomics at play. Inflation is not some type of collusion amongst corporate America — it’s not like they all say around early last year and decided ‘now’ is the time to increase prices. If that was the case, then wages would not have increased (they have). In addition, the inflation is impacting many countries around the world – not simply affecting wealthy corporate America. Inflation is the direct result of increased money supply, increased demand for goods and services in a short period of time, supply disruptions, and oddly the simple fear of inflation itself. This is not to say corporations cannot benefit. Nor is this to say people are not suffering. Both are true — but that does not change the cause. We must respect the cause in order to address the issue (and the affects) appropriately.

    1. Thanks so much!
      I tried to get across my agreement–yes, those are all normal causes of inflation and all things we’re dealing with right now. But in addition, there’s bold price-gouging happening in United States corporations, and that’s exacerbating the normal causes and effects of inflation.

    2. Agree with Ian. In this specific case, it’s most likely supply chain problems and stagflation all over again. Based on the title, I thought the post was going to be about our dependence on oil and how companies have been fighting to keep us that way instead of encouraging movement to renewables that wouldn’t be so dependent on Russia not invading Ukraine for supply.

    1. Well now you’re spoiling the SEQUEL, ANGELA.
      Seriously, it’s a great question. Enforcing antitrust laws to cut down on corporate consolidation is a great place to start… but other than writing to our representatives in congress, there’s not a ton the average person can do to make that happen. Boycotts have pros and cons, and it’s not like we can all just *not buy food* during periods of hyperinflation.

      1. I have doubled down on growing food and putting the means to do so in the hands of my neighbors.

        The seed library was a pandemic project, but this year I’ve also joined two local organizations aimed at building green spaces and food access. Plus I’m networking with other gardeners in the area to exchange seeds and have tripled my seeds starts this year.

        With prices what they are it makes a huge difference to be able to cook out of my garden 2-4 times a week, even if it’s just a salad or some scrambled eggs for breakfast.

        Not everyone can do this, but for those that have the option it helps.

  2. I can only imagine you are typing this wearing a tin foil hat. In the first place 7% inflation is minimal, yes I’m a boomer who lived through double digit inflation. And guess what? The economy not only survived, it thrived. We just got bigger raises to offset it, it was not at all a bad time. Plus your concept of hyperinflation is cray cray. Hyperinflation is 50% inflation per month. Not 7% per year. Many countries would kill to only have 7% inflation. And the idea there is a price fixing conspiracy, better apply more foil immediately Piggy!

  3. The “airlines triple profit” headline isn’t quite the gotcha you think it is; reading the article you linked, they tripled profits vs. the previous quarter (2Q 2021). 2Q 2021 was pretty mediocre and the first profitable quarter after a year of massive losses. Just check out the graphs in the article. These “triple” profits were still ~42% lower than 3Q 2019, before the pandemic.

  4. umm… The FED, blowout government spending, debt monetization and transfer payments. This was all predictable a year ago. rising prices and profits are a result of those actions. This same pattern is seen across time and countries throughout fiat currency history. They aren’t lying about prices/profits, they just aren’t telling everyone the whole truth because honestly, what politician or economic policy advisor would take the blame for this. Corp greed is too easy.

  5. I work for one of these companies, not the specific ones you called out, but I can 100% assure you that raising prices was absolutely necessary and the game is much more complex than just corp greed. Where I will agree is huge corporations have been too good at keeping prices low for a long time and many materials companies have been exiting businesses because they are no longer profitable anymore. In 2008 the auto big 3 pretty much bankrupted many of their tier 1 supply chain because profits were so slim that their tiers couldn’t withstand any downturn in orders. Like in personal finance, its not good for corporations to live paycheck to paycheck and many do.

    Many materials and mfg businesses have record profits now through a process called mix up. If you have capacity issues, you stop making your lowest margin products and sell more of the higher end stuff. You drop the bottom customers who will then go to an even cheaper commodity (but then that customer may be the high end person in that product family).

    I’m surprised you called out P&G because I feel like they kept their prices lower but may have streamlined production to improve throughput and profitability. Instead of 12 scents of your favorite thing, there were fewer choices during the pandemic.

    I do think once we get through the backlog of orders, prices will come back down again.

  6. Lotta commenters on here carrying water for corporate mega-profits on the back of my grocery bill. You know, for food. That I eat. To stay alive.

  7. Just gonna leave this here…

    “In earnings calls, executives detailed how even as demand and profits rose post-vaccine, they passed on most or all inflationary costs to customers via price increases, and some took the opportunity to add more on top. Margins – the share of sales converted into profits – also improved for the majority of the companies analyzed by the Guardian.”

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