The Soaring Costs of Dining Out and Inflation’s Impact on the Economy
Introduction:
In recent years, the price of dining out has skyrocketed, with burgers and beers that used to cost $4–5 now priced at $10 or more. Restaurants and cafes have shifted their revenue streams towards wine and cocktails, taking advantage of the price elasticity of demand for alcoholic beverages. As a result, a glass of house wine can now cost as much as $25. This inflationary trend is not limited to the food industry; it has become pervasive in the retail market, affecting various sectors. While initially believed to be temporary, it is now clear that this inflation marks a significant shift in our lives. The root cause can be traced back to the explosion of Fed bond purchases and the subsequent increase in the money supply, which has devalued the dollar. Despite attempts to blame the private sector for greed and shrinking packages, the American public is more sophisticated in their understanding. However, the convenience of digital payments has provided some leeway against public outrage. This inflationary trend has also led to a surge in credit card debt, further benefiting financial institutions at the expense of individuals. The official consumer price index (CPI) may not accurately reflect the true impact of inflation, as it disguises increases in rent, health insurance, and interest. Overall, this inflationary environment has eroded the quality of money and harmed the middle class and poor the most.
Restaurants and Cafes: Price Hikes and Revenue Streams
Restaurants and cafes have faced increasing costs, leading to higher prices for customers. The price elasticity of demand for alcohol has allowed establishments to shift their revenue streams towards wine and cocktails. This strategy is based on the assumption that people will continue to buy alcohol regardless of price increases. As a result, a glass of house wine can now cost as much as $25. These price hikes have become the new normal, with customers expecting to pay significantly more than they did just a few years ago. This shift in revenue streams has enabled restaurants and cafes to offset rising costs and maintain profitability.
The Root Cause: Fed Bond Purchases and Increased Money Supply
The dramatic increase in prices can be traced back to the explosion of Fed bond purchases and the subsequent increase in the money supply. Currently, the money supply is 38% higher than it was in January 2020, with $5.8 trillion in new dollars circulating. This has diluted the value of existing money, leading to inflation. The analogy of mixing concentrated lemonade in a pitcher versus a swimming pool illustrates how the increase in money supply devalues the dollar. While it was difficult to predict the long-term effects of this increase in money supply, it is now evident that it marked a significant change in our lives.
Inflationary Impact: Sticker Shock and Deceptive CPI
The inflationary impact is felt across various sectors, with sticker shock becoming a common experience. This inflation has affected both luxury items and everyday goods. Restaurants, grocery stores, theater tickets, cars, and new homes have all seen significant price increases. The consumer price index (CPI) may not accurately reflect the true impact of inflation, as it disguises increases in rent, health insurance, and interest. By reweighting the numbers and considering these factors, the true devaluation of the dollar since 2020 could be estimated at 30 to 50 cents on the dollar. This aligns more closely with people’s experiences on the streets today.
Quality of Money: A Proxy for the People
The quality of money reflects the quality of a country and its regime. A fundamental attack on the quality of money is an attack on the people. The devaluation of the dollar has systematically impoverished individuals, particularly the middle class and poor. The impact is seen not only in the rising cost of goods and services but also in the increasing difficulty of affording basic necessities like food. While some may argue that cutting back on consumption is beneficial for health, the least healthy food is often the cheapest, thanks to grain subsidies and the war on meat. Additionally, all forms of insurance are increasing in price, further burdening individuals.
The Lasting Effects: An Inflated and Bland World
The current inflationary environment has led to a more bland, crabby, and deprived world. Families are struggling to afford food, and credit card debt is soaring. Even luxury items like theater tickets and vacations are now predominantly funded through credit, leading to future financial burdens. While official data may not fully capture the extent of the devastation caused by inflation, the impact will become apparent once more accurate figures are released. The last days of the appearance of prosperity are upon us unless there is a significant course correction.
Conclusion:
The soaring costs of dining out and the pervasive inflationary trend in the retail market have had a significant impact on individuals and the economy as a whole. Restaurants and cafes have shifted their revenue streams towards alcohol, taking advantage of the price elasticity of demand. The root cause of this inflation can be traced back to the explosion of Fed bond purchases and the subsequent increase in the money supply. However, the official consumer price index (CPI) may not accurately reflect the true impact of inflation, as it disguises crucial factors like rent and health insurance. This inflation has eroded the quality of money and disproportionately affected the middle class and poor. The lasting effects are evident in rising credit card debt, increasing difficulty in affording basic necessities, and an overall inflated and deprived world.
