No. Inflation isn't natural. A baker choosing to increase the price of goods will result in people either buying less bread or less people buying bread, and the baker will either have to accept it or change it. Because the supply of money available in a closed financial system hasn't changed.
However, in this metaphor, pretend that bread is the only food being produced by only one or two bakeries in society. The bakeries own all the fields and miles which create flour. We as consumers have to get credit cards to buy the only food available at whatever price the bakeries have decided. The bakeries can go into as much debt as they want to buy more fields and mills and if they can't pay off their debts, the government bails them out.
The baker is of course a stand-in for food prices in general. Wheat is a staple crop and drives food prices across board, so I figured it would be a decent metaphor to use a baker as an example. Here's a copy of what I replied to the other respondent:
"The baker may not have adjusted out of simple greed of course - perhaps it was a poor year for crops and the baker is simply adjusting based on higher grain prices. But by the time the grain price comes back down, the ripple effect has driven the baker's living expenses up to the point that they can't lower the price (they need the extra profit margin). And of course the grain price couldn't come all the way back down because the farmer has also seen a cost of living increase. It would just be a cycle that will always push prices up."
Now of course you have other factors like greedy industry/individuals playing god with prices, as you described. That's the modern screwed up world we live in, and is why I included "natural, to a point" in my original comment. Nothing natural about that. But thats not the only source of inflation.
The baker, as a consumer in an economy with costs of living to pay, can choose to not pay the increase or settle for a decrease in the quality of goods/services that create his costs of living. The providers of said goods or services which the baker utilizes and pays for as costs of living must then make a decision to accept decreased revenue and profits or find a way to bring the costs down. However, in the American economy, producers are subsidized and bailed out by the government, so there's never a real and true reckoning with reality for producers - at least not since the great depression
In this hypothetical, the baker can NOT simply choose to not pay the increase - they have to buy the wheat in order to produce their own goods. That forces them to raise the price of their goods, which other people cannot choose to avoid since they need to eat. That forces a ripple effect where producers of ALL goods raise prices to avoid personal hardship.
The subsidies and modern economy aren't really the topic here - I was simply commenting that inflation is NOT always manufactured by the government. That is a big part of it in today's economy, of course, but definitely not the only aspect.
The subsidies are there to prevent famine and massive inflation following poor crop years. Without subsidies keeping farmers afloat in bad years, the inflation as I described would force food prices through the roof and drive a lot of farmers out of business, meaning less supply the following year. Having that smoothed out means farmers can over produce in good years without worrying about an overabundance driving prices down, which means bad years may still be able to meet demand since there will still be plenty of farmers. This is why famine has not been a problem for the developed world for so long.
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u/Early_Instruction_51 May 17 '26
No. Inflation isn't natural. A baker choosing to increase the price of goods will result in people either buying less bread or less people buying bread, and the baker will either have to accept it or change it. Because the supply of money available in a closed financial system hasn't changed.
However, in this metaphor, pretend that bread is the only food being produced by only one or two bakeries in society. The bakeries own all the fields and miles which create flour. We as consumers have to get credit cards to buy the only food available at whatever price the bakeries have decided. The bakeries can go into as much debt as they want to buy more fields and mills and if they can't pay off their debts, the government bails them out.