The following article appears first and foremost on the Ron Pail (RPI) Website.
President Joe Biden may have recently made history as the first president to discuss snack chips in the annual State of the Union message.
He used snack chips to illustrate the phenomenon of shrinkflation.
"Shrinkflation" occurs when businesses reduce the amount of goods sold in order to avoid raising prices.
President Biden pointed out that businesses hope that, since both the price and the size of the package remain the same, most consumers will not notice they are getting fewer chips, cookies, or whatever other product has been affected by shrinkflation.
Biden called on Congress to pass legislation, sponsored by so-called moderate Sen. Bob Casey, D-Pa., to crack down on companies reducing the amount of a good in a package.
Biden and his congressional allies and media apologists think that this will stop shrinkflation. They think this because they believe shrinkflation is caused by corporate greed.
In fact, shrinkflation is a rational response to increased prices caused by the Federal Reserve’s dollar depreciation.
Businesses reduce the amount of a product sold as a means to cope with rising prices of materials needed to make their products without directly raising the price paid by consumers.
Unless greed is the only human emotion that fluctuates with the Federal Reserve’s policies, the fact that shrinkflation only occurs when Federal Reserve policies cause major price inflation should show anyone willing to think logically about these issues that the Fed, not greedy businesses, causes shrinkflation.
Making shrinkflation a federal crime would force more businesses to increase their prices. This would give the American people a more accurate picture of how the Federal Reserve’s price inflation is affecting their standard of living.
Shrinkflation is impossible to quantify. Shrinkflation’s existence indicates that the impact of inflation is well above the Consumer Price Index’s report of a 3.2% increase in prices over the past year.
The Federal Reserve’s interest rates increases have not been as effective in fighting price inflation as the government’s manipulated statistics make it appear.