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IPFS News Link • Robots and Artificial Intelligence

Blame the Fed for 'Shrinkflation'

• Ron Paul Institute - Ron Paul

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.

President Biden called on Congress to pass legislation, sponsored by so-called moderate Senator Bob Casey of Pennsylvania, to crack down on companies that reduce 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.