 President Biden recently lashed out at corporate America for inflicting shrinkflation upon us. Horse drinks bottles are smaller. A bag of chips has fewer chips, but they're still charging the chest as much. The snack companies think you won't notice if they change the size of the bag and put a hell of a lot fewer... same size bag. Do the what about corn pop? It's a sneaky way for companies to keep prices the same while consumers are actually getting less stuff. And shrinkflation is real. At first I thought, maybe I'm just getting taller. You know, like when you visit your childhood home and everything seems smaller to you, your parents look different, and Asian, and they keep shouting, you don't live here, and how did you get the key? But no, I verified this. Shrinkflation is happening. My grocery store has been quietly replacing eggs with quail eggs and replacing the ostrich eggs with tennis balls somebody wrote eggs on. I don't think I have a very good grocery store. Anyway, it turns out shrinkflation is actually a form of an obscure economic concept called when the cost of labor or production increases, companies usually respond by increasing the price they sell things at. Like how coffee used to cost a buck, and now it costs seven dollars at Starbucks and you can only order the sizes in Italian like we lost the war. I just want a medium coffee. I don't have to order a milkshake in Italian. So that's inflation. But companies can also compensate for rising costs by keeping prices the same but making things smaller or selling fewer of them at the same price. Shrinkflation is just another form of inflation only more passive aggressive, prompting Senator Bob Casey to introduce the Shrinkflation Prevention Act, which if passed would declare shrinkflation a deceptive business practice and forbid companies to engage in it no longer can lays potato chips quietly shrink the circumference of their flavored styrofoam wafers. Cinnamon toast crunch cannot quietly put less childhood diabetes in the box. Now, to Bob Casey's credit, this act would make companies less passive aggressive, but it wouldn't fix the underlying problem. As costs of production rise, companies would just hike up the prices instead. And while I do appreciate trying to keep companies from tricking people into not realizing that inflation is actually happening, which it is, families on a tight budget might want to be able to purchase smaller units than getting larger honest units they can't afford. It doesn't fix the underlying issue, which is not labeling but inflation. So what's driving that? It's time to crack down on corporate greed flation. Right. So Elizabeth Warren at all maintained that the underlying cause of recent inflation is greed. You know, the mathematically precise, easily quantifiable, legally specific term greed, which we can totally legislate against. Essentially, Warren Biden and pretty much everybody who previously wanted the government to put caps on how big sugary drinks can be believe that inflation and shrink flation are happening because corporations became more greedy and use the pandemic and the war on Ukraine as a pretext to raise prices, as in every single industry in America and the world, the whole world, including France, every corporation from electronics to dairy products to coffee to automobiles to dairy automobiles. All of the world's corporations simultaneously became more greedy. Then all of them agreed to fix prices on everything. Like every industry in the world got together at the legion of doom and agreed to jack up prices on everything, but then also agreed not to undercut competition by defecting and lowering their own prices because they all, I don't know, went to high school together or something. And it has to be everyone because if all the egg guys decide to raise prices, consumers might just buy more cheese. So the conspiracy has to be egg supervillains and the cheese mafia. If movie theaters raise their ticket prices, consumers might go mini-golfing or whoring, I would. So pretty much every single business sector has to agree not to compete with each other or even with other industries for consumers money, which if they're truly greedy is all they care about, including Girl Scout cookies. Their prices went up to $6 for thinments. You greedy harlot. Elizabeth Warren's greed flation analysis essentially boils down to increased sin plus conspiracy equals need for government Oreo quotas. Blaming greed for inflation is like blaming airline crashes on gravity. Greed is pretty much constant across industries and time periods. When the price of airline tickets goes down, nobody ever says, oh, I guess the airline companies have become less greedy. The president of Delta must be spending more time with his family. That would be absurd. His family is awful. Prices are a function of supply and demand and profit rates are affected by competition. They don't fluctuate based on sin. By greed logic, the electronics industry is one of the most selfless groups of people in history. Adjusted for inflation, the cost of buying a television has dropped 99% since 1950. That's not because the electronics industry is 99% less greedy than it was during the Eisenhower administration. If Warren and Casey are right, this is because the electronic manufacturers are less greedy than profiteering candy makers like the Girl Scouts or history's greatest robber baron, William Randolph Wonka. Somebody get me a coffee. So why is inflation going up, if not real? Inflation happens when too much money is chasing too few goods. You print more money, money is worthless. The government responded to the pandemic by spending tons of money on programs, unemployment, and stimulus checks. But because the government also shut down the economy, tax revenues were lower. So there was an even bigger deficit than usual. The Federal Reserve covered that deficit by creating huge amounts of new money. As of 2024, the year that I and most of my friends live in, there was 32% more money in circulation than back in 2019. The monetary supply is swollen, engorged. There is indisputably more money than there was five years ago. But goods and services have not kept up with that increase. So because there is more money chasing fewer goods, inflation happens. That's it. Now there is a potentially damning counterpoint that Bob Casey brings up that I would like to address, that corporate profits spiked in 2020 and 2022. And if you run into Elizabeth Warren at a par, whew, she will corner you and tell you about how oil companies and food producers are making bumper profits. She'll do that three or four times, even after you ask her to stop. Lady, I'm just trying to enjoy my drink before the Cialis kicks in. They say if inflation is rising and corporations were just passing costs onto the consumer, we'd expect to see their profit margins the same. But profit margins are actually higher. What gives per chance greed? Well, people weren't spending as much money during the pandemic because they couldn't. They couldn't go out to watch movies or eat hamburgers or basically drive anywhere, including my birthday or even my birthday on Zoom, which nobody attended. Anyway, when the lockdown stopped, people started buying stuff and traveling again. So yeah, when the economy started up again because people were buying more hamburgers and movie tickets and gasoline, companies made more profit. You make more profit when you sell more stuff. It's not surprising that companies have higher profits now after the pandemic than they did during the lockdown. We would expect to see that. And listen, there are good arguments we can get into about how concentrated corporate power is and if we need stronger antitrust laws to increase competition. Good conversation, but for another video. The idea that inflation is caused by greed instead of this and that lawmakers can also ban greed through clever laws is folly. Yes, I said it folly. Now, if you'll excuse me, I'm off to go buy a cartridge of fewer, tinier bullets because I have a hankering for a cup of coffee. Hot coffee medium now.