It can be easy to think about terms like “inflation” as theoretical ideas and not connect how much macroeconomics affects the lives of average Americans. But a recent development is an unfortunate example of just how much inflation actually affects average Americans. Retail chain “Dollar Tree” has recently announced it is raising prices above 1 dollar.
Dollar Tree raised prices in response to inflation that made it increasingly challenging to offer products within the one-dollar range. To combat this, the company is increasing many of its products from $1.00 to $1.25 and $1.50. This move to raise prices is ultimately a part of the greater increase in prices across the entire economy as the nation reels from the effects of massive government spending increases.
In early January 2020, the United States money supply was approximately $15.5 trillion, according to data from the St. Louis Federal Reserve. Just over a year later, in September 2021, the money supply had increased to $20.9 trillion. To put this increase in perspective, a similar $5.4 trillion increase in the money supply had previously taken seven years. The money supply in 2012 was about $10.1 trillion, and it did not build up to $15.5 trillion until January 2020.
Such a drastic inflationary increase in the money supply has real effects. The more dollars that are in the economy, the less valuable the dollar will be. The changes at Dollar Tree are a practical indicator of this basic economic principle of supply and demand. When the government prints more money to “pay” for its spending wish list, the money supply increases, and it becomes less valuable.
Even without the massive inflation of the present day, in former days the nation saw the demise of penny candy, nickel postage stamps, and 50-cent cups of coffee. Yet, in today’s economic environment, not even the dollar itself carries enough value to support a line of products. As the government continues down a path of disastrous policies, one can only speculate what else the recent wave of inflation has in its crosshairs.
As the federal government considers raising the debt ceiling, pushing forward massive spending plans, and increasing the deficit more than ever before, everyday Americans are just trying to live their lives and support their families. The policies of a big government are inevitably detached from the challenges that its people face every day. As more spending and debt is enacted in the marble halls of Washington, thousands of Americans will be handing the store clerk a bigger chunk of change at the local Dollar Tree.