The Main Cause of Inflation is Natural Resource Depletion

[500channelsurfer]

Politicians and the media like to focus on Covid, trade agreements, taxes, oligopolies, immigration, war, etc. because it can further their own agendas.

Events in these areas are merely the trigger for price increases that would inevitably occur at some point or another.

All human consumption is tied to natural resource extraction, and all important natural resources are becoming more costly to extract or less available.

Fossil fuels are the primary natural resource that runs our economies. Easy to extract oil has become a scarcity as it is mostly used up and we have shifted to extracting more difficult oil such as oil sands and fracking. This is more expensive to extract and requires additional inputs in terms of manpower, water, machinery and chemicals. Countries that do still largely extract plain oil have to pump pressure into underground deposits in order to get the product to surface. We drill for oil in the deep sea now whereas we used to have sufficient supply on land.

Using non-fossil fuel energy sources still require fossil fuels in their construction, such as in solar panels, nuclear and wind. Energy production costs are higher for these sources.

The chemicals and machinery that make agriculture productive rely on fossil fuels and machinery manufactured using fossil fuels. Costs are passed on. Fertilizers and pesticides become more expensive. Underground aquifers that supply irrigation to agricultural land are drying up and expensive water projects are required in order to keep agricultural land irrigated. Small-scale farmers are experimenting with organic agriculture, crop rotation and residuals-as-fertilizer farming techniques, which in the past have been unprofitable but have now become viable.

Wood, whether for paper products or construction, has to be sourced from further locations and often poorer quality trees due to easily accessible forests having been emptied of desirable timber. The same goes for other industrial inputs such as the limestone required for concrete.

Computers and electric vehicles require inputs of rare minerals which are expensive to mine and manufacture. Exploration for new deposits is a costly affair, but one that is being pursued due to increasing demand.

Immigrants travel to new homes for better lives when natural resources at their existing locations become exhausted or priced too high due to depletion.

Edited August 11, 2024 by 500channelsurfer

[Moonlight Graham]

Amazing that resource depletion increased right when businesses shut down due to COVID.  Incredible.

[herbie]

People.

Just met a guy in the grocery store, was on his way to a BBQ with his wife. He had to buy 2 steaks for $52.00, he had no choice in the matter whatsoever. It was a BBQ he couldn't show up with something else.

I sabotaged the store today, in the freezer full of ice cream "on sale" for $8.99 there was a stack of Coconut/Lime ice cream for #3,99 I mentioned to a friend. When we were getting some a lady saw and put back the one she had and grabbed one too, then ran to tell her friend.
Must've cost them $50 in lost gouging.

[500channelsurfer]

On 8/10/2024 at 11:22 PM, Moonlight Graham said:

Amazing that resource depletion increased right when businesses shut down due to COVID.  Incredible.

The businesses largely shut down due to Covid in March 2020. Inflation went high in late 2001 and 2002, when everything was re-opening. In between, demand was reduced, while natural resources were still being utilized, albeit less. During re-opening, the sudden demand naturally caused a spike, and now the slow natural-resource depletion based inflation returns.

[Moonlight Graham]

27 minutes ago, 500channelsurfer said:

The businesses largely shut down due to Covid in March 2020. Inflation went high in late 2001 and 2002, when everything was re-opening. In between, demand was reduced, while natural resources were still being utilized, albeit less. During re-opening, the sudden demand naturally caused a spike, and now the slow natural-resource depletion based inflation returns.

Well there's various factors for inflation.  Lack of labour is another, which is another  type of "resource".  Inflation happens when demand rises faster than supply.  When you introduce more money into the market you're increasing demand while supply doesn't keep up.  It then takes more money to pay for the same product/service because "more money" doesn't create wealth, production does.  That's a reason why families that used to be able to live on 1 income now need 2 incomes to maintain a similar standard of living (e.i. buying a house).

So you're right in some ways.  It's generally supply and demand, and natural resources are a major factor in "supply" since all natural resources used in any goods or services are limited.

Edited August 13, 2024 by Moonlight Graham

[500channelsurfer]

46 minutes ago, Moonlight Graham said:

Inflation happens when demand rises faster than supply.  When you introduce more money into the market you're increasing demand while supply doesn't keep up.  It then takes more money to pay for the same product/service because "more money" doesn't create wealth, production does.  That's a reason why families that used to be able to live on 1 income now need 2 incomes to maintain a similar standard of living (e.i. buying a house).

So you're right in some ways.  It's generally supply and demand, and natural resources are a major factor in "supply" since all natural resources used in any goods or services are limited.

I see two completely separate issues:

Money supply increases resulting from Covid (whether you blame Biden and Trudeau, or the Central Bank of Canada and the Federal Reserve, is irrelevant here) caused the 2021-2022 inflation rise. This will be remembered historically as a blip.

The reason why families that used to be able to live on 1 income now need 2 incomes to maintain a similar standard of living (e.i. buying a house) is the result of a generational and decades long type rise of inflation, caused by increase in demand via population growth and supply getting close to maxed out due to resource depletion. The world's supply of readily available energy, arable farmland and other large-scale inputs such as timber and limestone are no longer increasing as population is, and in terms of cost-per unit of input are sometimes decreasing depending on jurisdiction.