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Rising prices... join the dots!

Everything costs more today.

Mince is up to $34 per kilo. Petrol is well over $3 per litre. Electricity bills keep going up. There is very little that hasn't been touched by the finger of price-hikes.

Unfortunately, incomes have not risen in concert with rising living costs.

This leaves us all poorer and in some cases really makes it hard to put money aside for emergencies.

All of this has been acknowledged but I haven't seen a lot of analysis as to exactly why we've seen this massive change in recent times.

In today's column, I'm going to join some dots in a way that I hope will cause you to stop and think.

It has to be admitted that the world is a mess right now.

We have some significant military conflicts, we're facing a climate crisis, we're told that AI might pose an existential threat to mankind.

To throw the increasing cost of living on top of this might lead you to believe that we're headed to a very dystopian future.

The problem, as I see it, is that we are spending incredible sums on these wars and AI development.

Where is that money coming from?

It's not like you can just "magic-up" money out of thin air. If that was possible we'd all be billionaires and life would be sweet.

The reality is that wealth (aka money) is something created at the bottom of the pyramid, where regular folk go to work, create stuff and get paid for doing so.

It's the plumbers, the builders, the engineers, the labourers, the chefs, the shopkeepers and all those other people who put in a solid 40 hours a week or more in return for a weekly, fortnightly or monthly pay cheque who create the GDP and true wealth.

When you're spending trillions of dollars building AI data-centres and hundreds of billions (or more) waging war against your enemies that money can only come from one place and that is the pockets of those people creating the true wealth.

Of course we don't have agents of "big tech" or the government rocking up and demanding money from us with menaces (although some say this is exactly what the taxman does). Instead, we're finding that the money is effectively coming from increased prices on *everything*. We're paying more because more is being spent on wars and AI.

Sounds like a great headline theory but is it really true?

Isn't the price of fuel rising simply because wars have constrained supply?

Well that's the way it looks but isn't that simply a manifestation of the problem? Reduced supply doesn't actually make it more expensive to make deliver or sell petrol does it? What we're seeing is the opportunity for companies to make more profit from selling less product and that amounts to picking our pockets.

How about the AI situation? All around the world, electricity prices are rising because AI datacentres are placing a burden on power generation infrastructure. It's just like the situation with petrol -- the price is going up even though it costs no more to create a KWH than it did 12 months ago. We're seeing people's pockets being picked by opportunistic power companies.

In both cases, charging more doesn't magically increase supply, it only increases profits for those selling into supply-constrained markets.

The links between war and AI and rising prices for everything may not be direct and obvious. Indeed, some may say that correlation does not equal causation but I think that really doesn't matter in this case. The reality is that governments and big-tech are spending huge amounts of money they don't actually have and no matter how things are structured, that money eventually has to come out of the pockets of those who create the wealth through their labour.

Sadly, I see no "quick fix" to this situation.

Governments seem hell-bent on giving AI companies an open license to rape and pillage the intellectual property of others and to keep throwing massive buckets of cash at building someting which (it is claimed) has a 10 percent chance of ending us as a species.

Those same governments are busy creating a state of hysteria based on paranoia to such an extent that they're pouring obscene amounts of money into amassing and sometimes using weapons that serve no purpose but to kill people and destroy property.

What on earth are we doing?

Carpe Diem folks!

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