Syndicated columnist Veronique De Rugy: Inflation is not caused by corporate greed but rather deficit spending and bad monetary policy

History has a way of repeating itself. Or maybe it's that people cling to defunct beliefs, stubbornly refusing to learn from experience. Such stubbornness is on display when pundits, legislators and President Joe Biden blame inflation on corporate "greed."

The fix, they claim, is price controls. But such controls would only bring further economic calamity.

To explain hikes in the prices of meat, poultry and energy, many politicians and pundits say we must look no further than coldhearted corporate CEOs padding their bottom lines at the expense of ordinary Americans. They would have you believe companies today are so greedy that they use the pandemic as an excuse to charge extortionate prices. Sen. Elizabeth Warren told MSNBC's Chris Hayes that "giant corporations who say, wow, a lot of talk about high prices and inflation. This is a chance to get in there and not only pass along costs, but to inflate prices beyond that and just engage in a little straightforward price gouging."

Playing along with this blame game is Biden, who asserts that "oil and gas companies shouldn't pad their profits at the expense of hardworking Americans."

Biden is not the first president to demonstrate ignorance of the complex factors that determine prices at the pump. His and others' grandstanding complaints about high prices - especially as they rise during inflationary times - aren't novel. George Mason University's Don Boudreaux recently highlighted a still-relevant observation from 1976 by the late UCLA economist Armen Alchian: "Direct attacks on the symptoms known to flow from inflation are politically convenient. As inflation occurs, politicians and the public blame businessmen and producers for raising prices and mulcting the public. ... The so-called shortage of gasoline and energy in the United States was precisely and only such a political attack."

The unrealistic assumptions underpinning the logic of those who argue for price controls are quite amazing. First, hikes in prices apparently have no impact on consumers' demand for goods. That's because monopolies are supposedly everywhere, and most goods - we are to believe - are so indispensable to consumers that we will buy nearly all of them at any price.

In addition, the price controllers assume when faced with bans on price increases, producers will keep supplying the same goods to market.

So, the only impact price controls are said to have is to decrease what consumers pay, while having no effect on consumption or production.

This is nonsense. When prices rise, consumers reduce their demands for goods (unless inflation expectations come into play, and consumers increase purchases today to avoid even higher prices tomorrow.)

Inflation isn't caused by corporate greed. It's caused by government's excessive deficit spending, fueled in part by loose monetary policy. Getting rid of inflation requires an increase of interest rates theoretically higher than the current inflation, along with some overdue fiscal discipline.

What we don't need is more government spending and debt accumulation. The result will only fuel the inflation fire.