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Five Things You Didn't Know About Inflation -- and It's Heating Up

Stocks in this article: MCD

3. Federal Policies Make Too Much Inflation Certain

Many homeowners have only one source for high-speed Internet and cable TV, but the government does not regulate cable companies as it does electric utilities. Rates have risen rapidly in recent years.

Top private universities and a few elite public institutions have a lock on most good-paying jobs for graduates. Those schools have boosted tuition far more rapidly than even health care costs. That sets the pace for other schools, and federal policy is not to intervene in their monopoly pricing.

Federal regulations permit prescription drug manufacturers to charge much higher prices than in Europe, but don't permit consumers to legally import drugs and force competition.

4. The Barbell Economy Will Get Worse

Harvard MBAs and Stanford engineers are doing great. But adults who lost good jobs in the recent recession remain stuck stocking shelves at local groceries or dependent on family and government benefits.

For most workers lucky enough to have full-time jobs, wages remain stagnant. Those wages purchase even less gas, food and other essentials with more inflation.

5. A Higher Minimum Wage Will Only Make Matters Worse

The Congressional Budget Office estimates that the president's proposal to increase the minimum wage will destroy up to 1 million jobs.

Some restaurants and similar establishments will shutter, while others will rely more on machines similar to those used at some supermarket check outs.

Although those who hold minimum-wage jobs will earn more, all those extra unemployed workers will drive down the wages of workers earning near the minimum. Team leaders at McDonald's (MCD) will have fewer people to supervise and end up accepting only the minimum to work.

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At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Peter Morici is an economist and business professor at the University of Maryland, national columnist and five-time winner of the MarketWatch best forecaster award. He tweets @pmorici1

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