Might as well break it to the kids now. Christmas may look a bit austere this year. Hasbro—the maker of Monopoly, Nerf, and Dungeons & Dragons—announced that it is implementing price increases that will "go into effect fully for the fourth quarter" in order to maintain profit margins in the face of skyrocketing costs. This was music to the ears of investors, sending the stock up better than 12 percent Monday. But whatever tune those investors were singing, it certainly wasn't a Christmas carol — because the fourth quarter price hikes will come in what is known to the rest of us as the Christmas season.

We do not mean to cast aspersions on Hasbro or its investors. As the toy maker's CEO pointed out in an interview with CNBC, ocean freight is on average four times as expensive as it was a year ago. They aren't waging a war on Christmas here. It's just that inflation is here, and it does not look like it is going anywhere. Shoppers are likely going to find that things are a lot more expensive come Christmas time.

As Greenlight Capital's David Einhorn detailed in a letter to investors sent out Monday, much of the capital investment made over the past decade has gone into digital media, unprofitable tech companies, and companies that profess the woke capital catechism trinity of environmental/equity, social, and governance. That has left the kind of companies that make the things that are rising in price starved of investment and unable to expand production to meet demand. Investors in Tesla—up 113 percent over the past 12-months—are no doubt happy, but nothing Tesla does is going to resolve the shortage of cars and trucks that has sent used auto prices up 10.5 percent in June and more than 45 percent since last year.

"The point is, we believe we have reached a structural change in inflation," Einhorn wrote. "Part of that is driven by public policy, but part of it has been driven by capital markets and ESG mandates.The enormous emphasis on investing in often money-losing businesses in disruptive areas like technology has left traditional industries starved for growth capital. The result is they haven’t grown capacity and now they cannot meet demand. The more these ‘value' stocks are starved of capital, the higher prices are likely to go and the longer the inflation is likely to last."

All the talk about inflation being "transitory" may actually be making things worse. Higher prices would ordinarily lure investment. But with Fed officials and the Biden administration insisting that prices will not keep rising—recall that Biden recently claimed that his $4.1 trillion spending package would reduce inflation—investors are likely deterred, according to Einhorn. That would explain, for example, why new home sales remain surprisingly low despite record high prices. Who wants to invest in building new homes—or in a home builder—if the Fed is promising to crush the price gains? Ironically, that underinvestment will likely mean supply constraints remain in place and prices do keep rising.

– Alex Marlow & John Carney Breitbart News Network