> whatever it takes to keep food, water, and shelter.

There are still economizing responses. When certain foods are expensive, people search for alternatives. When housing is expensive people move in with family or get roomates. With gas people carpool and drive less.

I don't want to suggest those are good outcomes, just that there is a response function.

> we have laws to keep prices close to "what a thing costs to produce"

Which causes the farmers to till the produce into the soil. The produce becomes more valuable as fertilizer than to be sold as food.

Runaway prices of necessary items can be controlled only by competition.

Farmers must cover the costs of the next season or run out of business.

This is the problem with inflation. As high inflation numbers get broadcast to the people, people become more willing to spend money now on commodities that may not be available / affordable in the future. That causes profit margins to increase as people take into account future inflation, and thus eventually cause a self-fulfilling prophecy.

Yes, I should have been more clear what people will pay compared to substitutions available and competition in the marketplace for that good.

I think everything you typed appears to be wrong? For instance there are no laws keeping prices close to producer price. That task is done by the competitive marketplace in capitalism. In socialism/communism the price is controlled by authoritarianism, which is why those regimes are marked by mass shortages and starvation.