We’ve come to expect the worst, but the worst keeps surprising us. It happened again with the February inflation numbers as reported by the Bureau of Labor Statistics.
As clever as the Biden administration has become at spinning bad news, this was impossible to hide. Inflation annualized came in at 3.2 percent, or nearly as bad as last year and even dating back to October 2022.
What are they going to say now? That this is “transitory”? The question even three years ago was: What precisely are we transitioning to? Now it seems obvious: a wrecked standard of living and a dollar with permanently lower domestic value.
For at least a year, we’ve heard from the Fed, the Biden administration, and the corporate media, month after month, that inflation is gradually going away. The problem is essentially over. The Fed can stop with its anti-inflation, rate-raising campaign and get back to dropping rates to support a growing economy, they have said.
Looking back at the reality at this juncture points to a very different problem. It is not getting better. It is getting worse.
The Cleveland Fed puts together a data package called the Median Consumer Price Index. It is an attempt to discern the core of inflation, stripping out various exigencies that could simply relate to the supply and demand of various goods and services, revealing instead what we are actually looking for, which is dollar depreciation attributable to monetary policy.
The new index came out at the same time as the Consumer Price Index. What it reveals is actually stunning. We are looking at annualized price increases of 6.54 percent. That is extremely intense, especially coming at a time when inflation is supposed to be under control. The entire trend since summer 2023 has been up, up, up. When you consider this, it’s impossible not to feel gaslit by the managers of public life who have been telling us the exact opposite.
In other words, you have been lied to. Surprised? Probably not.
In the past four years, official data claims that 17 cents of purchasing power from the dollar has evaporated into the ether. It’s at least that. When you consider the prices that you pay on groceries, gas, homes, education, health care, utilities, club memberships, movies, services, or anything else, your own personal estimate is probably closer to the truth.
What is your own estimate? Is it 25 cents on the dollar, 30 cents, 50 cents, or much more? I do not know the answer. No one does. And much depends on how you spend. But we only know it is bad and getting worse.
And by the way, remember how President Joe Biden bragged about getting the gas price under control? It is rising again. We were paying $1.74 four years ago and pay $3.38 now. That seems closer to the level of inflation that we’ve experienced overall.
This level of inflation makes business accounting extremely difficult. Costs are rising all around, including of course for labor. This is making life extremely hard for every retail outlet. They are still struggling to get back to normal following brutal lockdowns.
For three years, they have had to factor in unrelenting increases in the cost of all inputs, and one never knows precisely what they will be. To make the accounting work, they must raise prices for the consumer somehow. They can come in the form of new fees, smaller packages, less service, or cutbacks in other ways. They are only trying to survive.
This is why it is truly outrageous for President Biden to single out shrinkflation as the problem he wants to solve, so that candy bars stay large and bags of chips remain filled to the brim. This is not the problem but a symptom of aggressive dollar deprecation. This is nothing but more gaslighting from the Biden administration, blaming the private sector for what is really the problem of the public managers, from Congress to the Fed to the Treasury.
Inflation is another method of taxation. It allows the government to expand its power and reach by collecting money from the public in ways different from direct taxation. It’s a modernized version of the ancient despotic practice of coin clipping. The king or whoever would shave off a bit of the coins for himself and the court while hoping that the public doesn’t notice.
It was to prevent this practice that coins started being minted with ridges around the sides. It was a way to deter governments and other criminal organizations from watering down the value of money.
Believe it or not, part of the reason for the founding of the Federal Reserve was to stabilize the value of the dollar and get inflation under control. In a turnabout with which we are all too familiar today, the exact opposite happened. In a familiar pattern, the critics of central banking at the time said, “Do not do this.” They did it anyway.
After the Fed printed money to fund the U.S. entry into World War I, the value of the dollar underwent a precipitous slide. But for rather brief intervals, that slide has continued into the 21st century, such that the dollar’s purchasing power has been reduced to barely a cent from the Fed’s beginning.
The dollar seemed more or less to stabilize from 1982 and following with a target of 2 percent. That all came apart in 2021, in direct response to the wild mania of money printing that started with lockdowns and didn’t really end until 18 months later. We are still paying a heavy price for that, even as the Biden administration is regulating everything in sight to stop economic growth.
When does this inflationary bout come to an end? I wish I could say, but I’ve given up predicting the effects of $5 trillion-plus money expansion in a mere two years. No one has experience with this, so the truth is that we just don’t know. Part of the uncertainty concerns the pace of spending, which has been accelerating, as people and companies throw their accumulated cash balances at their balance sheets in hopes of staying afloat.
What have we learned? We should know for sure at this point that these supposed experts are not experts at all. They cannot predict, and they cannot manage. Monetary and fiscal policy of the United States is yet another sector of life that has fully lost credibility.
