(RightWing.org) – In March, inflation began to rear its ugly head. At the time, President Joe Biden and Federal Reserve Chairman Jerome Powell claimed the problem was temporary and transitory as the US economy emerged from the pandemic. Now, Powell is reversing course, and the White House is doing all it can to avoid talking about a bad political situation it stuck itself in. Instead of talking about solutions, President Biden appears content to stick his head in the sand and ignore the elephant in the room.
On Friday, December 10, consumer prices rose to the highest level in four decades. In June 1982, the consumer price index sat at 7.1%. According to the Labor Department, inflation jumped to 6.8% in November. Virtually everything Americans pay for is more expensive. Gasoline to drive to work, daycare, groceries – everything. The problem is exacerbating the key issue in the economic recovery.
Inflation Is Getting Worse
The inflationary growth topped 5% for the 6th straight month. Prices for airline tickets, automobiles, furniture, and rent were on the rise. Economists say there may be some minor relief in early 2022 on energy prices. Unfortunately, mother nature may have something to say about it if a significant cold-weather event grips parts of the US and demand for energy spikes.
The messaging from some economists and the White House is terrifying if you’re a Democratic political strategist. Some say the drivers of inflation are a good thing, but is inflation ever a good thing if you’re on a fixed budget or struggling to get by? The tone-deafness is what’s frightening.
Economists continue to blame the massive demand for goods in the wake of the pandemic while manufacturing and supply chains catch up. The question is, why aren’t they addressing a core issue?
Government Money Flooding the Market the Leading Culprit
While there is some validity to the supply and demand argument, it’s not the entire story. Ahead of Thanksgiving, former Obama Treasury official Steven Rattner blamed inflation on the Democrats’ March COVID relief bill. He argued that Congress unnecessarily flooded trillions of dollars into the economy and helped spark consumer demand, leading to the massive inflationary pressures.
In short, he argued that inflation was self-inflicted.
The Federal Reserve appears to agree. While it recently believed inflation was temporary, Powell stated that is no longer the case. Beginning in December 2021 through March 2022, the Fed intends to roll back and end pumping over $100 billion into the economy each month. In April, it says it will begin increasing interest rates to try and force money out of the economy. If consumers spend less because they have less money, the theory is that demand will drop, and prices will come back down – eliminating or reducing inflation.
The downside is that prices may come down, but paying for what one has will get more expensive if you use credit cards or need a loan for a car, truck, home, or home repairs. It’s a trade-off.
In either case, everyone needs to buckle up. Inflation is here to stay for some time.
Don Purdum, Independent Political Analyst
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