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Inflation

 


The latest figures on inflation turned out poorly. Yes, gasoline prices have headed down but that has been overwhelmed in the rising numbers by increases elsewhere. 

We're not back to 1970s-era figures yet. But it is worth mentioning that this administration has not been honest with us about inflation. Not by a long shot.

Yes, Biden is not Trump and I am willing to cut him some polemical slack for that great merit. Further, under Biden's administration there appears to be a real chance Trump will be quite deservedly indicted. More slack. 

Still, this is a "normal politics" issue. And I have to say, the administration has not been straight with us. 

Early on it said there was no inflation, just a transitory blip in prices. As the blips continued and increased, the Biden line become: this is all Putin's fault. 

What Putin did was wage a war against a neighboring country, leading to sanctions, leading to the cut off of pipeline supplies to western Europe. That increased the global price for natural gas and crude oil. This in turn has certainly had an impact on the prices facing Americans. BUT ... as noted above, the decline of gasoline prices has proven consistent with an increase in the overall price level, a fact that already hints that this is not something the war alone is putin' on us.

As a currency is cheapening, the average of prices for goods and services will definitionally go up. It of course doesn't follow that every price will go up. The administration may have found levers to move the price of gasoline down, but if the monetary problem is not addressed, this will come at the expense of further price increases elsewhere.   

The monetary problem is of course not Biden's fault. It is a central bankers' issue and the Fed has been laying the groundwork for this inflationary move for about 14 years now. But as we wait for the latest interest-rate hike announcement from the Fed, likely to come later today, it is worth thinking about why the Biden crowd thinks it needs to keep up the happy talk. 


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  1. Paul D. Van PeltSeptember 21, 2022 at 8:09 AM

    Yes. That large drop in the market days ago is portentous--- (portential is not a word, but should be). In an older, much smaller market, it would have been a crash. I don't know what that means: hang on to your shirt?

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