by E.J. Antoni
August came early to the nation’s capital with last week’s round of March inflation data. The late summer weather in Washington, D.C., is notoriously hot and sticky, two accurate descriptors of the latest price increases facing families and businesses alike. Inflation is stubbornly high, and the Biden administration’s spendthrift public policies are to blame.
In the past 12 months, consumer prices rose 3.5 percent, the second month of accelerating annual inflation. In March alone, prices rose 0.4 percent. That may not sound like much, but it’s actually terrible. If that monthly inflation rate holds steady, prices will double in less than 16 years.
That means a baby born today will face prices more than twice as high before he or she is even old enough to vote. Talk about a hot inflation rate!
When the apologists for bloated government tell you to be grateful because inflation has come down, they are gaslighting you, pure and simple. Annual inflation was a mere 1.4 percent when President Joe Biden took office and is now two and a half times that rate.
While it’s true that inflation is not as bad as the 40-year-high rates inflicted upon the nation just a year and a half into President Biden’s term, it’s still running very hot. Every month that inflation continues, your savings and income lose value as you’re robbed of your purchasing power.
Furthermore, today’s hot inflation rates are building on all the previous price increases from the last three years. Since January, the prices paid by consumers and businesses alike have risen 19 percent. This is also proof that inflation is not caused by “greedy” businesses – everyone is facing higher prices, including grocery stores, gas stations, and factories.
The reason inflation is sticky—stuck at these high levels—is that the federal government refuses to slow its breakneck pace of spending, which has pushed borrowing by the Treasury to stratospheric levels previously only seen in times of crisis. And since the public doesn’t have enough money to lend to the Treasury, the Federal Reserve has stepped in to simply create the money out of nothing.
The result is a catastrophic drop in the dollar’s value. That’s why everything is going up in price, not merely one or two items or services. Gold continues setting record prices on a nearly daily basis while energy marches steadily upward.
Small wonder an entire generation of Americans can’t afford a home today. Or one in eight Americans can’t afford adequate food without going into debt.
This is not a question of politics but policy: neither party has a monopoly on profligate spending, with some Congressional Republicans having supported trillions of dollars in President Biden’s profligate agenda.
To add executive insult to legislative injury, the Biden administration also continues unilaterally pursuing other inflationary moves, like an unconstitutional bailout of student-loan borrowers.
Until the big-spenders throughout government are reined in, the inflation forecast will remain hot and sticky, like an oppressive August afternoon in D.C. But unlike the summer heat, there’s no financial air-conditioning in which you can hide from these miserable conditions.
The hidden tax of inflation has you square in its sights.
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E.J. Antoni is a public finance economist and the Richard F. Aster Fellow at the Heritage Foundation and a senior fellow at the Committee to Unleash Prosperity.
Photo “President Biden Signing Bill” by The White House.
