Inflation just hit yet another high. Consumer prices rose 7.5 percent from January 2021 to January 2022, new data show. That’s the highest level in 40 years!
Cue the political blame game.
Inflation is at a 40-year high. Where are Americans seeing big price hikes?
Used cars 40.5% y/y
Rental cars 29%
Utility gas 24%
Peanut Butter 15.5%
New cars 12%
— Heather Long (@byHeatherLong) February 10, 2022
With the public deeply concerned about inflation, you can expect Democrats like Joe Biden and Elizabeth Warren to double-down on their absurd deflections blaming “corporate greed” and “monopoly power” for the ongoing price surges. (Spoiler alert: that’s not it. At all. Economists almost all dismiss this notion out of hand, because corporations are no more greedy or monopolistic today than they were 5 or 10 years ago).
Republicans will undoubtedly blame the Biden administration. On this front, they’re not so off-base. The president’s “solutions” for inflation are a complete joke, and he has signed into law trillions in deficit spending that is surely playing a role in the ongoing surge in prices. He has also made energy and other specific goods more expensive with foolish overregulation.
Still, the biggest culprit in all this is the Federal Reserve.
The nation’s central bank has created trillions of new dollars out of thin air since the pandemic began. This was supposed to “stimulate” the economy, but all it really did was send more money chasing fewer goods. As any economist will tell you, that’s a textbook recipe for inflation.
Here’s a graph of the money supply. Notice anything?
“We know what causes this and we need to hold the Fed accountable,” economist Lee Coppock tweeted. “Money supply is up 40% in two years.”
Inflation now at 7.5% is highest level since February 1982!
We know what causes this and we need to hold the Fed accountable. Money supply is up 40% in two years. pic.twitter.com/OOqxWwrHaV
— Lee Coppock (@leecoppock) February 10, 2022
So while there are absolutely fair criticisms to be of the Biden administration over the ongoing inflation crisis, we must not let the Federal Reserve off the hook. Until we hold America’s central bankers accountable, the American people will continue to have their savings erased and their wages eroded by policy-fueled inflation.