New inflation numbers out this morning show that prices continue to surge at the highest level in decades. And GOP Congressman Thomas Massie just perfectly explained the main reason this is happening.
First, the facts. The new Consumer Price Index out this morning shows prices rose 7.9% from February 2021 to February 2022.
That’s the biggest increase recorded since 1982! In another reminder of why inflation is such a painful stealth tax on Americans, the biggest price increases came in essentials like gas, food, and shelter.
Cue the blame game.
But you can safely ignore the Left’s cries of “corporate greed” as the culprit for the ongoing surge in prices. Economists across the political spectrum reject this economically illiterate explanation out of hand. So what’s really going on?
Well, Massie put it concisely in a tweet this morning:
The first chart is the M1 money supply.
The second chart represents inflation.
Class is dismissed. pic.twitter.com/cZc1ZDouTn— Thomas Massie (@RepThomasMassie) March 10, 2022
Moving this up in the thread… https://t.co/zL8MLlzQyk
— Thomas Massie (@RepThomasMassie) March 10, 2022
Here’s an alternative graph of the money supply:
Simply put, the Federal Reserve, America’s central bank, printed trillions of new dollars out of thin air to “stimulate” the economy during the COVID-19 crisis. All it really succeeded in doing was “stimulating” some serious inflation.
Why? Well, when more money chases the same amount of goods, prices rise. That’s just Econ 101.
What’s more, the federal government spent trillions of dollars it didn’t have on wasteful and ineffective “stimulus” programs. This flooded the system with money at the same time that state and local governments were actually constricting the supply in the economy through lockdowns and other COVID-19 restrictions.
With all this in mind, it would’ve been a shock if prices didn’t surge.
Yes, inflation and prices in a modern economy are complex phenomena influenced by many factors. But the main causes here aren’t all that hard to identify. If Thomas Massie can sum up the problem in a single tweet, why can’t President Biden and Fed Chair Jerome Powell get their shit together?
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