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We Just Got Even More Proof Inflation is On the Rise

Brad Polumbo
May 31st, 2021
The Foundation for Economic Education
Comments (4)

This article was originally published by Brad Polumbo at The Foundation for Economic Education. 

The money in your bank account or under your mattress is worth less now.

The most widely-used metric for price inflation hit a 12-year high in mid-May, showing that prices had risen 4.2 percent over a year. But some argued this was just a one-off outlier, not indicative of a broader trend or serious problem stemming from runaway government spending and money-printing.

Their case just got a lot weaker. New figures released today by the Commerce Department offer even more corroboration that prices are seriously on the rise.

Another key inflation metric, the core personal consumption expenditures index, exceeded expectations and came in showing a 3.1 percent year-over-year increase in prices. If you factor in energy and food prices, the inflation figure rises to a whopping 3.6 percent.

It’s also worth noting that this index and others like it notoriously underestimate inflation.

Where is this inflation coming from? Well, at least in part, it stems from the Federal Reserve’s money-printing to fund COVID-19 “stimulus” efforts.

“Nearly one-quarter of the money in circulation has been created since January 2020,” FEE economist Peter Jacobsen explains. But printing more money doesn’t mean we actually have more stuff, and “if more dollars chase the exact same goods, prices will rise.”

The problem with these inflation levels, which are still far short of truly catastrophic hyperinflation, is that they erode your savings and purchasing power. The money in your bank account or under your mattress is worth less now. And unless your income has risen more than 3-4 percent this year, you’ve really had a pay cut, because what ultimately matters isn’t the number on your paystub but what it can buy you.

Simply put, public policy is all about trade-offs. And the downsides of government largess include more than just the traditional check you write to the Internal Revenue Service. When mounting price inflation erodes your paycheck, that too is a form of indirect taxation you can trace back to Washington, DC.

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    Author: Brad Polumbo
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    Date: May 31st, 2021
    Website: https://fee.org/

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    4 Comments...

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    1. Then you have inflation manifesting itself as shrinkflation…smaller size packages.

      Saaaayyyy…howz come the wimmenz ain’t gittin’ smaller?

      Well, I guess some are smaller…but when I hit on them, their mothers chase me off the playground…

    2. You have not seen anything yet!
      Just wait Biden is a Fool and has surrounded himself with fools!
      God Help the poor working slobs!
      He is a sell out to China and the elite.

    3. rick says:

      for some delusional reason people don’t realize biden has pushed the flush valve

    4. Bill says:

      The Joe B administration has already spent several borrowed trillions. The budget they are crafting is not really a budget, it’s a spending list, it includes more than 6 trillion dollars of spending. This IS NOT hyperbole, the dollar is going to basically worthless. The accompanying coming high inflation will only speed up the decline in national standard of living, which is already occurring for two reasons, the average person has too much debt, and despite what the gov’t and the MSM say, wages are still not keeping pace with present inflation.
      Based on the bogus accounting methods the fed. gov’t uses, the present national debt (this does not include state, city, and local gov’t debt) is about 29 trillion dollars. Adding more than 6 trillion for proposed spending this year will put it at 35 trillion. At this rate we’ll see a debt at 50 trillion by the end of his admin.
      Unless you have received a recent 3 to 4 percent increase in pay you already have that much less to spend. And due to massive money creation and spending you will see at least equivalent inflation next year. This means employers would have to give their employees another 3 to 4 percent next year to maintain a semblance of buying power and the standard of living standard you currently have. Good luck with that. By the way, because the dollar is worth less, you can count on local taxes and fees to increase to compensate for the increased costs of your local gov’t, further diminishing your discretionary spending.
      Compounding the problem of the massive debt, which in itself is intractable, are the future liabilities that exceed a 100 trillion dollars. Where in the hell is the money coming from? It will have to be created from thin air, it will be WORTHLESS. The policy makers can’t be this stupid. Therefore, it is devised, purposeful and necessary to the policy makers (the nameless and faceless real policy makers). The big question is, who benefits?
      We are only average citizens, but even we understand the consequences of money creation, over-spending, and all the other policies destroying the middle class. It means lower standards of living, inflation, less personal empowerment, and fewer options for citizens. I believe the train is purposely being driven off the tracks. I believe another war is coming for distraction of the masses for the coming depression, and to justify the further clamp down on citizens rights, is being cooked up. I believe the State will ramp up more social division and chaos, more PC propaganda, more laws for “equity and justice”.
      The State has an especially virulent hatred for conservative Christians, MAGA people, and those who refuse to comply with State edicts, it inevitably will motivate the other half to be violent against us. The State’s goal is nothing less than to totally undermine all the foundations of what we call American life. The State’s highest and primary goal is to irrevocably alter the demography and culture of America.
      A person wrote in a comment above “ prez JB has pushed the flush valve” he is absolutely correct. Events to alter all we know have been placed in motion. It only remains to see how the American people respond to these events.

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