To Say That Inflation Is Fine Is an Illusion
To Say That Inflation Is Fine Is an Illusion

By Jeffrey A. Tucker


It’s CPI day today, with all the predictable blather and nonsense about how what you absolutely know to be true is certainly not true because the experts say otherwise. This keeps happening these days: we know one thing—in this case that our purchasing power is being slammed—but regime spokesmen keep saying we are wrong.

The top-line number today is 6.5 percent for the year and down 0.1 percent for the month. That seems good or at least better. Therefore, of course, the media spin on awful inflation numbers is the same that it has been for the last year: it’s not an issue! It’s going down! Stop complaining! If you complain about inflation, you are probably an unmasked anti-vaxxer with a gas stove.

Here’s the New York Times: “Inflation continued to slow on an annual basis in December, providing welcome relief for American households and a positive development for policymakers at the Federal Reserve and White House.”

Welcome relief? Now, let’s look at the actual facts.

This inflation report documents that your food at home is up 12 percent for the year and up 0.2 percent for the month. Food away from home is up 8.3 percent for the year. It’s worse on the particulars such as eggs, which today are through the roof if you can find them.

Now, ask yourself: in what world is it “welcome relief” to be paying 12 percent more for groceries overall this year than last? It’s absolutely nuts and reveals just how out of touch the NYT truly is.

On what basis can the Times claim that this is “welcome relief?”? Well, the gas price is down dramatically from a year ago—which is a bit of a statistical artifact if you think about it. In June of 2022, you were paying upwards of $5 per gallon.

That very intense pain is why today’s $3.25 is truly a relief. To be sure, if you compare it to the $1.75 of March 2019, it’s not so hot. If you step back and look at it, for the price at the pump to have nearly doubled in 3 years, that’s pretty darn awful. It’s the way we calculate prices that makes it all seem fine.

So how it goes? It’s the frog boiling slowly in water.

Or consider this analogy.

If you put on 50 pounds last month and only 5 this month, but you are still 200 pounds heavier than 3 years ago, you can congratulate yourself if you so choose. But let’s not indulge the illusion that you are well on your way to health.

So much of this inflation issue has been stuck in a mire of language obfuscation. We say it is improving because the depreciation of the currency is getting worse more slowly.

This is a bit like falling in a deep ditch and it starts raining heavily and the water is coming up to your neck. The person above assures you that it is raining far less hard this hour than last. Your first thought might be: I’m not entirely sure that this person fully understands the issue I’m dealing with here.

If the very existence of the inflationary problem is a point of controversy, the issue of causation is even more so. We still have not gotten a clear admission from anyone that all of this traces to the catastrophic Fed policy from the pandemic, during which time, the Fed printed $7 trillion in a rather short period of time while driving interest rates back to zero, with absolutely no plan to keep the hot money off the street.

In fact, it was the opposite. This was fresh money dropped from helicopters. What did they think would happen? This is entirely due to government and Fed policy and nothing more. It was not Putin. It was not the pandemic. It was not only supply-chain breakages. It was old-fashioned expansion of money and credit to fund a profligate government.

I was just going through a great book by Thomas Jefferson’s favorite economist, the Frenchman Destutt DeTracy. Jefferson translated his 1817 book “A Treatise on Political Economy,” which you can download for free.

It’s a wonderful book. DeTracy explains in detail how a government that spends what it doesn’t have, and issues new coin with fake names to pay the debts, is engaged in outright robbery of the people, doing to them what taxation would do but in a sneakier way.

“All paper money is a frenzy of despotism run mad,” he wrote, and explained why in detail. Jefferson adored his thought, and there is nothing about the present inflation that would surprise either of them. This is just another case of lost knowledge: a fact about economics that was well known in the 18th century but which is obfuscated and buried in the 21st century. In this, economics has a lot in common with virology and immunology, not to mention climatology.

The whole of society today is being misled by experts who know nothing about deeper wisdom beyond their woke educations, and have every financial incentive to remain as ignorant as possible. This is simply because nothing is worse for a professional career in these times than to discover and then proclaim the truth. That is a sure path to ruin.

Let’s conclude with the bigger picture, shall we? The Federal Reserve was created in 1913 with the intention of ending monetary chaos of the previous period and guaranteeing a sound money and banking system. It was only a few years later when the power to print was massively abused to enter the Great War and slaughter Americans, who came back after the war depressed and drunken. That in turn led to Prohibition, which gave rise to crime families and violence, which led to cries for more government.

The Fed was then deployed in service of the New Deal and another war, followed by the Great Society and so on it goes. Thus, since 1913, the dollar then is worth 3 cents today: the responsibility belongs entirely with the experts who have managed this system.

(Data: Federal Reserve Economic Data [FRED], St. Louis Fed; Chart: Jeffrey A. Tucker)

The Fed absolutely must be unplugged. It proves too much of an occasion of sin for politicians, just as it did with COVID. We might only improve the current inflationary environment that paves the way for something much worse. The only real protection for the American people in the future will be to completely abolish the beast.

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