Blame Washington, Not Moscow, for Surging Inflation

The Bureau of Labor Statistics (BLS), has announced that the February all-item Consumer Price Index, (CPI), skyrocketed 7.9 percentAmerican consumers weren’t surprised that the year-over-2018 increase was so large. This was the biggest increase in oil prices since 1982, and it followed monthly increases of 6 percent since September. This has been almost a year coming to anyone who shops for the family, like me, and who fills up the pickup or SUV with gas.

Joe Biden expressed concern over the rising gasoline prices. So-calledIt “Putin’s rise in gasoline prices.” Although it may seem appealing politically to shift the blame for inflation on a foreign despot, the BLS report says that the price rise had nothing to do the Russian invasion of Ukraine on Feb 24, which was too late to affect the monthly survey of gasoline prices.

BLS reported that the Food Index was at 7.9 percent in 2018, while gasoline saw a 37.9 percent increase. You should also remember that in the United States, the average cost of one gallon of gasoline was $2.38. In January 2022 it was $3.82. PricesAt $3.32 it was only a penny more. The % was at $3.32 by March 10. PricesAnother dollar was added at $4.31. Putin’s invasion does make a difference. However, gasoline demand surged earlier than that when people with cash and no interest in flying due to COVID-19 worries, drove their family cars in the middle of the COVID shutdown. This increased the likelihood of gasoline being available. KilometersThe spring 2021 rose to new heights in terms of travel.

Too long, political leaders in Washington have refused to admit that they are major sources of inflation. That inflation does not occur because suddenly greedy businessmen cause it. It is not common for people to admit that Washington has created inflation, which will only continue and worsen in the next twelve months.

Numerous analysts (and) Even Biden’s Council of Economic Advisers) now recognize that, fed by trillions of stimulus dollars distributed in 2020–21, surging consumer demand placed extraordinary pressures on the Supply pressureThere are many home appliances and automobiles. Prices rose because of the flood of money and shoppers shopping.

However, war-generated market turmoil is important. Price increases will be caused by any reduction in supply. Consumers will not care about the cost of gasoline and other commodities. However, people who are concerned about government policies and how they might address the problem know that there’s a significant difference in changes in relative prices for one commodity (e.g. gasoline), and overall changes in all commodities’ price levels, as shown in CPI.

To reduce energy supply restrictions and make gasoline less expensive, encourage more drilling and more frracking. Also, rethink and revise regional formula differences that are required by the Environmental Protection Agency to make gasoline more expensive. Anti-competition policies such as the Jones Act that ban foreign-built and foreign-owned ships from U.S. coast shipping should be eliminated. This makes it more expensive to transport petroleum products domestically.

To reduce inflation, you must first recognize that it is primarily a financial phenomenon. Inflating money is the act of chasing a small supply of goods or services, which causes inflation to occur.

We are now back at the trillions of dollars in stimulus money that was happily sent to consumers’ checking accounts in 2020-2021. While the money printing presses continued to run, notable economists advised caution early and forecasted that inflation would soon follow. The respected University of Florida economist is correct. James D. GwartneyJohns Hopkins University’s highly-respected monetary scholar Steve HankeHe was a former Treasury Secretary and Presidential Advisor. Lawrence SummersEach sent out warnings, anticipating that printing money-based government spending would lead to a severe bout of inflation. Washington’s leadership refused to listen. Nevertheless, Washington leadership was not in the mood to listen.

The predictable outcome is now in front of us. Our political leadership refuses almost universally to accept the monetary explanation, regardless of which party it may be. 

We are not likely to hear any solutions if we don’t focus on inflation’s source. Politicians will likely demand more control and command-and-control measures instead of restricting debt-based spending or revising regulatory restrictions. Keep an eye out for wage-price recommendations, corporate profit restrictions, and merger limitations, all designed to keep a check on Washington inflation. These will continue to undermine the economic prosperity of common Americans.