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The Inflation Spike was Created in Washington

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EDITOR NOTE: The political left may seem somewhat appeased now that the current White House regime is willing to give a greater handout to those who find themselves on the unfortunate end of economic inequity. But it’s a trick that only a sucker can’t see. For every dollar the government gives, it sneaks in through the backdoor to usurp its value. We see this on a day-to-day basis. The more people spend on basic goods such as grocery items, the more expensive they become over time. That’s inflation; a result of too much money chasing too few goods. In the end, what matters is not how many dollars you hold, but the purchasing power your dollars give. And that’s slipping away fast which could quickly result in an inflation spike. Ultimately, what Americans are paying for, besides the basic necessities to sustain their lifestyle, is the capacity for the government and the Fed to continue their radical economic experimentation on the very people who are forced into funding it--that’s all of us.

The Labor Department’s consumer price index surged 5% year-over-year in May, the largest increase since August 2008 when oil was $140 a barrel. But don’t worry, Americans. The Federal Reserve says inflation is “transitory” and that it has the tools to control prices if they start to spiral out of control. Let us pray.

Nobody should be surprised that prices are increasing everywhere from the grocery store to the car dealership. Demand is soaring as the pandemic recedes while supply constraints linger, especially in labor and transportation. As always, this is a price shock largely made by government. Congress has shovelled out trillions of dollars in transfer payments over the past year, and the Fed has rates at zero while the economy may be growing at a 10% annual rate.

The personal savings rate in April was 14.9%, double what it was before the pandemic. Record low mortgage interest rates have enabled homeowners to lower their monthly payments to burn more cash on other things. Congress’s $300 unemployment bonus and other welfare payments for not working have contributed to an enormous worker shortage, which is magnifying supply shortages.

All of this is showing up in higher prices. Over the last 12 months, core inflation excluding food and energy is up 3.8% and much more for used cars (29.7%), airline fares (24.1%), jewelry (14.7%), bikes (10.1%) and footwear (7.1%). Commodity prices from oil to copper to lumber have surged. Higher lumber prices are adding $36,000 to the price of a new home.

What Congress has given in relief payments, inflation is taking away. The Fed says annual inflation only looks high compared to...

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