Not everyone can explain what causes inflation or how inflation rates are calculated; however, anyone going to the grocery store weekly to buy groceries can tell you that the costs have gone much higher during the past four years. One of the problems with understanding what the rate of inflation is telling you is knowing what products and services are being used in the consumer price index CPI at that point for the calculations of change from a previous period. It can also be confusing or not clear as to the period for comparison. If the government publishes that the inflation rate has dropped to 2.7%, what does that say? You see the bread in your cart is 50% higher than it was four years ago. What they are likely saying is that the current calculation using the items in their CPI is only 2.7% higher than the amount one month ago. They use a rolling baseline that is a compounded number.
Example Rent: $1,500/month increase $150 rate increase 10%
6 months $1,650/month increase $150 rate increase 09%
6 months $1,800/month increase $200 rate increase 11%
In 12 months the rent went from $1,500/mth to $2,000/mth or a 34% rate increase.
When prices go up, in some cases consumers buy cheaper cuts of meat or substitute cheaper kinds of products that may not be included in the CPI-monitored products, and that flaws the value.
There can be several factors that cause inflation or a higher price for goods and services. Supply and demand are certainly a factor, for this discussion, collectible items and limited items will not be included. For products like chicken, if there is a bird-flu epidemic that causes the destruction of millions of chickens, that can cause a price increase, and the same if a large operation is bought out by a foreign company and the US operation is closed.
The biggest factor for inflation is the government and there is not a close second. During the past four years, the government has printed more new money and pumped that into the economy in the form of COVID handouts and funds to keep certain employees not working but paid by the taxpayers. They have pumped trillions into “green energy” projects that have not provided any real value. They have allowed millions of illegal aliens to come into this country and have paid millions to fly tens of thousands of other migrants into cities around the country. They have spent billions to provide housing, feeding, healthcare, and other services for those millions. That has put those people consuming products and services that were geared toward the citizen population in cities around the country. When 20,000 migrants were moved into Springfield Ohio which had 60,000 residents, you would understand that an increase of 34% would cause all kinds of problems. The population of New York State is less than 20 million and there may have been as many as 18 to 20 million illegals come into this country during the past four years.
Energy has been another huge factor in inflation during the past four years. The cost of energy impacts every product and service in one or more ways. The most obvious way is when you fill your tank at the pump. Every product when manufactured requires some form of energy, the delivery of products from the point of manufacturing to market requires energy. The cost of energy affects every step along the way. Some forms of energy are a lot more expensive to create than other forms. Some forms are a lot more reliable than others.
When President Trump was in office, oil and gas were much more available and cheaper because the government was not preventing exploration and production. The Oil and Gas industries were doing what they do best, providing products. Power generation plants were being built without being forced to switch to wind or solar which are more expensive to build and maintain and to get added to energy networks. The XL Pipeline from Canada was under construction and drilling in Alaska and other places was booming bringing pump prices down and keeping prices for goods and services with almost no inflation. More people were working and earning higher wages.
Trump’s lower taxes helped create millions of new jobs and companies were more profitable and paying more taxes off those profits. More red tape was eliminated than added through the new laws by Congress. The border wall and executive orders by President Trump had reduced the flow of illegals coming into the country to the lowest levels in many years. That alone helps many residents get jobs that would have been taken by illegals working for less money with no papers.
When President Biden went into office, he immediately reversed everything that President Trump had put in place. He killed the construction of the pipeline affecting workers in cities along that path and stopped the sale of oil and gas leases in many locations. He stopped the construction of the border wall and opened the border to people from around the world. The Inflation Reduction Act that Kamala Harris was the tie-breaking vote was the nail in the coffin that shot inflation out of control. Almost another trillion going into green energy and chasing “climate change” and three more years of Affordable Care Act subsidies.
Enough said, you saw it happen in real-time. The question is, will you admit what you already knew?
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