Red alert for families: "inflation is rising three times faster than your paycheck," warned Representative Kevin Brady (R-Texas). "The average family in America, now, since Joe Biden became president, is paying an extra $5,700 more to buy the exact same things that they were before." On Tuesday, the Labor Department released the March 2022 inflation numbers, reporting that the consumer price index (CPI) had risen 8.5 percent from a year before. Inflation hasn't been this high since December 1981, when Raiders of the Lost Ark was in theaters. "Today's report was expected to be bad. It was worse than that," said Brady.
As an economic "double whammy," Brady referenced the National Federation of Independent Businesses (NFIB) Small Business Optimism Index continuing to slide in March, decreasing 2.4 points as inflation overtook "labor quality" as the top concern. "Inflation is so high for small businesses," said Brady, "they're having to pass it on to their consumers or eat it, and they can't find workers either."
Instead of taking the lead to solve the problem, President Biden was more concerned about who took the blame. "Democrats didn't cause this problem. Vladimir Putin did," said Biden. "I'm sick of this stuff... The American people think the reason for inflation is the government spending more money. Simply. Not. True." Since Russia's invasion, gas prices have spiked from $3.60 per gallon to $4.30 per gallon, but when President Biden took office, gas was $2.35 per gallon. Unfortunately for the president and his party, most voters have memories longer than a hamster's and can remember that rising inflation predated Putin's (now six-week-old) war by a year.
Voters might also remember last July when President Biden called inflation "temporary" and said "nobody" was "suggesting there's unchecked inflation on the way -- no serious economist." They might remember his chief of staff tweeting that inflation was a "high class" problem, or an economic official trying to spin higher-than-predicted inflation as "actually a good sign." By December, Democrats were blaming corporations for rising prices, months before Putin's invasion. "I've concluded he just doesn't understand the American economy," said Brady.
Indeed, President Biden needs to review Economics 101, the basic, supply-and-demand graph. When anything decreases supply or increases demand, that's a price shock, not inflation (for instance, a Gulf hurricane that temporarily shutters oil refineries). The war in Ukraine is a price shock. With inflation, all the economic realities displayed on that simple graph remain the same; only the perceived price changes because a dollar can no longer purchase what it previously could. National Review's Jim Geraghty cites a classic definition, "Inflation occurs when too much money is chasing too few goods." In this case, it occurs when politicians pump trillions of borrowed dollars into the economy.
From their chosen villains to their proposed solutions, Democrats and the media seems to confuse inflation with price shocks. USA Today inanely asks "What causes inflation?" and then attempts to answer the question by simply listing which prices are rising fastest. Democrats have proposed emptying the strategic reserve and suspending gas taxes, which are legitimate responses to price shocks but counter inflation like taking a single step up a "down" escalator. Still, President Biden and his Congressional majority want to spend trillions more, a suicide mission which their own Senator Joe Manchin (D-W.Va.) has prudently chosen to thwart. "Until [President Biden] admits the problems the economy is facing, I don't think we'll see any progress," said Brady.
To solve inflation, someone must vacuum up those recklessly spent trillions. That mucky job belongs to the Federal Reserve, which can only right the ship by hiking up interest rates (as the Fed chairman appointed by President Reagan did in the 1980s), "higher than inflation," Brady explained. That translates into steep interest rates, "a very harsh punishment on the economy," Brady added, which could trigger a recession. Thus, he guesses, "the Fed will fall short of getting inflation under control." Oh, for a sound economic policy.