To Say That Inflation Is Fine Is an Illusion

Jeffrey A. Tucker Jeffrey A. Tucker
January 12, 2023Updated: January 15, 2023


Jan. 12 was Consumer Price Index (CPI) day, with all the predictable blather and nonsense about how what you absolutely knew to be true certainly isn’t 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’re wrong.

The top-line numbers were up by 6.5 percent for the year and down by 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 as it has been for the past year: It’s not an issue! It’s going down! Stop complaining! If you complain about inflation, you’re 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 by 12 percent for the year and up by 0.2 percent for the month. Food away from home is up by 8.3 percent for the year. It’s worse on the particulars such as eggs, which currently 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 NY Times truly is.

On what basis can the NY 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 2022, you were paying upward 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 three 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 five this month, but you’re still 200 pounds heavier than three years ago, you can congratulate yourself if you so choose. But let’s not indulge the illusion that you’re well on your way to health.

So much of this inflation issue has been stuck in a mire of language obfuscation. We say it’s improving because the depreciation of the currency is getting worse at a slower rate.

That’s 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’s raining far less hard this hour than the 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 haven’t gotten a clear admission from anyone that all of this traces to the catastrophic Fed policy from the COVID-19 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 wasn’t Putin. It wasn’t the pandemic. It wasn’t only supply-chain breakages. It was an 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 Antoine Destutt DeTracy. Jefferson translated his 1817 book “A Treatise on Political Economy,” which you can download for free.

It’s a wonderful book. DeTracy explained 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, explaining why in detail.

Jefferson adored his thought, and there’s 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 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. That’s simply because nothing is worse for a professional career in these times than to discover and then proclaim the truth. That’s 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 the 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 is worth 3 cents today: The responsibility belongs entirely to the experts who have managed this system.

Epoch Times Photo
(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-19. 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.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Jeffrey A. Tucker is the founder and president of the Brownstone Institute, and the author of many thousands of articles in the scholarly and popular press, as well as 10 books in five languages, most recently “Liberty or Lockdown.” He is also the editor of The Best of Mises. He writes a daily column on economics for The Epoch Times and speaks widely on the topics of economics, technology, social philosophy, and culture.