Market Insights

The Truth About Inflation

Gold Alliance disclaimer
Americans are experience hotter than expected inflation under Biden.

Remember this? 

Back in June 2021, several Federal Reserve and Biden administration officials claimed inflation and soaring prices were “transitory.” 

“Those are things that we would look to, to stop going up and ultimately to start to decline as these situations resolve themselves,” said Fed Chief Jerome Powell.  

Five months later, inflation’s grip was still crushing the economy, and Powell told Congress it was time to stop calling it “transitory.” 

That was over two years ago. 

Last month, Treasury Secretary Yellen said: “I regret saying [inflation] was transitory.” And now, the Consumer Price Index (CPI) print from the U.S. Bureau of Labor Statistics (BLS) came in hotter than expected for the fourth month in a row. 

According to the BLS stats, inflation rose 3.5% in March from a year ago—up .4% from February’s readings.  

These figures may not look significant when viewed out of context, but the big picture truth is: From January 2020 to January 2024, the CPI ballooned by 19.6%. 

And that’s a 19.6% loss of purchasing power you don’t get back. 

Meanwhile, the White House is preaching an alternate narrative. 

In a White House Dinner speech, President Biden said inflation is “now lower in America than any other major economy in the world. The cost of eggs, milk, chicken, gas, and so many other essential items have come down.”  

Again, that’s out of context.  

Because those costs are only lower compared to the 40-year highs we faced in 2022—triggered by what the Congressional Committee on Ways and Means calls “Bidenflation”: 

“Bidenflation: From denying inflation and claiming it was ‘temporary,’ to passing the buck with ‘Putin’s Price Hike,’ the White House [… is] out of touch with the challenges Americans face.”

House committee on ways and means

The fact is… CPI data show prices for personal care, clothing, insurance, rent, electricity, medical care, property taxes, food and more are still going UP. 

In other words: 

The rate of inflation may have slowed down some, but that only means… 

Prices are still rising, just not quite as fast as they were a few months ago. 

Economists, analysts and government spokespeople can massage talking points about inflation. But facts are facts. And the rising costs we’re all facing right now are a long-term pain in the pocketbook and savings account. 

Because inflation is cumulative. 

Every uptick of any size adds to the total. 

As The Wall Street Journal says: “if the price of eggs increased 10% last year and a further 3% this year, they now cost 113.3% of their pre-inflation cost.”  

And who does the administration blame? 

During his White House Dinner speech, the President said, “…for all we’ve done to bring prices down, there are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation.” 

But this buck-passing ignores another important context: 

Inflation jacks up costs for companies, supply chains and labor too.  

When costs of supplies and labor go up and inflation erodes the dollar’s purchasing power, prices must go up to cover these costs, or a company could go out of business. 

But the biggest problem with downplaying inflation figures and blaming “greedy corporations” is this: 

The Fed printed trillions of dollars over the last few years. 

That’s the main catalyst for inflation. 

On top of that, the federal government is spending over $5 billion per day, has plans to spend trillions more, and doesn’t have enough money coming in to cover the bill. 

And if they keep on spending money they don’t have, the nation’s ballooning debt problem won’t be “transitory” … 

Inflation may not be “transitory” … 

The dollar’s loss of purchasing power may not be “transitory” … 

And gold’s rally may not be “transitory” either. 

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