…“Republicans may have to find something else to criticize me for now that inflation is coming down…” President Joe Biden, Auburn, Maine, July 28, 2023
Inflation is a general increase in prices and a corresponding fall in the purchasing power or value of money.
In 2019 I secreted a one-hundred dollar bill in the deep, dark, end-pocket of my bill fold…just for emergencies. Recently I happened upon that bill. As I drew the bill out of the leather compartment, it appeared to me just like any other $100 dollar bill of today. The familiar blue-green engraving of Ben Franklin peered out over the edge of the leather bill fold. Ben’s characteristic stern look, and his tightly pursed lips made me pause. As the wrinkly image of Franklin slipped beyond the leather, Ben’s lips seemed to move. I imagined him saying: ”Watch out citizen, I am not worth what I was three years ago!”
Franklin, understood inflation. His business was printing and he was also a strong advocate for printed paper money. In 1739 he and his partner produced thousands of bills for the colonies. All went well at first. But Ben, perhaps too eager for business, printed up too many bills, and the result was the predictable threat of too much paper money chasing too few goods and services—rampant inflation.
Prior to 2021, the USA average inflation rate over the last ten years has been calculated at only 1.9%. (See: Forbes.com Money 1/02/23 “Is Inflation High compared to Years Past? ). In the 1930s during the Great Depression we even experienced a period of deflation, when our paper money actually grew in value when demand collapsed and goods and services became cheaper. Then in the 1970s and 1980s, inflation spiked to unprecedented levels. After that frightening inflationary period ended, US governments carefully shunned policies which would increase inflation. They were successful. For the last 40 years inflation has remained very low, often less than 1%. That is— until 2021 when under the Biden Administration inflation reappeared with a vengeance—all as a result of unwise irresponsible and intentional Administration polices.
Recently, as we move into the hyped up political season, we have been hearing from the present Administration politically driven reassuring noises regarding the economy.
One of these “reassurances” includes the oft-repeated but misleading statement that the rate of inflation has slowly come down. But a falling RATE of inflation does not mean that somehow prices of goods and services are falling, or that our devalued bills are worth more. Inflation is cumulative! Even when the rate is declining prices continue to rise. Inflation reduces your money’s buying power each year it occurs. It does not go away!
Current US Inflation Rates 200-2023 (See: forbes.com)
From 2013 to 2020, annual inflation rates were low, ranging from 0.7% (in 2015) to a high of 2.3% (in 2019) and a near long time average of 1.4% in 2020.
But after 2020 rates surged under policies instituted by the Biden Administration .
2021 —Inflation = 7%
2022—Inflation = 6.5%
2023—Inflation = 3%
Total year-over-year inflation is now 16.5%. That is how much buying power you lost.
But the inflationary policies and practices which produced high inflation (topping 9% in June 2022) have not changed. Pumping cash into every nook and cranny of the economy, spending wildly and recklessly, and instituting irresponsible policies which caused higher fuel prices— all generated intense inflationary pressures. Even the so-called Biden “Inflation Reduction Act” reduced no inflation— it only pumped more dollars into an overheated economy— increasing the dollars chasing goods and services— which only added fuel to the inflationary fire. The Biden Administration polices caused a near 17% increase in inflation over their years in office that continues to harm American citizens with sky high prices, which resulted in higher mortgage rates (5.5%) which have chilled
home sales. Inflation has generated citizen anger and discontent, labor unrest, and general malaise.
So if you have not had a salary increase in the last three years, you have lost 16.5% in buying power. If you did get a raise of 5%, your are still in a hole, having lost buying power of “only” 11.5%. If you are on a fixed income, or you are living off of savings, your income and savings have shrunk by nearly 17%. That is what Biden’s economic policy has caused.
In 2021 the USA median income was just about $70,000.00. By 2023, that median wage earner lost close to $12,000 in purchasing power as a result of inflation. ( $70,000 x 0.165 = $11,550). In the real world of purchasing power that “median” $70 k wage earner was only ($70,000-$12,000=$58,000) about $58,000.
That is why we all feel so economically “pinched” when we pay our bills at the grocer or gas station.
Or another way of looking at this is that the Biden administration dipped into your pocket book and your weekly salary envelope and took away nearly 17%, or (for the median wage earner) about $12,000, of hard earned purchasing power in the few years he was in office. You should be very angry.
As a result, we should not feel any sense of reassurance that all is well with our economy, and certainly no reassurance at all regarding the probity and wisdom of those who control the levers of power of the state.
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