We all know that inflation is a problem. But the media is downplaying this, probably in a failed attempt to protect Democrats. Yahoo reported that the inflation rate in February was 7.9%, which was a 40 year high. If only that were accurate. But the real measure of inflation is “what was the cost last year, and what is the cost now?” By that measurement, 7.9% seems absurdly low. What on earth are they measuring?
Last April the average price of gas was between $2.76 and $2.99 per gallon. Today it is between $4.11 and $4.34 per gallon. Unless you are in California, where gas is much more expensive. I will choose the higher estimate of $2.99 for last March and the lower estimate of $4.11 for this march. That is still a 37.4% increase, and no one expects this to end here.
Last year you could buy a ribeye steak for about $10.99 per pound, but today that costs $17.99 per pound. That is an increase of 63%. I don’t really know of anything that has increased by only 8% from last year. Do you?
Have you been to a restaurant lately? First, you have to find one that survived COVID. You probably have to wait in line. Your waiter is likely to be inexperienced. Service will be slow because of understaffing. Food portions will be smaller than last year. But the price has been lowered to only about a 50% increase to make up for this.
Don’t even think of buying a new car. Few dealers will consider selling a car for the manufacturer’s suggested retail price. They will mark it up substantially. Sometimes it is hard to even find a new car because the parts are on a slow boat from China. But you can find a new used car, for just about the same amount someone paid for it last year. Only now it has 30,000 miles on it.
Incredibly, the only solution proposed by the Biden Administration is to buy less gas from Russia, to block building pipelines and suggest that somehow, miraculous, switching to clean energy like wind and solar is going to reduce costs. They suggest people consider buying an electric car. Why not? Just because it will cost a lot more, the battery is an environmental nightmare, and you need to use electricity, usually generated by what they call fossil fuels, to charge your car. And, by the way, good luck finding a charging station if you travel more than 50 miles from home. There was a guy on TV last night promoting a portable charger. He can come out to your electric car and give you a charge good for 50 miles. Nice!
The fed is talking about raising interest rates .05% per quarter. In Brazil the current interest rate is 11.75%. I doubt we will get anywhere near that, but interest rate increases are coming. I have a degree in economics and have done graduate level work in economics and even taught this at the college level. Yet I could never understand how raising interest rates, which raises the cost of everything, somehow magically reduces inflation. What it does do is limit the ability of people to buy things, so I suppose lowering demand eventually reduces price. However, this distinction is unlikely to be embraced by someone having trouble affording the cost of the gas necessary to get to work.
Naturally at a time like this, one looks for the dumbest possible solution. Well, here it is: “Let’s lower the national speed limit to 55 and stop driving on Sunday.” This makes sense, because there are still too many people who go to church and Lord knows we can’t have that.
The only thing certain is that the people currently in power will ignore the obvious and embrace the ridiculous. Everyone will pay a high price for this, but ultimately, they will be the ones who will reap the full benefit of what they sow. How high? Hopefully high enough to replace the entire class of clowns who know nothing but consider themselves pillars of wisdom. That high!
TDM