The bad inflation numbers are even worse than the government says

You couldn't miss the headlines: the annual percentage increase in inflation clocked in at 7.5%, making it the worst increase in 40 years.  For anyone on a fixed income, living off savings, or in a low-paying job, this is a disaster.  Rich people don't feel it (much), but ordinary people do.  But here's the kicker: inflation is almost certainly worse than it was 40 and more years ago.  Moreover, because the government is in thrall to Modern Monetary Theory, it's going to get worse, lots worse.  And all the while, China is sitting there, watching and waiting.

Inflation destroys wealth.  People's salaries never keep up with the inflation rate, and the elderly aren't earning more money, so their savings can only lose purchasing power.  It also hits the poorest people the hardest, making it completely regressive.  That's why a news report like this one strikes terror in the hearts of both citizens and the political party in charge:

A relentless surge in U.S. inflation reached another four-decade high last month, accelerating to a 7.5% annual rate as strong consumer demand collided with pandemic-related supply disruptions.

The Labor Department on Thursday said the consumer-price index — which measures what consumers pay for goods and services — in January reached its highest level since February 1982, when compared with the same month a year ago. That put inflation above December's 7% annual rate and well above the 1.8% annual rate for inflation in 2019 ahead of the pandemic.

The so-called core price index, which excludes the often volatile categories of food and energy, climbed 6% in January from a year earlier. That was a sharper rise than December's 5.5% increase and the highest rate in nearly 40 years.

That "40-year" number, though, is misleading.  Certainly, inflation has shot up with incredible speed, as happened in 1982, but real inflation is probably even worse than the accelerated rate suggests.  That's because, in 1990, the government changed how it calculated inflation (something it also did in 1980).  John Williams's Shadow Government Statistics calculates inflation as it would have been calculated before 1980 and before 1990.  According to his numbers, inflation would have been over 15% using pre-1980 metrics and over 10% using pre-1990 metrics.

You don't need the numbers, though, to tell you what you already know.  It's getting increasingly hard to afford life's necessities.


Image: Hundred-dollar bills by jannoon028.  Freepik license. 

Moreover, it's going to get worse because there's no indication that the government intends to stop printing money.  It's currently in thrall to "Modern Monetary Theory" (MMT).

MMT, beloved of leftists like Bernie and AOC, holds that a government with fiat money — that is, money that has value only because the government gives it value (e.g., paper money as opposed to gold coins) — can print money indefinitely because it makes up the value as it goes along.  In other words, money really does grow on trees in the world of MMT.

But that's nonsense.  Ultimately, fiat money must represent the actual wealth of a nation.  As I used to tell my kids, a candy bar is always just a candy bar, whether it's priced at 5 cents in pre-inflation money or $5 in post-inflation money.  The only real thing in that equation is the candy bar.  But once you start printing money like crazy, so that there are so many dollars floating around that the candy bar is priced at $5,000, while the candy bar hasn't changed, you've bankrupted everyone in the country.

Employers aren't part of printing money.  And savings accounts definitely aren't in on that government printing press.  While the government goes on a spending spree, everyone else lags behind.  Speculators and cronies may get rich, but the economy eventually falls apart.

That's what the Biden administration — helped along by a bipartisan Congress drunk on spending — is driving us to: the collapse of our financial system.

And all the while, China is watching us like a hawk — China, the country that holds an enormous amount of our debt and much of our manufacturing.  China would like the yuan to become the world's reserve currency, the one everyone relies upon because of its stability.  If the government will not stop printing money, people around the world will start to view dollars like the Italian lira in the 1980s or the Reichshmark in the 1920s — that is, worthless.  China then steps in, and the dollar truly collapses.

And when the dollar collapses, America is cooked.  The resulting depression will make the 1930s look like a party.

If you want to save America from that fate, you must tell your congresscritter to vote "no" on any future spending bills.  In the primaries, you need to vote for the candidate who swears on his own life that he will cut spending, and then you need to vote again for that candidate in November.  Otherwise, we're not traveling down a dangerous road; we're in free fall off the sheer face of a high cliff.

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