Bear with me, this is complicated but I will explain why neither Donald Trump or Joe Biden or any president can do much about inflation either way.
We recently had a surge in inflation but it was only so bad because COVID had changed the world so much that there was a period of low inflation, but most people don’t understand what inflation really is and especially who can and who can’t control inflation.
Politicians all rely on misinformed voters for most of their support but that isn’t their fault, it is just what we have, a science-free education system producing a population with about 95% science illiteracy and perhaps a 99% financial illiteracy.
Inflation Is Not Just Something Costing More
Inflation is the reduction in value of the country’s currency determined by how much of it you have to shell over for daily needs.
That may seem obvious but it isn’t. The same item purchased in a different currency may not go up and could go down. So inflation is something costing more in a specific currency.
In fact the price of practically everything goes down all the time if you buy it with gold or Swiss Francs but UP if you spend dollars, euros, pounds, etc.
The reason that sounds more than a bit silly is related to the fact that The Nobel Prize in economics can be for an idea directly contradicting that of some earlier Prize winner.
Unlike most other Nobel Laureates.
Why Do We Have Inflation?
Inflation is the hidden tax we are all forced to pay, even the very rich, you can tell because the US Central Bank (The Federal Reserve) doesn’t try to stop inflation, it merely tries to manage it to a 2% average/year or about 20% in a decade or about 150% since I was born. That is the GOAL of the Federal Reserve, it is often worse.
By reducing the value of the U.S. Dollar every year it gets that much easier to pay off the public debt since the government prints the money.
(BTW, something most people don’t realize is that The Federal Reserve Bank is not part of the U.S. government. The Fed as it is often called, is a government instrument, but not a government agency. The Board of Directors of the Fed IS a government agency which is why members are appointed by the President and confirmed by the Senate. And, no I don’t know how to explain that to you in something you would read.)
Now for why that was important. Members of the Board determine, to great extent, the interest rates – how much money is added to the system. In other words, they have a great deal of control over inflation. The President can’t ask them to do something, but he can hint. Like the Supreme Court, once he or she nominates a member they have the office for 14 years which is longer than the President can be in office they are independent of what any politician asks them to do.
That Said, There are Two Special Reasons for the Jump in Inflation
President Trump caused a massive jump in the deficit by getting a major tax break for very rich people. Republicans always want to do that and say the benefit will trickle down and increase tax income from less than rich people who will make more money. It never works.
President Biden then made it much worse by pumping up the economy rather than have us go into a major depression due to the slowdown caused by the COVID pandemic.
Neither of them had much choice. President Trump followed his campaign promise and President Biden saved the economy and probably thousands of lives not to mention millions of family budgets.
But There are Other Reasons for Current Inflation
Gold bugs like to point out that an ounce of gold in 1910 would buy a very good man’s suit. In 2024 with a value of $2,500, it will still buy a very good man’s suit. That is currency devaluation.
I like to point out that I have silver dollars which cost me $1 but just the silver in them is now worth $32. Gold is expected to go up because it is a place to run to when the world economy is in danger, which it is. Gold is generally worth 70 times the value of silver.
Gold is expected to go up to about $2800/oz so silver, which is now $32 should go up to about $40.
If you are thinking of buying some precious metal consider that platinum is usually more expensive than gold, that is, over the past few thousand years. Right now Gold is around $2500 but platinum is only $950. Just something to consider
Food Inflation
We recently saw a surge in grocery prices in the U.S. with eggs nearly doubling in the past month at Walmart. (Although candidate Trump and VP candidate Vance both make it sound a lot worse than it is. For example JD Vance just held a press event in a grocery store and complained that eggs now cost $4/dozen under Biden/Harris the trouble was he did this in front of eggs priced at $2.99/dozen.
Is that inflation? Something a President can change?
Well, some of it is, but some of it is due to 90 million chickens being killed due to bird flu, increases in real estate costs, fuel costs in transport, and the salaries of the people who produce and put the eggs on the shelf for you to buy.
We can expect that food will cost a lot more in a few years because global warming reduces crop yields for corn, wheat, even apples, by up to 30% in extra warm summers which are predicted to become common.
