The last time inflation was as bad as it is now, President Ronald Reagan was only finishing his first year in office.
Leonid Brezhnev was still alive and in charge of the Soviet Union. U2 was unknown in the United States, not yet having released the album War. The young company Apple was still two years away from launching its first Macintosh computer model.
That’s how far back you have to go — February 1982 — to find a time when inflation was as bad as it was last month. It is now official that this is the worst inflation in 40 years. At 7.5%, prices are rising so quickly that they will double in less than 10 years if this rate of inflation continues.
Of course, Reagan inherited an inflation problem back in his own day. President Joe Biden, on the other hand, created his own inflation problem with the reckless spending that began his administration. With so many trillions already shoveled out the door in the form of COVID relief, Biden just couldn’t resist the temptation to play Santa Claus himself. Inflation was the predictable result, and indeed one we predicted, due to a surge in deficit spending and the slowdown in production that occurred because of COVID-19.
Biden has spent the last few months attempting to compound his mistake further, spending another $5 trillion on his completely unnecessary Build Back Better boondoggle. Even now, knowing that inflation rose to 7.5% in January, Biden’s White House is still calling on Congress to pass that bill, claiming, in contravention of all laws of economics, that it will make the problem better and not worse. Really? Is someone making use of all those crack pipes whose distribution to addicts Biden’s Department of Health and Human Services just abruptly canceled?
The topline 7.5% inflation figure released on Thursday is quite close to the 12-month increase in the cost of groceries and restaurant food. Energy prices, however, are up a staggering 27% over the last 12 months. Electricity is up 11%. Natural gas is up 24%. Gasoline prices are up 40%.
In other words, there is no part of daily life that Bidenflation has not affected. Although workers’ wages have gone up in nominal terms, they are not keeping up with the cost of everyday necessities.
At first, the Biden White House tried to maintain that the inflation problem was just temporary. That talking point has long since expired. This is becoming a crisis. The Federal Reserve will soon be forced to raise interest rates far more quickly than people are accustomed to, and to painful levels that haven’t been seen in a generation.
For reference, mortgage interest rates had to top out above 13% before Reagan could beat inflation in the early 1980s. Could you even imagine that today? Can you imagine what it would do to the value of your home?
Biden inherited a rapidly recovering economy. All he had to do was get out of the way, let it happen, and claim credit. He couldn’t manage that. Biden had an ideological vision that was more important than the nation’s return to prosperity. Part of his agenda is to increase prices for fossil fuels, and another part is to give away massive government handouts, even if they cause inflation.
Consumers are now suffering the bitter results of bad policy decisions on his part. To borrow and tweak one of Reagan’s old adages, economic recovery will only begin with job loss — that is, whenever Biden and most of the Democrats in Congress lose their jobs.
