Posted on 05/21/2021 6:34:44 AM PDT by Red Badger
Massive government spending has decreased the value of the American dollar and triggered increased consumer prices, which economic experts said will only get worse.
“Over the past few months, we have seen an inflation rate that is much higher than where we’ve become accustomed to,” Heritage Foundation research fellow Joel Griffith told the Daily Caller News Foundation.
Peter Schiff, the chief economist and global strategist of Euro Pacific Capital, said there will be “massive inflation,” which will negatively impact Americans’ standard of living.
The price of food, particularly wholesale pork and poultry, gasoline, steel, copper, home appliances, lumber and many other consumer items have increased since President Joe Biden entered office in January. Massive government spending has decreased the value of the American dollar and triggered increased consumer prices, which economic experts said will only get worse.
Americans will continue to see higher prices across the board, from food and gasoline to home appliances and cars, as the federal government continues to propose more stimulus into the economy without an adequate plan to pay for it, according to several experts. Even if the government doesn’t pass legislation increasing taxes, higher prices ultimately amount to an “inflation tax,” some of the experts said.
“Over the past few months, we have seen an inflation rate that is much higher than where we’ve become accustomed to,” Heritage Foundation research fellow Joel Griffith told the Daily Caller News Foundation. “When we are going to the grocery store, going to the gas station, building our new home, we’re noticing that prices are really accelerating at a much faster clip than what we’re used to.”
Since January, prices have outpaced wage growth meaning Americans’ average salary isn’t keeping up with the cost of goods and services. While wages have grown 1% since the beginning of the year, consumer prices have grown 2.1%, according to government data.
Hourly earnings have increased from $29.93 per hour to $30.17 per hour since January, according to the Bureau of Labor Statistics. Average weekly earnings have increased from $1,048.60 to $1,055.95 during the same period. (RELATED: Here’s How Biden’s Spending Could Become A Hidden Tax On Everything You Purchase)
Overall, inflation increased more between May 2020 and April than it has during any other 12-month period since 2008, according to a Department of Labor report released last week.
Lumber prices have tripled, the price of certain grocery items like chicken are expected to increase 8%, companies like Procter & Gamble, Kraft Heinz and Coca-Cola announced price hikes due to increasing commodity costs and gasoline is 62% more expensive than it was in 2020.
Meanwhile, the average price of gas nationwide has surged to $3.04 per gallon as of Thursday, according to AAA. The average price in 2020 was $1.87 per gallon, meaning Americans, whose car has an average 12-gallon gas tank, are spending $14 more every time they fill up.
While the cyberattack targeting Colonial Pipeline caused gas shortages, prices have increased since the hack, according to ABC News. Prices had also been increasing prior to the attack, reaching $2.87 a month ago, AAA data showed.
In March, President Joe Biden signed the nearly $2 trillion American Rescue Plan — a coronavirus relief bill — which Democrats called a “beacon of hope for America’s families.” The White House has also unveiled trillion-dollar infrastructure and welfare plans, which lawmakers are currently negotiating.
But, the U.S. budget deficit ballooned to $660 billion in March, the third-largest monthly budget deficit ever recorded. The federal government received $268 billion in revenue while spending a whopping $927 billion. (RELATED: Manufacturing Prices Rise At Record Pace, Influential Fed Report Shows)
Biden’s infrastructure plan includes various unrelated provisions on housing, in-home care, climate change, unionization and schools. His families plan — which provides universal free pre-K, free community college and implements a national paid family leave program among other provisions — is more expensive than the White House originally promised and would cause negative economic growth, the Penn Wharton Budget Model concluded.
Former National Economic Council Director and Treasury Secretary Larry Summers warned that large spending could cause once-in-a-generation inflationary pressures in a February editorial published in The Washington Post. He said this week that inflation is increasing even quicker and sooner than he originally expected.
“The vast majority of these funds allocated so far do not actually address COVID itself or vaccination or health treatment,” Griffith told the DCNF, noting that the American Rescue Plan isn’t simply a coronavirus relief bill. “It’s a big problem. Those on the left are trying to use COVID as an excuse to pass this wishlist of progressive radical socialist items.”
American consumers can expect to get “sticker shocked” in most aspects of their lives, Ethics and Public Policy Center senior fellow Henry Olsen recently told the DCNF in an interview. (RELATED: Inflation Increasing Quicker Than Expected, Former Treasury Secretary Larry Summers Says)
Peter Schiff, the chief economist and global strategist of Euro Pacific Capital, said there will be “massive inflation,” which will negatively impact Americans’ standard of living. Like Griffith and Summers, Schiff blamed inflation on the government spending money it doesn’t have.
“The 100% cause of inflation is the government,” Schiff told the DCNF. “It’s when the government spends money that it doesn’t collect in taxes and then the Federal Reserve monetizes the resulting deficits by printing money.”
At-home food costs are expected to jump by up to 2% this year while away-from-home costs could jump 3.5%, according to the Department of Agriculture. The price of wholesale pork and chicken are projected to increase by up to 7.5% and 8% respectively.
Copper and steel have also increased in price, causing home appliances and other items to also become more expensive. Lumber reached a record cost earlier this month, driving up homebuilding costs, The Wall Street Journal reported.
The Federal Reserve Bank of New York’s influential manufacturing survey released on Tuesday showed that prices have increased at a record pace.
“Even if this is just a temporary phenomenon over a few years – let’s say you did have inflation at an elevated rate of – let’s say – 5% per year over the next three years,” Griffith told the DCNF. “That means after that three-year period, the value of the dollar that you have in your pocket now is worth about 20% less.”
“That’s why people say inflation really is a hidden tax,” he added. (RELATED: Consumer Prices Have Skyrocketed In Recent Months. Experts Say It’s Just The Beginning)
Schiff said that the so-called inflation tax will wind up hurting the poor and middle class more than the rich.
“Every dollar the government spends is the equivalent of a tax, because every dollar the government spends, the money has to come from the American people,” Schiff said.
However, Fed officials have maintained that inflation isn’t a concern. Fed Chair Jerome Powell said “upward pressure” on prices during the economic recovery are expected, according to Reuters.
While inflation could tick up slightly this year to a higher-than-usual rate, it will eventually return to a normal rate, Boston Federal Reserve President Eric Rosengren said in a recent speech. The Fed’s normal annual inflation rate goal is 2%, which it considers to be an appropriate level for encouraging individuals and businesses to make sound financial decisions.
But the Fed has shown signs of potentially changing its current monetary policy, CNBC reported on Wednesday. Throughout the pandemic, the Fed has chosen to keep interest rates low, a policy which encourages economic activity, but could spur inflation.
Low interest rates incentivize people to invest and take out loans, flooding the economy with cash and increasing prices, according to Harvard Kennedy School’s Shorenstein Center.
Many of us saw this coming last summer. It is the reason for my tag line. Billion became the new million a couple of decades ago, and already trillion has become the new million. How often did you hear the word, “trillion” in news casts 15 years ago?
And to be clear, trillion is 1000 times larger than billion. Have your wages gone up 1000%?
We’re approaching hard times. What concerns me is that this could be much worse than the carter years.
“Every dollar the government spends is the equivalent of a tax, because every dollar the government spends, the money has to come from the American people,” Schiff said.
Like an alcoholic taking a shot of booze in the morning to delay a hangover.
If we had a media, the masses would be about to get a lesson in economics. Instead, this will be spun as more evidence that capitalism is evil, and the masses must eat the rich.
This is just more “pouncing” on the Democrats.
I am happy to pay more for everything if that means that we can have the young, hip Democrats like Biden, Pelosi, Hillary, Soros, China, Schiff, Schumer, Nadler and Warren in charge.
High gas prices, high inflation, a contracting economy, and the US considered be be a joke on the world stage. It is like the Carter administration, but without Disco and Leisure Suits.
I am glad I finished my building projects before lumber prices increased. There will be no building in my home for a long while. Prices won’t retreat either. Every price that goes up will stay there for many years. I remember the Carter years. It took the first 4 years of Reagan to stabilize things. I expect the same post Biden/Harris...
If you believe in free markets that is not true. Higher prices mean more supply...
Stimulus checks, Extended unemployment benefits, EBT and Child Tax Credit monthly payments...................
I think you're correct.
I've seen others suggesting this already too.
From pedo Joe: “We don’t see any evidence of that!”
TO pedo joe: “We don’t see any evidence of cognitive ability.”
Generally, I agree. However, I do think “some” lumber price increases are fueled by a different driver. I don’t expect things like OSB to stay five times more expensive than they were before the lockdown. Maybe twice as expensive. However, that stuff seems to fluctuate in price like gas. I paid $8 a sheet a year ago, but two years ago it was more around $18 a sheet, and ten years ago it was $7 a sheet.
We got back from five weeks in Seattle to find all but three of our chickens were ravaged by varmints. And within a week, they were gone too. It seems the varmint saw our coop as the local free deli.
I caught the varmint and received 20 new chicks a couple of days ago. Starting again. But we are planning no long term trips this time.
I used to spend ‘Broad Money’....................
Welcome Back, Carter!
Money = human time
No output/productivity = money worthless
People just don’t get that. Money is just an abstract concept representing human time. If everyone stays at home, and government just pumps money into the economy, all you get is inflations and empty store shelves because money itself does not build a bicycle, the IC’s used by cars, aluminum, steel, lumber... and if you then have an all these great ideas like a $15 minimum wage, start to restrict oil production and low cost logistics because you want to save the planet also... well...
***But for a short time, before the inflation comes, this sort of nonsense does help win elections.***
I think I’m going to run for office. My agenda will be to make cancer illegal. I propose a law banning cancer! What do you guys think? You need too vote for me because I like chinchillas and they are cute and fluffy, therefor I’m a nice guy. Yeah, that’s about where we are at when it comes to politics and policy making in this country.
Plywood at Lowes has hit $80.
Eighty
Dollars.
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