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Our Inflationary and Economic Mess

By October 13, 2022Commentary

Today’s inflation report shows exactly what it had to show–the continued flood of federal government spending is creating inflation in everything.  As I have noted several times, health care is beginning to kick in to inflationary pressures, with a sharp rise in September.  Food is very expensive, housing is expensive, energy is expensive.  I believe those are all necessities.  I have a new slogan for Dems–“Democrats, making everything you need cost more.”

There is no likelihood that this rate of inflation will substantially recede.  Government spending continues to grow and this is all deficit spending so the money supply has to grow and prices will rise.  And on the labor side, everyone is demanding more pay to keep up with the cost of living, and those pay increases cause further inflation.  There will be no slackening in demand for more pay because real income has been falling for months–what it costs people to live is growing much faster than their incomes.

Interest rates are rising and that is itself inflationary–interest is the price of borrowed money and it has soared, making it harder to buy houses and cars and for businesses to borrow to expand.  My timing was only slightly off, as we now see the ten year treasury above 4%.  This rise in interest rates is costing the federal government a fortune, it’s interest expenses are soaring on our over $30 trillion in federal debt.  Our deficits and debt now have us in a vicious spiral.  It is going to be incredibly painful to get the federal budget back in line with where it has to be.  We will soon be spending a trillion dollars a year on interest.

And economic growth is extremely weak because of the uncertainty and pain caused by inflation and by the distortions of federal fiscal and regulatory policy.  It is a mess and we can only hope Dems pay a well-deserved price in the mid-terms.  But we still have Mr. Senile in charge and his administration will continue to do tremendous damage to our quality of life.  It is really, really bad right now.

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