Fact Checking

We have an inflation crisis that is making life unaffordable, ravaging the incomes of working and low-income families, and crushing, just simply crushing, our people like never before.

- Donald Trump

The monthly inflation rate as measured by the consumer price index (CPI) soared to a high of 9 percent in June of 2022.  The annualized rate has dropped considerably since then  with the year-over-year rate last month of 3 percent.

Former president Trump would lead you to believe that President Biden is solely responsible for the recent rise in prices.  Of course I'm old enough to to have lived with inflation and have even blogged about it from time-to-time.  I purchased my first house in the early 1980s when inflation was roaring-along at double digits and a 30-year fixed-rate mortgage would set you back 14.5 %.  But I digress.  

As a recovering financial guy I know a few things about this subject.  First, inflation usually (but not always) rises quickly and falls slowly.  Second, we live in a market economy and therefore inflation rises and falls as a consequence of market forces and not by a president flipping a switch.

The recent bout of inflation has its roots in the COVID pandemic.  Lock downs caused pent-up consumer demand to spike as the economy eventually recovered from the Trump recession of his last year in office.  This was further aggravated by global supply chains disrupted by the pandemic.  Add-in the the government largess (expansion of the money supply or M-2) that began with stimulus spending under Trump that continued in the early years of Biden's term of office. 

Excess liquidity (money supply) + ravenous consumers (demand) + busted supply chain (product supply)  = increased prices (inflation).  

A simple supply and demand equation.  Economics 101.

It was a perfect storm of events the likes of which we haven't seen before; with responsibility shared by both presidents.  Corporate greed is the cherry on top.

Because this was a global phenomenon I would submit that Old Uncle Joe is incapable of influencing global economics on this scale.

I won't bore you any further; if you'd like to learn more on the subject simply type 'inflation' in the search box in the upper-left corner of the blog and a bunch of posts on the subject will pop-up for your late night reading pleasure.

Meanwhile, Donald Trump is playing fast and loose with the facts.