You Don’t Get It Back

The latest inflation number was just announced.

It’s not pretty. Rather ugly, in fact. 6.8%, annualized, the biggest number in nearly 40 years.

The Democrats, who are running the nation (into the ground, in the eyes of more and more based on plummeting poll numbers), have been insisting that the current run of inflation is transitory, that it’s the result of pent up demand and supply chain issues born of the pandemic (that they’re doing nothing to remediate those issues, despite the ease with which they could, tells us of their twisted priorities), and that it’ll ease up as things sort themselves out. Everyone who isn’t wearing partisan blinders knows this is a truckload of horse manure.

Even if this were the case, though, the reality of inflation is that it’s a one-way street. Deflation, a phenomenon that strikes mortal fear into the hearts of those who tell us they know better, almost never happens. Instead, we get a slow-and-steady erosion of our wealth, with 2% inflation considered so ideal that the money printers at the Fed actually target that number. Unlike in the case of a stock price drop or a downturn in business, you don’t have a chance at recovering what inflation takes from you. Even a casino gambler has a chance at winning back some losses. Inflation is a gone-forever proposition.

Inflation does benefit some people, however. It helps the profligate spenders in government, because it devalues the money they borrowed, and thus harms those who were willing to lend it.

That’s about it. Everyone else, from the billionaire to the middle-class office worker to the “drink your wages every weekend” laborer, is hurt by inflation. Investment funds become less powerful, savings are sapped, everything costs more (and wage increases usually lag price increases), and beer gets more expensive.

Economist Milton Friedman famously noted:

Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.

Indeed, almost one out of every five dollars in existence was created in 2020. So, color me shocked that we are witnessing inflation.

Of course, big-government politicians and their enablers in the press, on social media, and in the blogosphere will continue to insist that the staggering money-printing operations prompted (or justified) by the pandemic has nothing to do with this sharp and sudden rise in inflation.

They might as well tell us that water isn’t wet.

That Biden and his politburo, as one friend likes to call them, are still looking to pass their Build Back Better monstrosity, to the tune of FIVE TRILLION DOLLARS, in the face of this inflation is a gross insult to the people they are supposedly serving. Our national debt is over $29T, and even if the tax revenues they forecast materialize (they never do), the bill will tack on another $3T across the next decade – on top of the existing and perpetual annual massive deficits.

A house of cards eventually collapses, and the taller the house, the more catastrophic the collapse. Inflation may very well run amok next year, with or without the Dems’ profligacy getting past the last gatekeepers in the Senate. If and when it does, remember that what you lose to inflation is gone forever. There’s no catching up, there’s no waiting for a bounce-back.

Reach into your wallet, and pull out one dollar of every fifteen therein. Now burn what you pulled out.

THAT is what’s happening to your money today.