Jason Lewis' remedy for inflation, which came in at 5% year over year in May, actually 4.9%, is the standard remedy: The Fed should raise the interest rate, which is effectively zero at the moment and has been for some time.
Aggressive low-interest-rate policy has been the rule since 2002, with the brief escalation from 2005-2007 during the housing bubble being the exception. Over those 19 years through 2020, the average effective federal funds rate (DFF) has been 1.36%.
Contrast that with the 19 year period previous to that, from 1983-2001, when the DFF averaged 6.27%.
That should have kept inflation under control, right?
Well, no.
Under the low interest rate regime we've had an average annual change in CPI of just 2.01%. For the previous period with the higher DFF we had higher inflation, 3.24% per annum on average.
All inflation is bad. At 2% per annum the value of your pile of assets is cut in half in 35 years. At 3% it's closer to 20 years.
What kind of conservatism is it to advocate for either one?
Real conservatives believe in sound money. Less unsound money won't do.
The evidence is the two things, the fed funds rate and CPI, aren't correlated.
And CPI is rightly mocked because its components do not capture the inflation which has infected the cost of education, health care, housing, stocks, gold, intellectual property, et cetera in our life times.
It's the purchasing power of the dollar which has continued its inexorable decline which is the problem. We haven't had a sound dollar policy since the advent of the Great War in 1914. The desire for an independent monetary policy conducted by a Federal Reserve from 1913 came at the price of the ongoing robbery of the wealth of the people. World War couldn't have been financed without it, nor the Welfare State after it.
It's hardly a coincidence that political conservatism has been in retreat from the same time. You make a lie of the money in your pocket, you make a lie of everything else, too. Slowly at first, and then suddenly.
This American swindle will not continue forever.
