No Fries with That: Inflation Takes a Bite out of Families
Sometimes, you just want a shake and a burger. Sweet, salty, chewable succulence, all combined in one great meal. But imagine their surprise when two friends went in for burgers, shakes, and fries a few days ago and paid a whopping $44.02.
Now, the cheeseburger might well be one of the greatest inventions since the wheel, but $44.02?
Across the country, inflation is spreading like a financial cancer. The Nobel Prize-winning economist Milton Friedman called inflation “the cruelest tax” because it is invisible, eroding the value of hard-earned dollars in the unseen corners of the economy. It hits everyone, from the low-income worker trying to put food on the table to the companies that pass along their own rising costs to ordinary Americans.
The Biden administration seems to have been caught unawares. Earlier this month, Treasury Secretary Janet Yellen did something politicians seldom do: She admitted she had been wrong. Late last year, she made a dismissive comment that inflation was “transitory.” But in an interview earlier this month, she said, “I think I was wrong then about the path that inflation would take.”
Well, three cheers for understatement: According to a new federal report on consumer prices, in May inflation “increased 8.6%, the largest 12-month increase since the period ending December 1981.” The report notes that over the past year, energy prices have risen nearly 35% and food costs have soared by more than 10%. Staples are costing even more — the price of meats, poultry, fish, and eggs has gone up by more than 14 percent since this time last year.
This is all augmented by getting less for the same price. “Ingredients and manufacturing are getting more expensive, and it usually results in two things: higher prices or smaller sized products,” notes Business Insider. This trend, nicknamed “shrinkflation,” means that producers are “making candy bars sold in multipacks smaller than ones being sold individually, or changing the shape of their products so you can barely notice the difference in weight.” So, the next time your “family size” cereal box seems suited only to a very small family, it probably is.
And even though wages are up a little more than 5% since the same time last year, they are well below an inflation rate that is eating away at paychecks and savings.
Why the surge in inflation? One of the most significant reasons is the excessive amount of money in circulation. It’s axiomatic that the greater the money supply, the less value money has. As explained by the St. Louis Federal Reserve Bank, “If the money supply grows at a faster rate than the economy’s ability to produce goods and services, then inflation will result.”
So, when the government prints and distributes nearly $820 billion in COVID stimulus checks, it is impossible for these massive, unparalleled infusions of “fiat money” — money not collected in taxes or tariffs but simply run off the federal printing press — not to have an impact on inflation. Given the sudden and profound effect of COVID on economies around the world, perhaps some federal action was needed. Yet even after our economy was beginning to bounceback, the Biden administration kept pouring money we don’t have into the economy. As economics writer Eric Boehm concludes, “American policy makers added a uniquely high amount of fuel to the (inflation) fire.”
There’s also the fact that Congress and the Executive Branch have, for many years, spent far more money than they are taking in. Economics analyst Joel Griffiths reports that federal spending went from $4.76 trillion in 2019 to $7.02 trillion in 2021. “The Federal Reserve has enabled much of this surge by printing dollars like crazy,” writes Griffiths. “In just two years, the Fed has used these newly minted bills to buy more than $3 trillion of government bonds, as well as trillions more of other financial assets.” In sum, says Griffiths, “the Fed has spurred an expansion of the money supply by nearly 50% in just two years.” Result: inflation.
And as to the cost of gas at the pump, the bottom line is that we are not producing the oil we need. As reported by The New York Times, American oil “refineries have been steadily shutting down for similar reasons, as oil companies plot a transition to renewables.” To again quote Joel Griffiths, “because of (liberal) policies and threatening rhetoric designed to discourage new domestic production, oil prices nearly doubled over the past year.”
The actor Matthew McConaughey said not long ago, “The man who invented the hamburger was smart, but the man who invented the cheeseburger was a genius.” Many of us agree. But let’s also agree that no burger meal for two should cost $44.02. President Biden, we hope you agree, too — and will take action, now.
Rob Schwarzwalder is Senior Lecturer in Regent University's Honors College.