Inflation is back — big time

I’ve long been warning you about inflation on this blog, and for years before that when I was at The Orange County Register. Now the evidence is obvious:

Wholesale prices rising at fastest pace since 1981
Tuesday August 19, 9:00 am ET
By Martin Crutsinger, AP Economics Writer

Wholesale inflation surged by 1.2 percent in July, more than double what had been expected WASHINGTON (AP) — Wholesale inflation surged in July, leaving prices for the past year rising at the fastest pace in 27 years, according to government data released Tuesday.The Labor Department reported that wholesale prices shot up 1.2 percent in July, pushed higher by rising costs for energy, motor vehicles and other products. The increase was more than twice the 0.5 percent gain that economists expected.

“Economists” might not have expected it, but I did, and so did you if you read my blog.

The reason is simple: The government is printing too much money. You can see that by the price of gold, which has almost tripled in recent years (despite a recent decline). Check out this chart:

And note the date on the AP story that I began with: highest inflation since 1981. That’s the year Ronald Reagan was inaugurated, cut taxes and (along with Fed Chairman Volcker) stopped inflating the dollar. Those two actions — tax cuts and sound money — broke the back of the 1970s “stagflation” (stagnation + inflation) and formed the foundation of the prosperity we have enjoyed the past 27 years.

Now, President Bush, the anti-Reagan, has inflated the currency, along with Fed chairmen Greenspan and Bernanke (the anti-Volkers).

And stagflation is back.