The primary burden of inflation has shifted from middle class to low-income households thanks to a shift in the spending categories hardest hit by price hikes, according to a study published Wednesday by the Federal Reserve Bank of New York.
At the onset of rising inflation in the spring of 2021, middle-income households, defined as those earning between $50,000 and $150,000 per year, bore the brunt of inflation as they purchased more used cars and gasoline than other demographics, according to the New York Fed. However, as the cost of gas falls and the price of food and housing surges, lower-income households, defined as those earning less than $50,000, now face higher effective costs — roughly 0.3 percentage points higher than average — since they spend a larger portion of their income on food and housing than middle and high-income households.
“As of December 2022, the bottom 40 percent have the highest year-on-year inflation rate of the three groups, and the inflation rate of the middle-income group is below the national average,” the report reads. “It is likely the case that the same rate of inflation represents a greater welfare loss for lower-income than higher-income households because of the former’s lower capacity for substituting to less expensive goods, greater liquidity constraints, and larger marginal utility of real income.”
Most people (especially most Americans) still seem to view the events of the past half-century as more or less random.
Booms and busts erupting out of nowhere, impoverishing all but a handful of lucky elites. Political crises that end up dividing rather than uniting. Wars that cost fortunes and resolve nothing. Everything is bad, and nothing is related to anything else.
But of course that’s not true. Each of the above events serves the same purpose: to enrich a modern aristocracy at the expense of everyone else. And the endgame is looking even worse.
To see the scam play out, let’s go back to 1995. Two decades previously, in 1971, the US and by extension the world had ditched sound, gold-backed money in favor of “fiat” currencies that their governments, via their central banks, could create in infinite quantities out of thin air. The result was spiking inflation and exchange rate chaos in the 1970s and soaring government deficits in the 1980s.
By the 1990s it had become clear to the people running major governments and big corporations that unsound money would lead to unsustainable debt, which in turn would destabilize the financial world and bring about a hyperinflationary depression followed by a French Revolution-style reckoning for those responsible.
That generation’s elites were thus left with two choices:
- Return to the gold standard and avoid monetary collapse — but at the cost of giving up the ability to create money at will.
- Or use their fictitious currencies to steal as much real wealth as possible from the peasants and let future elites deal with the eventual collapse.
They, as the sociopaths we now know them to be, chose the second strategy.
A few weeks ago, US Secretary of the Treasury Janet Yellen appeared on the Late Show With Stephen Colbert to discuss a range of issues both political and personal.
The most widely reported moment in the interview came when Yellen talked about practicing her signature (don’t ask me why this is newsworthy, I have no idea). However, a significantly more important moment has not gotten the attention it deserves.
When asked by Colbert to explain the reasons behind the worst inflation the US has experienced in 40 years, the former Federal Reserve chair blamed it primarily on rising consumer spending—Americans “splurging” on goods—at the start of 2021 once the Covid-19 lockdowns were lifted. This, compounded with supply chain issues and the war in Ukraine can sufficiently explain inflation, Yellen claims.
But can it really? Let’s take a closer look.
As US voters head to the polls for the much-anticipated Midterms, talk of Russian trolls monkeying with US democracy is back in the news. But does the country really need Russia’s help in “stoking anger” among the electorate?
If the hyper-liberal New York Times can be taken at face value just two days before an epic election, Russia’s underground army of trolls is, once again, attempting to seed the minds of malleable US voters to the Kremlin’s advantage. If those charges sounded outlandish in 2016, when the Democrats accused Russian ‘influencers’ of denying Hillary Clinton the presidency, they seem doubly so today.
The Times reported that the goal of the reactivated Internet Research Agency in St. Petersburg is to “stoke anger among conservative voters and to undermine trust in the American electoral system.” Judging by the looks of things, the Russians are a bit late to the party. It would be hard to name another period in US politics when the level of anger and distrust has been so extreme, and that is something the Russian trolls, despite their supposed superhuman abilities, can’t take credit for.
Take inflation, for example, the single most pressing issue among US voters. It doesn’t require any sort of Russian mind-bending operation to inform Americans that the economic situation is deteriorating before their eyes, and has been ever since Biden entered office. They only need to look at their food and utility bills each month, and the price at the gas pump, to feel fury for what the Biden administration has done to the economy in a shockingly short period of time. Any effort to blame these negative sentiments on “the Russians” is just another way of the Democrats saying that soaring prices is “disinformation” and unworthy of your attention.
CNN faced intense backlash online Friday after publishing a report that suggested Americans should view a slight dip in gas prices as a “$100-a-month raise” or a “$100-a-month tax cut.”
The national average price of gasoline was $2.38 per gallon when President Joe Biden assumed office, according to the Energy Information Administration, and increased to $3.53 per gallon by the start of the Russian invasion of Ukraine, The Daily Wire reported. Prices surpassed $5.00 per gallon in early June before subsiding to $3.92 per gallon as of Friday, according to AAA.
CNN Business senior writer Chris Isidore lauded the decline in gas prices without mentioning that costs remain highly elevated from the level seen less than two years ago.
“Next time you stop at a gas station, think of it as a $100-a-month tax cut. Or a maybe $100-a-month raise,” Isidore wrote. “The steady drop in gas prices over the last few months has turned into an unexpected form of economic stimulus, coming at a time when the Federal Reserve is trying to cool the economy and battle rising prices with higher interest rates.”
Critics absolutely roasted Energy Secretary Jennifer Granholm after she suggested that lower to middle class Americans could fight the rising cost of living by investing thousands in solar panels and other green energy initiatives.
Granholm made an appearance on “Fox News Sunday” to explain how the recently-passed Inflation Reduction Act — which has since been touted as a tax, energy, and health care bill — would impact everyday Americans who are struggling with record-high inflation, food, gasoline, and energy costs.
“If you are low income, you can get your home entirely weatherized through the expansion from the bipartisan infrastructure laws, a significant expansion — you don’t have to pay for anything,” she said, adding, “”If you want heat pumps, insulation, new windows, that is covered,” she said. “If you are moderate income, today you can get 30% off the price of solar panels. Those solar panels can be financed, so you don’t have to have the big outlay at the front … If you don’t qualify for the weatherization program, you will be able to, starting next year, get rebates on the appliances and equipment that will help you reduce your monthly energy bill by up to 30%. That is all about reducing costs for people.”
But as critics quickly pointed out, people who were struggling to feed their kids or wondering how they’d afford the gas to get to work were not just waiting on a 30%-off sale to make the jump to solar — they were just doing what they could to get by.
“GOP just needs to run ad after ad of Granholm telling the poors to buy solar panels and electric cars to save money,” Erick Ericksen tweeted.