Inflation is rising again, but tariffs are not the cause. According to Daniel Lacalle of The Mises Institute, the true driver of inflation is the Federal Reserve’s monetary policy and the U.S. government’s excessive spending. The Fed expanded the money supply aggressively in 2020 to fund massive stimulus efforts, and inflation has been embedded in the economy ever since. Now, as the Fed looks for excuses, it may attempt to shift the blame to tariffs—just as it previously blamed supply chain disruptions and reopening effects.
Key Takeaways:
• Inflation is tied to money supply growth, not tariffs. The U.S. money supply has surged by 39.3% since 2020, fueling a nearly 25% rise in consumer prices.
• Government spending is out of control. Federal spending in 2024 was over $2 trillion higher than in 2019, driving inflation through currency debasement.
• The Fed is avoiding accountability. Jerome Powell has hinted at a broad range of possible effects from tariffs, setting up a convenient excuse for continued inflation.
• Tariffs do not cause inflation. While they may affect specific prices, overall price inflation results from excessive money creation, not trade policies.
• Keynesians distort the narrative. By blaming external factors, inflationists conceal the real cause: reckless fiscal and monetary policy.
If inflation continues to rise, expect the Fed to use tariffs as the next excuse—while ignoring its own role in eroding the dollar’s purchasing power.
Read the full article here.
