Opinion | Scott M. Estill: Digging into inflation | SummitDaily.com
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Opinion | Scott M. Estill: Digging into inflation

Scott M. Estill

Congressman Joe Neguse was recently in Dillon to discuss the high cost of living and inflation issues in Summit County. He suggested that a few recent pieces of legislation would begin to solve the supply-chain problems that have plagued the world during COVID. This in turn would lead to some relief from inflation and put a lid on rising cost of living. Except that it won’t.

The most recent three U.S Presidents have combined to print over $5 trillion dollars ($5,000,000,000,000) of new money. Thanks to Obama ($787 Billion), Trump ($3.1 Trillion) and Biden ($1.9 Trillion so far), there is now a considerable amount of “free money” in play for the same goods and services as prior to the money-printing machines. The U.S. is not the only country that did so during the pandemic. When you create currency and give it to people to spend, you don’t get to control the economic consequences.

It all boils down to simple supply and demand. When you have more money chasing the same goods and services, the prices will naturally increase. Throw in major imbalances in the availability of supplies and commodities and you have a perfect recipe for inflation. It does not help that this country’s energy policy (or lack thereof), coupled with the war in Ukraine, is pushing oil and gas prices through the roof. It costs a lot more, as gas prices reflect, to ship goods (and people) around the country. And we are all paying the price.



Politicians of all political stripes think they can manipulate the economy on a whim with legislation. They believe that they have control over a monster with way too many moving parts for anyone to manage. In November 2012, Donald Trump proclaimed on Twitter that “If the Dow drops 1,000 points in two days the President should be impeached immediately!” Apparently, he believed that a president could control the stock market and that Obama should be impeached for his inability to do so. During the Trump presidency, the 11 biggest drops by points in U.S history occurred. So much for impeachment. Yet, on the flip side, seven of the 10 largest gains in a single day also happened during the Trump administration. He had nothing to do with the winning or losing days.

Inflation is now officially calculated at 9.1% for June 2022. Yet this is on the low side for most people due to the way the index is calculated with respect to food and energy costs. Biden claims he is getting the problem under control, but there is nothing he can do. If politicians or the Federal Reserve could have done something, we would not have inflation today eating away at wages every payday.



He claims that inflation has peaked, and the recent inflation numbers do not reflect the lower gas prices in the last few weeks. He’s wrong. Gas prices will continue to fluctuate depending upon market forces that are beyond any politician’s control. They are simply one component of the inflation index.

It is going to take a long time for the economy to absorb $5.7 trillion of additional cash. No one knows how long it will take. The last time inflation was this high we had President Reagan in the White House, and the times have changed. We are all participating in an economic experiment for which we never gave consent.  

While I appreciate Neguse’s attempts at helping families meet the rising costs of living (and these small government programs have a large local effect), there is nothing he can do about the inflation we are all experiencing. Even with wages increasing, the average worker is still losing out, as prices are rising faster than wages. It has been estimated that compensation actually declined by 3% last year for the average American.

Inflation will get worse before it gets better. The Federal Reserve will raise interest rates again (and again) in an attempt to control the beast. Yet this is going to take a lot of time to work itself out. Anyone looking for a quick fix is going to be disappointed. Economists are predicting an inflation rate of 7.7% this year, while the U.S. Government (in March 2022) is going with 4.3% for 2022 (and will somehow fall to 2.7% and 2.3% for 2023-24). Of course, trusting the government has been a recipe for disaster in the past and to think that the inflation rate will be cut in half for the remainder of the year is simply foolish.

When the Federal Reserve raises interest rates, it is interesting how fast interest rates rise on debts we accrue (mortgage, credit card, etc.) and how slow they rise when it comes to savings accounts and other investments. The game is rigged and the sooner we realize this the better. In the meantime, if you are offered a Vegas-style bet on whether the inflation rate for 2022 will be over or under the predicted 4.3% (or even 7.7%), take the over. It is about as sure a thing as we have going today.


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