Calling it an “inflation tax,” Bloomberg reports that the average American household will spend an additional $5,200 this year if they want to enjoy last year’s lifestyle.
Last year, the median American household income was $68,703. Minus the average household tax burden of $15,322, that’s about $53,000 in spendable income.
So a $5,200 “inflation tax” means the average U.S. household is going to be 10% poorer this year. Essentially, the average American household will have its 2022 tax burden increased by a painful 33%.
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Remember when Presidentish Joe Biden said he wouldn’t raise taxes on anyone making less than $400,000?
Good times.
Bloomberg, being Bloomberg, tried to soften the bad news with this misleading chart.
“See? It isn’t so bad! The top fifth will pay a massive $10,000 but you poor schlubs in the bottom fifth will pay a puny inflation tax of only $2,275,” Bloomberg seems to be saying.
The thing is, a wealthy household can much more easily afford $10,000 than a poor one can afford two grand.
It’s the difference between one household settling for the lesser trim package on the new BMW X7 and the other household giving up beef for Lent, Spring Break, April Fool’s Day, summer, Labor Day weekend, Halloween, and pretty much the entire Christmas holiday season.
While inflation approaches double digits, the Fed has promised to raise interest rates all the way up into the low single digits.
Here’s the thing: As long as interest rates are lower than the inflation rate, people will keep borrowing more money to spend on more things — because they’ll pay back less than they borrowed.
Money supply goes up, demand goes up, prices go up.
Inflation goes up and up and up until the whole thing comes crashing down.
We probably need interest rates to hit at least 15% and the nasty (I mean nasty) recession that would go with it.
But it’s easier for politicians to inflate their debts away while blaming your decreased standard of living on greedy oil companies or whatever.
That’s the truth about inflation.
Yet it seems like only last autumn that President Ron Klain — Biden’s overambitious puppetmaster — was claiming that inflation was a “high class problem.”
And it wasn’t that much longer ago that the White House indulged in this massive self-own:
Planning a cookout this year? Ketchup on the news. According to the Farm Bureau, the cost of a 4th of July BBQ is down from last year. It’s a fact you must-hear(d). Hot dog, the Biden economic plan is working. And that’s something we can all relish. pic.twitter.com/7h9qLauIbC
— The White House (@WhiteHouse) July 1, 2021
I wrote at the time:
Using a very narrow definition of what constitutes a cookout, Presidentish Biden’s crew was able to find a measly 16 cents in savings (for a family of four on a diet, we’re guessing by the portions) over last year’s cost.
But last year’s prices were artificially high, due to supply-chain disruptions caused by the lockdowns — which we now know were unnecessary.
Where are the hot dogs (prices up), the buns (bread prices on the rise), the beers (ditto), the fruits and veggies (even more price hikes)?
“Chicken has been a nightmare in terms of pricing and shortage,” a food truck owner told Boston.com, so now you know why there aren’t any chicken wings on the White House picnic table.
If you were planning on grilling steaks, fuhgeddaboudit: Cattle markets have been upended, and big meat producers are making 20 times the normal margins as beef prices soar.
Last July, inflation was running at maybe 5.4%. For the year, it ran 7.9%, and only shows signs of accelerating even faster.
Food inflation ran a stunning 20% last year. Fighting in Ukraine — practically egged on by Biden — is making matters worse.
The good news is, you can still save the same 16 cents on this year’s Independence Day cookout. You’ll just have to skip the pork chops (who grills pork chops for ID4?), the ground beef, cheese, and the ice cream. You might want to skip the sugar in the lemonade, too.
Pass the beans?
