This week, a long-haul trucker took to TikTok to explain fuel pricing in words that any American can understand. “What are you going to do next month when a gallon of milk costs $11?” he wonders. “You should spend a lot more money on milk,” he continues.
In Monument, Colorado, the price of a gallon of fuel has climbed by 20% in less than a week. On Saturday, the town’s fuel station was selling diesel for $4.05 per gallon and is now selling it for nearly $5 per gallon higher. That’s the good news if people allow him to expand the meaning of “good” to encompass inflation reaching 40-year highs.
The good news is that the pricing impact of the supply chain disruption will be temporary. People are currently in the inflation expectations phase of an increasing inflationary cycle. Interest rates will rise due to the inflation “premium,” which implies mortgages, vehicle loans, and consumer credit will all rise. It means that the potential of a higher price will be there in every transaction, every economic decision made by individuals.
Moreover, when people anticipate inflation, they participate in more actions that drive inflation. Also, if consumers feel that if they wait until next month to buy something, it would be more expensive, they will delay their purchase until this month. This rise in aggregate demand, as one might expect, adds to the already-existing inflationary pressures.
The Fed cannot raise interest rates because of increasing the interest paid on $30 trillion debt. If people complete the first three, the fourth will itself. Perhaps they know someone who bought a property they could barely afford at a low-interest rate but couldn’t afford it at all when their variable rate rose.
Therefore Joe Biden is not going to deregulate anything. Democrats have a rule for everything, from what sort of automobile people should drive to how much grooming their children should have. They’ve known for a long time that they were heading straight for a canyon, but Congress has grabbed the steering wheel securely forward while keeping the accelerator pressed to the floor at every opportunity to reverse course. All that remains is for the automobile to collide with the cliff wall.