Darrell Castle talks about the growing threat of inflation. Is it really something terrible or just a transitory phase of the economy?

Transcription / Notes

CAUGHT ON THE HORNS OF A DILEMMA

Hello this is Darrell Castle with today’s Castle Report. Today is Friday the 18th day of June in the year 2021 and on this Report, I will be talking about the growing threat of inflation. Is inflation really happening and if so, is it really something terrible, something to be feared or is it what the FED and the treasury department say that it is, just a transitory phase of the economy.

This is Father’s Day weekend for the Castle family as it is for everyone else. Husband and father are the two greatest roles that a man can have as far as I’m concerned, and I thank God for the opportunity to have those roles in my own life. I’m sure Joan has something wonderful planned for me this weekend, and the family daughter will call from wherever she is in this world.

What is going on in this economy right now. Are prices really out of control? Has the FED (the Federal Reserve) lost control of inflation and the economy in general or is it all just a transitory phase as we are often told? When we visit the grocery store or gas station it seems certain that inflation is a reality and not an illusion. It may be transitory, but its effect on our lifestyle and our ability to care for our families is very real. Our standard of living is being diminished every day as prices, especially for commodities we use every day are increasing.

It is easy to raise prices on consumer products. All the grocer has to do is change his sign for hamburger from $3.99 per pound to $5.99 per pound and you pay a third more for the simplest American meal. When the gas station changes its sign almost daily and always upward, it costs more to drive to work or to the grocery store or to take the kids to school. When prices for such commodities increase your standard of living falls because your wages do not keep pace.

Most working people in America are employed by small business and those businesses are struggling to keep their heads above water right now. I’m not talking about Google, Microsoft, or some Wall Street bank that has billions in assets and should trouble arise for them, the federal government is there ready to use your money to bail them out. No, the person who runs the small business is losing his standard of living just as you are. Wages always lag behind prices because if an increase comes it is probably yearly while price increases happen almost daily.

What exactly is inflation anyway? The traditional definition is an increase in the money supply, but recently the FED and treasury departments started referring to it as an upward trend in pricing, whatever that means. The government likes to tell us that the CPI (consumer price index) is the proper measurement of inflation. The CPI is just a bundle or basket of industries or companies that the government looks at to measure pricing. On that basket depends the COLA (cost of living adjustment) for Social Security recipients as well as all federal pensions.

COLA is supposed to keep those people on “fixed incomes” from losing ground to inflation, so it is to the advantage of the government to hold COLA to a minimum and that is done through adjustments to the CPI. If you want to show that there is little or no inflation, make sure to have a lot of high-tech companies in the basket. Prices on certain electronics such as TV’s have actually fallen as knowledge increases. To prevent problems on the upside just take volatile industries such as timber, meat and other foods from the basket and CPI can appear to be under control.

People see the prices of things they use continuing to rise, but most do not understand what is happening and if they do understand, what can they do about it? The FED has been good in recent years at keeping inflation from their constant money pump limited to Wall...