President Joe Biden, Federal Reserve (Fed) Chairman Jerome Powell, and Treasury Secretary Janet Yellen all insist that the nation’s disturbing inflationary trend is “transitory.”  They tie rising prices pretty much entirely to supply chain disruptions, and they tie those troubles to the lingering effects of the pandemic restrictions.  These pressures, they assure the nation, will lift soon.  But there is more going on than just supply problems, and these other considerations make the whole matter more worrisome.

There can be little doubt that some of the recent price pressure does stem from supply chain problems, especially where energy is concerned. But even if that were all, it would take time to erase the price pressure.  Transportation Secretary Pete Buttigieg has said not until 2022.  On this basis, the word, “transitory” must count as misleading.  Beyond this and more ominously, there is reason to suspect that today’s inflation also reflects years of expansive fiscal and monetary policies, especially the latter.  If this effect is operating, inflation will have a more fundamental and lastingcharacter than anyone in authority now admits.

All the latest price measures tell similar and troubling stories.

The Labor Department’s consumer price index rose 0.4 percent between August and September, the most recent figure available.  That is about 5 percent at an annal rate.  So far in 2021, this broad measure of the cost of living has risen at better than a 6.5 percent annual rate, well above the Fed’s informal preference for 2 percent inflation a year and faster than any time in the last decade and a half.  Producer prices tell a similar story.  They have risen at more than a 10 percent annual rate so far this year.  In September the jumped 0.5 percent, a slight moderation from earlier in 2021 but still over a 6 percent annual rate.  Commodity prices have soared.  Their overall index has risen almost 20 percent so far this year; industrial supplies, 11 percent; energy, 40 percent; metals, 16 percent; construction lumber, 23 percent; wheat, 16 percent; beef, 26 percent; and pork, 66 percent, just to pick a few of the economically more important.

Contrary to Chairman Powell’s claim that the overall figures are the result of just a few pockets of inflation, the pressure has made itself felt widely.

Of the 23 major sectors tracked in the Labor Department’s consumer price index, 17 show inflation rates above the Fed’s informal target of 2 percent annually, and of those, 14 show inflation over a 5 percent annual rate, some considerably more.  Worse for a society that seems obsessed with inequity and protecting its most vulnerable members, the mix of inflation pressures has put the greatest burden on the least affluent.

Food prices, for instance, have risen at an especially rapid rate, jumping 1.2 percent in September, more than a 15 precent annual rate.  According to the Labor Department, food absorbs some 14 percent of the average American’s budget, but that proportion is much higher among lower-income people.  If that were not inequitable enough, energy costs have also led in this inflationary surge.  In September the retail cost of all kinds of energy – gasoline, heating oil, natural gas, and electricity –  rose some 1.3 precent, an almost 17 percent annual rate of gain.  Retail energy prices have risen over 40 percent over the past year. These absorb almost 8 percent of the average American’s household budget but, as with food, a much higher portion of the expenditures of poorer individuals and families.  Worse still, fuel oil prices rose 3.9 percent in September, more than a 50 percent annual rate while natural gas prices jumped 2.7 percent, almost 40 percent at an annual rate. Just keeping warm as temperatures drop will burden all but especially the poor for whom these purchases absorb a larger than average proportion of their limited income.

The only major category in the Labor Department’s accounting that showed substantive price relief were airline fares.

These fell 6.4 percent in September.  Were it not for this drop, the overall consumer price index would have recorded a 0.8 percent rise for the month, some 10 percent at an annual rate.  Though in some circles the drop in air fares might offer comfort, it is apparent that the price decline is purely a response to the sudden drop in traffic due to the rise in infections from the Delta variant of Covid-19.  There can be little doubt that as the rate of infections abates, as it already has, travel and air fares will again begin to increase, if only to keep up with the rising cost of jet fuel.

No doubt, the supply chain interruptions to which official Washington points factor into this picture.  These will surely dissipate in time, but they will not go away any time soon.  Take energy.  There can be little doubt that global supplies have fallen short of surging demands.  Renewables are hard to ramp up, and the production of fossil fuels, still providing some 80 percent of American energy, has actually dropped.  Recent cutbacks in fracking and the cancellation of the Keystone pipeline have reduced U.S. production 9-10 percent since early 2020 before the pandemic.  Meanwhile,  the drop in American production has given Russia and OPEC the whip hand, as it were, and they would much prefer to get more for each barrel than increase pumping.  Even as supply chain problems ease, prices will not fall. Americans, especially poorer Americans, will have to carry the burden of heightened living costs into the future. Beyond all this, the inflation picture also includes an additional and more sinister aspect.

Washington may well prefer to ignore this matter, but there is reason to suspect that today’s inflation stems from years of expansive fiscal and especially monetary policies.

Republicans point to President Biden’s efforts to increase federal spending to unprecedented levels. That spending does not help, but the problem goes deeper. For over a decade, federal spending and deficits have risen at a pace far beyond historical averages. What is still more dangerous from an inflationary standpoint is that the Fed has bought a good portion of the resulting rise in federal debt, some $5.0 trillion, in fact, since 2009, $3.2 trillion in just the last year. The Fed has effectively financed the government with the electronic equivalent of the printing press, and the ensuing flood of money is, according to both economic theory and the historical record, inflationary. Experience shows that the lags from monetary expansions to the resulting inflation are often long and always variable. Now that the price pressures have become evident, there is reason to suspect that those long lags have finally caught up with this economy.

Perhaps, the country will avoid what history and economic theory suggest lies in its future. Perhaps Biden, Powell, and Yellen will be vindicated, and the inflation will dissipate in coming months.  Even so, Americans would still have suffered increased living costs.  In the meantime, there is ample reason in past monetary policy for concern that this matter will last longer and cause still more harm than Washington seems willing to acknowledge