Interview: Rand Paul Explains What’s Really Causing America’s Inflation Woes

“I think inflation is pretty easy to explain and people need to know what causes inflation,” Senator Paul said in an exclusive interview. “[The federal government] gets debt, then the Federal Reserve prints up new money to pay for the debt, that new money enters circulation, and that expansion of the money supply [leads to] inflation.”

Source: Interview: Rand Paul Explains What’s Really Causing America’s Inflation Woes

In reality, inflation can best be described as an increase in the money supply. An increase in the money puts an upward pressure on prices. While not the only factor, this usually leads to higher prices. However, government's definition of inflation comes from a mathematical formula that takes into account the average prices of certain goods and services. But you don't have to be very good with math to see that prices are getting higher.

Government has been referring to this as "transitory inflation". I guess they mean that inflation will return to "normal" levels soon. There are a couple of problems with this assurance. First, prices aren't going back down. Even if inflation returns to normal, the higher prices we have already are here to stay (without deflation anyway). Second, unless the government's lack of economic foresight changes, there's no reason to believe it will be transitory. In fact, it seems likely to get worse. Instead of retreating from the policies that helped to cause this supposed "transitory" inflation, they are doubling down on them. What's the definition of insanity again?

All of this is pretty common sense stuff. If you print and borrow more money, it puts an upward pressure on prices. Lately those levels have skyrocketed. This inflation is really a backdoor tax. Nothing is free. If the government insists on spending and borrowing ever larger sums, you pay for it in rising prices even if you don't pay for it in direct taxes (which must come eventually as well).