Jerome Powell Has a Dream: Control Inflation

A recent article in the New York Times is reassuring. It assures us that while the recent CPI print showed inflation was running hot, not to worry! When measured in terms of “core” inflation, which “gives us a better idea of the underlying trend,” inflation actually isn’t so bad. And that underlying trend requires that you remove food and fuel, two essential resources, from the equation. They say the prices of food and gasoline are too “volatile” to justify including in the overall metric

Avian flu issues aside, eggs alone have risen by 30%, and gas has gone up by almost 4.5% in December alone. Food and gas are not discretionary items; they are daily necessities for American families. To the New York Times article’s credit, it does spend most of the article after the third paragraph discussing how policymakers are frustrated with a lack of progress containing inflation. While readers don’t go past the second paragraph, it acknowledges that the mainstream view is that inflation isn’t anywere near being under control.

Regardless of the endlessly vague, avoidant Fed-Speak, it appears that Jerome Powell’s dream of saving the banking system without increasing inflation will not materialize in 2025 and this reality has dawned on him in earnest.

“Peter Schiff on Schwab Network: Markets have mispriced the dollar! Inflation is higher than expected, and tariffs aren’t helping. Watch the full breakdown here. #CPI #Inflation #DollarOutlook“https://t.co/1tAzpte2i9

— SchiffGold (@SchiffGold) January 17, 2025

According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) rose 2.9% over the 12 months ending December 2024, up from 2.7% in November. This uptick was significantly driven by a 4.4% increase in gasoline prices and a 0.3% rise in electricity costs. The core CPI number, which excludes food and energy, rose 3.2% over the same period, a slight decrease from previous months. Proponents of core inflation love to ignore essential expenses because they want to paint a misleadingly rosy picture of economic stability and growth.
But we have high inflation paired with an economy that produces almost nothing. Even the government’s own CPI data indicates that inflationary pressures aren’t under control, and reality is forcing their hand. It’s a disconnect that proves that monetary policy is being guided by metrics that are cooked to make the narrative fit the Fed and government’s preferences. It’s by design that they completely fail to capture the economic realities faced by the average American.
The argument that food and energy prices are too volatile to include in inflation metrics is a convenient excuse to downplay the true cost of living. Volatility does not negate reality. When gasoline prices surge by 4.4% in a single month, as they did in December 2024, it directly affects commuters, businesses, and the broader economy.

By excluding food and energy prices, core inflation fails to account for the very expenses that constitute a significant portion of household budgets. Most policymakers, finance reporters, and analysts don’t want to have an honest conversation about the US dollar and real inflation, because if they did, they’d be acknowledging that the economy is doomed in the long run and they’ve been wrong for all these years.
With prices of many goods creeping back toward their COVID peaks, gold remains the true measuring stick of dollar weakness. And when you zoom out far enough, gold always gains against the US dollar.

Gold vs. USD, 1-Year

America’s primary exports are now war, debt, and inflation. When the world reserve currency is inflationary, it makes dollar dominance expensive for other countries that are forced to do business in USD. As the US produces less and less, and relies more and more on foreign imports for essentials like oil and building materials, we pay more to import those goods because of the effects of our own monetary policy.
But other countries pay an even higher price. In a country where an increase of a few cents on a liter of gasoline or a loaf of bread isn’t just an economic inconvenience but a matter of life or death for millions of people, commodity inflation is a dire matter. The US dollar, unauditable and managed in secret by a small handful of individuals, is not an appropriate measuring stick to determine prices in the global economy.

For that, we need hard money.