YOUGHAL, IRELAND – We write today with a jolly prediction: The war against inflation will be long… with sturm and drang… boom and bust… tears and laughter.

Looking ahead, there will be battles won… and battles lost.

A crash on Wall Street might produce a shocking deflation. Then, the forces of inflation will counterattack.

Ultimately, this is a war inflation can’t lose. Because America will be betrayed by its own brass and blowhards.

Inflation Update

Here’s the latest on the battle, from The Wall Street Journal:

Supermarkets are stocking up on everything from sugar to frozen meat before they get more pricey, girding for what some executives anticipate will be some of the highest price increases in recent memory.

Some supermarkets said they are buying and storing supplies to keep their shelves full amid stronger demand. Grocery sales in the U.S. for the week ended June 19 rose about 15% from two years earlier and increased 0.5% from a year earlier, according to Jefferies and NielsenIQ data.

Stockpiling by food retailers is driving shortages of some staples, grocery industry executives said, and is challenging a U.S. food supply chain already squeezed by transportation costs, labor pressure and ingredient constraints.

Dear Reader Randy C. reports from the front lines:

I just had my car serviced at the dealership. Took a stroll through the lot. EVERY new car – every single one – had a supplemental sticker beside the manufacturer’s sticker: a $3,500 “market adjustment” addition. No inflation worries? Uh huh. Yeah, right. Move along now. Nothing to see here.

And CNN elaborates:

Normally, a dealer selling a one-year-old used car will get about 80% to 85% of its original price, according to But, according to the site’s most recent figures, car dealers can now sell one-year-old used cars for about 95% of the original price. That’s the average. And some used cars and trucks are worth even more than they cost when they were new.

Last War Against Inflation

Let us put this in the simplest perspective.

Forty years ago, Field Marshall Paul Volcker led a successful war against inflation. He blasted it with higher reserve requirements to prevent the banks from lending money… and bombed it with a 20% interest rate on money lent to the banks by the Federal Reserve.

The battlefield was littered with casualties – dead companies… failed investments… and desperate households.

It was the worst economic calamity in America since the Great Depression.

But when the smoke cleared, Tall Paul was still standing… and inflation was on the run.

Inflation Attack

Now, four decades later, inflation is again on the attack.

But what could you expect? America’s “base money” (the Fed’s balance sheet) was less than $1 trillion in the summer of 2008. Now, it’s over $8 trillion. That’s an 8x increase in the space of 13 years.

And here’s colleague Dan Denning on federal spending:

…the Congressional Budget Office (CBO) projected this year’s federal deficit to reach $3 trillion, or 13.4% of GDP. It may be even bigger than that, if President Biden and Congress collude on more spending. But as is, it would be the second-largest deficit as a percentage of GDP since 1945.

Those stimmy checks and unemployment toppers are giving people money to spend. But the free money doesn’t produce more goods and services. It only produces higher prices.

Inflation Sympathizers

Yes, it’s going to look a little like America’s last war against inflation. But this time, the U.S. is far more vulnerable. Its ramparts have been undermined by debt. Its elite warriors have grown fat – after decades of feeding at the funny-money trough.

And its leaders have all become inflation sympathizers… who owe their wealth, power, and status to the enemy!

In the last war, Paul Volcker was determined to win. In the next, Jerome Powell will aim to lose.

Federal debt is more than 32 times what it was in 1980.

Total debt – including household and corporate borrowing – is nearly 19 times higher.

Paul Volcker’s war against inflation was a close call. Business, Wall Street, Democrats, Unions – none were ever fully behind the war effort. They wanted Volcker fired – not because he was losing the war, but because he was winning it. They burned an effigy of him on the Capitol steps and pressured President Reagan to cut him loose.

(They finally got their wish in 1987… when Volcker was replaced at the Federal Reserve by Alan Greenspan.)

How Today’s War Might Evolve

Now, try to imagine how today’s war against inflation might evolve.

Imagine the Fed’s key lending rate not at today’s 0.25%… but at 80 times that amount, at 20%…

Imagine mortgage rates not under 4%, but over 13%…

Imagine a grim recession imposed by the Fed itself…

Imagine Joe Biden standing behind the Fed chief, even as the mob calls for his head… against the deafening howl and disgust of the Washington Post press, the Krugman economists, the Pelosi and Warren Congress, the Pentagon, the universities, and Wall Street.

Unimaginable, right?

White Flag


The trouble with a war against inflation today is not that it is unwinnable. The problem is that it is unfightable.

Every sector of the Establishment is in cahoots with the enemy. None will oppose it seriously.

And there… leading them all… will be the Commander-in-Chief himself, Joe Biden…

…with a white flag in his hand.




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