Scapegoats for the credulous:

These policies have now continued during periods of both Republican and Democratic Party control, so there is enough blame to go around.

To divert blame from themselves, Congressmen sanctimoniously seek out scapegoats - OPEC, big oil companies, market speculators, economic expansion in China and India.

Surely, it would be ungrateful of us to blame our gallant legislators for the inflationary results of all the benefits they have so generously extended to us from the public treasury.

  Congress must divert blame for the inevitable results of more than half a dozen years of Keynesian budgetary deficits and the expansionary monetary policies required to monetize much of those deficits. These policies have now continued during periods of both Republican and Democratic Party control, so there is enough blame to go around.
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  The politicians - and the Keynesian economists who provide them with intellectual support for irresponsible policies - rage against natural limitations - natural disciplines - that block their desire for unlimited expenditures and the easy solutions of budgetary deficits and the printing presses. To divert blame from themselves, they sanctimoniously seek out scapegoats - OPEC, big oil companies, market speculators, economic expansion in China and India. They hide behind the smoke and mirrors of phony statistical methods and looking glass budgeting techniques. They blame globalization and the disciplines of capitalist processes for the consequences of their own mismanagement. They cite ridiculous Keynesian concepts to support the absurd notion that they are not to blame.
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  Soon, we can expect them to try to shift the blame to us - to "the public malaise." Surely, it would be ungrateful of us to blame our gallant legislators for the inflationary results of all the benefits they have so generously extended to us from the public treasury.
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  Image is of course more important than reality for your government. It has fought price inflation by changing the way price inflation is measured. If it were being measured according to 1970s methods, price inflation would be about twice as high as current figures. The methods used in the 1970s had their problems - and probably did overstate inflation a bit - but not by 50%.
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  The markets, of courses, cannot be fooled. Prices on world commodity markets - not just for oil and gold but for all industrial and agricultural commodities - have been soaring at double digit rates for several years already. Your pains at the grocery store and gas station are not imaginary. Price inflation has really reached painful levels, well above those indicated by the government's statistics. See, Economic Statistics and Macro Econometrics: The Figures Lie.
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  For those of you who have not been paying attention - or who remain in denial - FUTURECASTS has been warning of these events since 2003. See, Heedless Government and Government by Crisis. It has all been ridiculously easy to foresee. All of FUTURECASTS' Near Futurecasts and Futurecasts Reviews since 2003 have increasingly emphasized the inevitability of our current troubles and accurately explained their causes and impacts. Anyone who failed to grasp all this confesses a deplorable ignorance of basic economics.
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Inflation is a process that is not so easily calibrated or contained. Moreover, one cost of phony statistics is that they cease to be an accurate guide to policy.

How can you know what  "real" inflation adjusted interest rates are if price inflation statistics are being grossly  understated?

The government's Keynesian economists become the "authoritative voices" that provide people with authoritative misinformation on inflation and other economic matters.

  Governments actually dearly love inflation. They will generate as much of it as they can get away with. They hire Keynesian economists to provide justification. The electorate seems to tolerate - and the economy seems to be able to function with - approximately a 2% rate of price inflation in addition to the inflation that eats up all the substantial price benefits of productivity gains. So that's what governments aim for.
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  Unfortunately, inflation is a process that is not so easily calibrated or contained. Moreover, one cost of phony statistics is that they cease to be an accurate guide to policy. How can you know what  "real" inflation adjusted interest rates are if price inflation statistics are being grossly  understated?
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  The Keynesian rationalizations are as phony as the rest of Keynesian theory. By concentrating only on short term impacts, Keynes provided an intellectual excuse for the ancient political vice of monetizing debt. That's why the politicians hire only Keynesian economists for prestigious government positions - and these economists become the "authoritative voices" that provide people with authoritative misinformation on inflation and other economic matters. See, Keynes, "The General Theory," Part II, "Interest Rates, Aggregate Demand, and the Business Cycle." They even authoritatively insist that inflation is essential for economic prosperity. However, this is clearly contradicted by a mere three centuries of modern economic progress prior to Keynes.
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  The records on the English commodity exchanges run back to the end of the 16th century. There were indeed many upward surges in prices - usually associated with such things as wars or crop failures or gold discoveries - but the vacillations remained within a remarkably level range for the approximately 3 1/3 centuries prior to the Great Depression. Keynes himself noted the remarkable price stability for the century between the Napoleonic Wars and WW-I when Great Britain prospered and became the world's primary economic superpower..
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  Moreover, the 19th century was a period of persistent price deflation in the U.S. - a period when the U.S. economy prospered and the U.S. joined Great Britain as an economic superpower. With the exception of the 1850s and 1860s - the decades of the gold rush and the Civil War - prices declined on average about 1.5% per year - reflecting productivity gains and providing the U.S. economy with vast gains in purchasing power.
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Governments dearly love this method of taxation because most people do not understand that the resulting rise in prices is in fact a tax imposed on them by their government.

The Federal Reserve thus has no choice but to exchange increasing amounts of newly created cash for securities issued by the government.

The Fed may not be the basic cause, but it is an absolutely essential enabler of the government's inflationary policies.

Only Congress - by budget cuts that are real and substantial - can avoid or substantially mitigate the severe recession that will be required to end the debasement of the dollar and bring this period of inflation to an end.

• Vast amounts of government debt is today being monetized by the Federal Reserve. The monetization of government  debt is a classic engine of inflation. The Federal Reserve's inflation fighting credentials are thus being revealed to be phony.

  However, the Federal Reserve is not an independent agency. It is a mere creature of Congress. Especially in an election year, Congress would not be amused by the recession that its budget deficits would cause if their interest rates were not being held down by monetary expansion. The Federal Reserve thus has no choice but to exchange increasing amounts of newly created cash for securities issued by the government. The monetization efforts required to prevent government debts from pushing interest rates to depressive levels inevitably become increasingly desperate - and increasingly inflationary.
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  Fed chairman Bernanke's assertions that the Fed's monetization of debt and resulting rapid expansion of the money supply - its euphemistically called  "monetary policy" - is not responsible for the current inflationary problems mark him as either a liar or a fool. The Fed may not be the basic cause, but it is an absolutely essential enabler of the government's inflationary policies. If Bernanke were serving the American people instead of just his Congressional masters, he would be explaining all this. Instead of ducking responsibility, he would be answering the question:
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  Who is to blame? Congress is to blame!

• Meanwhile, our gallant legislators remain helplessly committed to their unsustainable spending schemes. They expect us to be grateful for the $600 they have sent us. They hope we will ignore the thousands in purchasing power that we are losing because of their inflationary policies.

  It is Congress that is the driving engine of this inflation. The rapid escalation of government spending since the terrorist attacks on 9/11/01 has been domestic as well as military, and the military spending increase has been remarkably modest. It was from a very low base, and we are in a real war, after all. That some of the tactics have been more than a little questionable - as FUTURECASTS has frequently noted - does not change that fact.
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  The bulk of recent spending increases have been domestic. Only by substantial spending cuts can Congress avoid or mitigate the severe recession that will be required to end the debasement of the dollar and bring this period of inflation to an end. But the cuts will have to be real and substantial. Smoke and mirrors cuts won't do. Delay only permits matters to get much worse. Don't hold your breath!
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  Who is to blame? Congress is to blame!

This is chronic inflation, and chronic inflation is solely the result of an expanding money supply. It cannot occur without that.

• It is not oil that is going up - it is the dollar that is going down. It is not just oil. All commodities - agricultural as well as industrial - have been rising at double digit rates for several years already. This is chronic inflation, and chronic inflation is solely the result of an expanding money supply. It cannot occur without that.  Forget the scapegoats. Chronic inflation is always caused by government.

  Who is to blame? Congress is to blame!

• Inflation is now skyrocketing all around the world among those nations that have tied their currencies to the dollar and use the dollar as their primary reserve currency.

  The dollar is the world's primary reserve currency, so dollar devaluation transmits inflation world wide. Double digit inflation is increasingly afflicting a wide array of developing nations, threatening these nations with an economic train wreck. All of their gains during the last two decades are at risk.
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  Who is to blame? Congress is to blame!

• Inflation of fuel and food prices is already causing instances of civil unrest all around the world.

  The innumerable ways in which inflation undermines economic and political systems are becoming increasingly evident, just as they did during the Great Inflation of the 1970s. Economists who claim that we can live with inflation - who persistently underestimate the manifold difficulties caused by inflation and grossly overestimate the ability to control inflation - thereby confess a deplorable ignorance of economic history.
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  As FUTURECASTS has frequently reminded its readers: No nation has ever prospered with a weak currency! No nation has ever indefinitely been able to "live" with inflation!
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  Who is to blame? Congress is to blame!

Because the dollar is acceptable as a reserve currency around the world, the U.S. is able to a certain extent to print gold.

Because of irresponsible budgetary and monetary policies, the U.S. is throwing away a tremendous advantage that has helped it finance all its 20th century conflicts and all its vast social programs.

A weak dollar leaves the U.S. increasingly vulnerable to financial and economic crises.

• The dollar is losing its status as the world's primary reserve currency. This will be a tremendous loss to the nation.

  Because the dollar is acceptable as a reserve currency around the world, the U.S. is able to a certain extent to print gold. Without this, price inflation would have afflicted the nation far more quickly and far more severely since the New Deal.
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  We are now printing that gold beyond the sustainable extent. Nations and private entities and individuals are increasingly losing faith in the dollar. They are turning to the euro - or to the real thing as gold prices soar.
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  Its domestic inflation is forcing China to permit its currency to rise against the dollar. This makes its exports increasingly expensive and adds to U.S. price inflation. Major hard currencies - the euro, the yen and the pound - are also being inflated and are going down against commodity prices, but not nearly as much as the dollar. Because of irresponsible budgetary and monetary policies, the U.S. is throwing away a tremendous advantage that has helped it finance all its 20th century conflicts and all its vast social programs.
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  Who is to blame? Congress is to blame!

• A strong dollar provides substantial protection against the unexpected crises that are always to be expected. A weak dollar leaves the U.S. increasingly vulnerable to financial and economic crises. A weak dollar creates instability worldwide that increases the likelihood of financial and economic crises.

  It does not matter what the individual crisis happens to be. The untoward impacts on the U.S. will be primarily due to the weakness of the dollar - and we know who is responsible for that.
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  Who is to blame? Congress is to blame!

Vast amounts of purchasing power is pouring out of the nation or being dissolved by price inflation. as the Federal Reserve frantically creates more currency for its debt monetization activities.

The Federal Reserve can only be as strong as the dollar, and the dollar is beginning to resemble a wet noodle.

• Sharply negative real interest rates driven substantially below price inflation levels mean that oil and other precious commodities are now worth more in the ground than produced and sold for dollars.

  Oil producing nations with substantial surpluses in their international payments have no incentive to expand production. Disruptions in the production of oil and other commodities as a matter of national policy are now increasingly possible. If they occur, Congress will blame those who refuse to provide us with the commodities we need.
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  However, negative interest rates do not inspire increases in production. These negative interest rates have been made essential to prevent our debts from driving the economy into recession - and we know who is responsible for those debts.
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  Who is to blame? Congress is to blame!

• Sharply negative real interest rates undermine the ability of the dollar to serve as a store of value.

  Investors - pejoratively referred to as "speculators" - are thus induced to exchange their depreciating dollars for appreciating commodities. Entities that have the ability to inexpensively store commodities will actually take commodities - especially precious metals - off the market to use as a store of value - a role the dollar no longer reliably plays. This aggravates the inflationary bubble of rising demand and prices accompanied by falling supply.
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  Sanctimonious Congressmen rage against these "speculators" and "hoarders" driven to rely on precious commodities as a store of value. However, the dollar no longer serves as a reliable store of value, and we know who is to blame for that.
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  Who is to blame? Congress is to blame!

• The nation's international accounts remain in deficit despite the accelerating devaluation of the dollar. As FUTURECASTS has explained, currency devaluation may be made unavoidable by international payments deficits, but it is NEVER by itself enough to end them. Devaluation ALWAYS runs behind the power curve.

  Vast amounts of purchasing power is pouring out of the nation or being dissolved by price inflation as the Federal Reserve frantically creates more currency for its debt monetization activities. Eventually, the Fed must lose this battle. It is already hesitating to act with the aggressiveness with which it fought recession at the beginning of this decade.
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  Purchasing power can decline faster than a monetary authority can add zeroes to the currency. Well before that, inflation will transform itself into stagflation, and we will suffer both price inflation and rising unemployment. The Federal Reserve can only be as strong as the dollar, and the dollar is beginning to resemble a wet noodle.
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  Only a period of budgetary austerity - that must inevitably be accompanied by a fairly severe recession - can undo the inflationary harm of the last half dozen years. And, it is Congress that controls the budget. The Constitution places this power and responsibility squarely with the Congress. Congress is responsible for the prior deficits and only Congress can substantially reduce the current and future deficits.
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  Who is to blame? Congress is to blame!
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  Do not let their sanctimonious scapegoating divert your attention. Let your Senators and Congressional representative hear from you on this matter. Let them know they cannot play you for the fool.
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  Who is to blame for this inflation? Congress is to blame for this inflation - for creating the massive deficits that the Federal Reserve must dutifully monetize.