Inflation Pressures The Federal Reserve

Either Die a Hero or live Long enough to become the Villain

Inflation Dilemma: The Federal Reserve’s Hero or Villain Moment

The latest inflation data is in, and it’s a scorcher. Despite the Federal Reserve’s 2% inflation mandate—a level long considered the benchmark for price stability that they set —we are now entering the fifth consecutive year of an inflation crisis. Since 2020, total inflation has ballooned to 23%, according to the Bureau of Labor Statistics (BLS). Yet, many Americans feel the real impact is far worse, as essential expenses—food, shelter, and transportation—continue rising at an even steeper pace.

This moment echoes a famous scene from The Dark Knight, in which Harvey Dent declares, “You either die a hero, or you live long enough to see yourself become the villain.”

Today, that sentiment rings true for the Federal Reserve. Tasked by Congress to ensure price stability, the central bank risks becoming the very villain it was meant to defeat if it fails to take decisive action to crush inflation this year.

The Inflation Reality Check

Since 2020, inflation has compounded at an annualized rate of nearly 5%, more than double the target rate. Had inflation remained at 2%, the total increase over five years would have been around 10%, a stark contrast to the reported 23%—and an even starker contrast to the real-world inflation burden borne by American households. The purchasing power erosion from this discrepancy is massive, leaving families struggling to cover basic necessities.

Breaking down the latest inflation report, the numbers tell an alarming story:

• Food away from home (restaurants, fast food, etc.): Up 4% year-over-year.

  

• Transportation services (insurance, car maintenance, etc.): Up 8%.

• Shelter (rent, housing costs, etc.): Up 5%.

  

For the average American, these categories represent the core of their daily expenses. When compounded over the last five years, real inflation in these necessities isn’t just 23%—it’s closer to 50%. Something Americans were never prepared for.