Economy

Biggest Driver of Inflation Is the Government

The Fed's intervention in the market in the name of controlling costs has proven to do just the opposite.

Political Editors · Mar. 5, 2018

Much of the recent volatility in the stock market can be attributed to growing fears over the Federal Reserve enacting interest-rate hikes due to concerns over increasing inflation. On the subject of inflation, however, it is the government’s meddling in the market that tends to be the greatest contributor. Economist Mark Perry, who has tracked changing prices for over two decades, has noticed a common trend with the price of various goods and services — costs have increased over the inflation level for those goods and services that have lacked competition. This should be no surprise to conservatives.

Specifically, those goods and services that have seen the greatest overall price increases are in the fields of medical and education-related services. And those two fields are most directly impacted by the government’s intervention in the marketplace, via subsidy and regulation. As the costs for health care and schooling only continue to increase, they in turn significantly impact the overall rate of inflation.

As Investor’s Business Daily explains, “All that subsidy money was premised on the goal of making these things [health care and schooling] more affordable. The result is, for many, the exact opposite. By paying most of the tab, the government has insulated consumers from the true cost of these things — a recipe for runaway prices.”

In short, much of the stock market’s current uneasiness can be laid directly at the feet of government for its work to limit competition, all in the name of making these goods and services more affordable. In the end, the American taxpayer is left footing the bill.

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