Is inflation making a comeback? That’s the fear after the latest report of wholesale prices moving up 3.5 percent in January over last year. That’s more than 50 percent higher than the Fed’s target. It poses a political headache for President Trump, who is urging the Fed to cut interest rates — even though the stubbornness of inflation makes that less likely. It’s a moment to mark the need for monetary reform.

Inflation’s persistence is, above all, a symptom of the fiat money era. The value of the dollar is plummeting in terms of gold, the real basis of monetary value. In Thursday’s trading, the dollar is fetching less than a 2,900th of a gold ounce. Before America abandoned the gold standard, dollars were convertible at the legally defined rate of a 35th of an ounce. Amid this plunge, is it any wonder that prices, measured in ever more worthless dollars, are climbing? 

Adding to the difficulty facing Mr. Trump and his economic team is the fact that voters don’t want only inflation to slow down. They want prices to go back down to where they were before the inflation wave triggered by President Biden. Yet a fundamental feature — or defect — of the fiat money regime is that it only sees prices ratchet up, never back down. That’s a contrast with the gold standard, which saw prices fall back after upward swings.

The steadiness of prices under the gold standard kept American inflation to an average of 0.2 percent a year between 1792 and the Fed’s creation. That’s a mark of the discipline of gold convertibility. The government and banks were required to redeem paper dollars for real money — gold — at a fixed rate set by law. The inexorable logic of convertibility meant that even if prices rose, as they did in wartime, they soon fell back. Over time the result was steady prices.

The failure of the federal government and its central bank to achieve that stability of prices is at the heart of today’s voter dissatisfaction. Consumer confidence dipped in January, the Wall Street Journal reports, with fears over inflation causing some of the anxiety. More broadly, the standard gauge of American economic confidence, kept by the Conference Board, has yet to return to its pre-pandemic level. This isn’t likely to be resolved with quick fixes.

This is not to dismiss Mr. Trump’s early policy moves, which do show promise of helping the inflation fight. Boosting energy production, lowering taxes and regulations, and cutting spending will all help. Even so, ongoing federal deficits, leading to more government borrowing, could mitigate those positive steps. Plus, too, a raft of new taxes on imports, better known as tariffs, will likely only add fuel to the inflationary fire.

“I would say we’re close, but not there on inflation,” is how the Fed chairman, Jerome Powell, summed up the situation in testimony Wednesday on Capitol Hill. “Last year, inflation was 2.6% — so great progress — but we’re not quite there yet.” The latest inflation numbers, though, undermine Mr. Powell’s self-congratulatory message. That points to the unreliability of the Fed in the inflation battle — in part because its dual mandate clouds its focus. 

The worst handicap, though, on Mr. Trump’s program is the legacy of inflation he was bequeathed by the Biden-Harris administration. On their watch prices surged an average of some 20 percent. The rise was largely fueled by federal overspending — especially unneeded Covid stimulus dollars— and excessive regulation. Plus, too, the Treasury and the Fed denied inflation’s danger until it was already entrenched, making it all the more difficult to reverse.

Mr. Trump, though, is hardly one to shy from a challenge. His platform pledge to the voters to “defeat inflation” was a prime reason why they hoisted him back into office on Election Day. Mr. Trump has, in Secretary Bessent and in his budget chief Russell Vought, a team that understands the limitations of the fiat dollar and the Fed. Vanquishing inflation will require taking on the challenge of monetary reform and restoring an honest dollar.