Trump’s Missed Opportunity on Inflation

With the midterms days away, inflation is shaping up as the GOP’s Achilles’ heel. “High Inflation Haunts Trump and Republicans on Eve of Election,” reads a Times headline. “A backlash over high prices helped Republicans capture a majority in 2024,” the Grey Lady adds. “Now, it may be the source of the party’s own undoing.” These columns have been warning Mr. Trump and the GOP on this head since the runup to the 2024 election.“I got elected because of high prices,” Mr. Trump averred on Tuesday at a rally in Texas, turning what the Times called his “ire toward Democrats.” He asserted that “I didn’t have the high prices. They had the high prices.” The president has a point. President Biden and the Democrats in Congress fueled the inflation wave that spiked in the summer of 2022 with a rise of 9.2 percent over the prior year. Unnecessary Covid stimulus spending was a factor.In all, prices rose by some 20 percent on Mr. Biden’s watch. The frustration that resulted helped Mr. Trump win the 2024 election, and propel the Republicans toward control of Congress. The pace of inflation has abated since then. Yet prices have not retreated to their earlier levels, as consumers would rather be the case. Instead, prices are merely rising at a slower pace. This is in part a result of our fiat money regime, in which prices tend to ratchet ever higher.A, by contrast, specie standard in which the dollar is defined by law as a fixed weight in gold tends to hold prices steady over the long run. Under such a system, the discipline of gold convertibility means that even if prices ever rise, as they do, say, in wartime, they soon ratchet back down to their earlier level. This is the system that prevailed in America until President Nixon in 1971 breached Uncle Sam’s obligations under the Bretton Woods agreements. Based on this historic track record, in which an honest dollar defined in gold helped ensure strong growth with low inflation, these columns in the summer of 2024 urged Mr. Trump to put monetary reform at the center of his policy agenda. It was encouraging, we said, that “defeat inflation” were “the first two words in the table of contents of the draft GOP platform,” suggesting Mr. Trump grasped the need for restoring sound money.After Mr. Trump won the election, but before he took office, there were signals that inflation was mounting a comeback. A report in late November 2024 showing prices inching back up was a caution, we wrote, “that even if the recent wave of inflation was caused by President Biden, it’s now President Trump’s problem.” We urged Mr. Trump, then building his economic team, “to look at the root cause of the recent price spiral.” To be sure, “federal overspending, high taxes, and excessive regulation” were factors, we said, “but the heart of the problem is our fiat money system.” Getting prices down, we asserted, would require the president, “along with the new Congress, to examine the monetary system that has brought America to this impasse.” We mooted a monetary commission to weigh the Fed’s performance and the implications of our shift to a fiat dollar regime. By February 2025, though, the new administration’s lack of progress on this head prompted us to ask: “Will Trump Take Inflation Seriously?” Mr. Trump was conceding that “we have to get the prices down, not the inflation down, the prices down.” Yet this goal is hard to achieve without reforming the monetary system that enables inflation and unchecked federal borrowing. It’s a challenge, and an opportunity, for the GOP and its standard-bearer in 2028.

Trump’s Missed Opportunity on Inflation

Trump’s Missed Opportunity on Inflation

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