The 2020s have been a crazy decade in American politics.
They began, of course, with one of the most chaotic and intense years in recent American history. After a global pandemic brought almost all aspects of life to a halt, cities erupted in nationwide riots for much of the summer, and a seemingly endless stream of scandals and stunts like the Hunter Biden laptop drove the politically-active public to exhaustion; after all that, Joe Biden won the presidency.
Biden—the old-fashioned, centrist, familiar vice president from the Obama years—was supposed to represent a repudiation of the chaos of the Trump years, and of 2020 especially. The “adults were back in charge,” and politics could finally get boring again. Or so many thought.
Instead, the Biden years saw the government’s heavy-handed pandemic response drag on, the outbreak of war in Ukraine and, later, Gaza, and the consequences of the bipartisan economic response to the covid pandemic slam into the already-exhausted country in the form of a forty-year-high rate of price inflation.
The high prices especially drove many voters to abandon the Democrats in the 2022 midterms—although the Supreme Court’s overturning of Roe v. Wade earlier that year drove high Democratic turnout, which greatly minimized the expected “Red Wave.” Still, in 2024, voters seemed to snap all the way back in the other direction and handed Trump and the Republican Party the White House and both houses of Congress. And now, only two years later, Trump’s approval rating is at a historic low, and not only Democrats but even “democratic socialists” are enjoying all the political momentum, as we saw in Tuesday’s elections.
It can be tempting to chalk these dramatic political swings up to any one of the many stories that dominate the news cycle at the moment. Or, on the other side, to some seemingly inexplicable global forces of chaos that seem to be driving all aspects of public life these last few years.
But, in truth, there’s a very clear explanation for the political whiplash we’ve been experiencing in these last few elections: inflation.
Now, too often, any discussion of inflation becomes hyper-focused on one unusually high driver of last month’s CPI report or a slightly better-than-expected month-over-month reading in the core PCE.
But that is not how most people have experienced and are experiencing inflation.
To better understand how inflation has changed our politics, we have to zoom out.
As we cover here a lot, inflation has been a ubiquitous and escalating problem in this country for a long time. Prices naturally fall as economies grow. It’s only because the political class was able to take control of the monetary and banking system over the last fifty to a hundred years that the sort of permanent price inflation we’re supposed to consider normal is even possible.
In other words, inflation isn’t a new problem. But, back in 2019, it was mostly a background issue. Prices were rising, but slowly. And the entire field of “respectable,” establishment-friendly economists were telling everyone that the 2 percent inflation rate was optimal. Those obsessed with politics were focused on non-economic stories like the Trump impeachment, while the politically-disinterested majority were focused on their own lives.
But then covid started to spread, and state and local governments across the US began locking down the country with the full support of the federal government. And a primary aspect of that federal support came from the Federal Reserve.
The central bank printed trillions of new dollars to help finance the enormous economic “rescue plans” that Congress passed to make the complete shutdown of huge swaths of the economy possible. The Fed created a little over six trillion dollars in the first two years of the decade. And most of it was injected straight into the economy. That massive increase in the monetary supply greatly lowered the value of every dollar. The pain that would eventually follow was unavoidable.
However, importantly, the economic pain would not be felt right away, and it would not be experienced equally. As economists have been explaining for hundreds of years, when governments print money and send it to their friends and cronies or use it to fund government programs, the resulting loss of purchasing power is not instantaneous. It occurs over time as the new money works its way through the economy. Those who get the new money first get to use it at the old, unadjusted prices. As they spend, they bid prices up, forcing those who get the new money last to pay higher prices before the new dollars even reach them.
Monetary inflation is, literally, a transfer of wealth from the people who get the money last to the people who get it first. And, because it’s hard for the victims of this forced transfer to detect it at first or connect their later resulting troubles to the true culprit, it’s become the political class’s favorite way to quietly move wealth to friends and allies. This is exactly what they did during the covid pandemic, at a scale that’s almost hard to comprehend. The government printed so much money that, today, one in every three dollars in existence was created after 2019.
So, as governments finally began to relent and allow people to return to normal life, we were met with an enormous jump in prices. In 2022, prices rose faster than they had in four decades. And, in the years since, even though the rate of price increases has slowed, prices are still rising faster than we’ve seen in a long time.
But remember, most people are not combing through inflation reports or obsessing over the data. They’re comparing their experience today with how it was before. And before, in this case, means 2019. Prices have increased by 30 percent since then. Some prices have gone up even higher, such as with coffee, beef, and—especially this year—energy. But, overall, there is visceral, widespread, and appropriate frustration that prices are not normal right now, and, further, that the way these price increases have played out has made us poorer. And that’s correct.
Further, the sheer scale of this monetary theft forced the issue out beyond the normal political and ideological silos. Swing voters, political independents, and—most significantly—the politically disinterested were very angry about inflation and, understandably, put the blame on whoever was in office. That gave a tremendous advantage to any political candidate who made improving the cost of living a centerpiece of their campaign and who, importantly, was perceived as having been out of power as the inflation crisis materialized.
That is what happened in 2024 with Trump. In fact, that basic dynamic was present worldwide. 2024 was the first election since 1905 where every developed-country incumbent party lost vote share. These are countries that either operate within the dollar system or under their own inflationist central banks. Americans are not the only ones dealing with this.
However, what had been an advantage for Trump in the run-up to 2024 began turning into a disadvantage as Trump and Congressional Republicans showed no interest in going after the actual root of the inflation crisis. The inflationist racket run out of the Federal Reserve is too lucrative and empowering for the political class to ever roll it back absent extreme public pressure. Trump, in fact, has pushed for the Fed to print more money so he could pretend the artificially boosted economy was his doing.
Republicans instead used the public’s anger to justify unrelated pet policy projects and hoped the public would grow used to the new price level and wealth distribution. To push that along, administration officials took after their predecessors in the Biden administration. They cherry-picked positive economic data, dishonestly conflated inflation (or price increases) slowing down with prices actually coming down, and, above all, tried to declare over and over again that the economy was great.
Then, of course, Trump poured fuel on the fire by launching a war on Iran that led to a completely predictable jump in energy prices. And, by doing so, he helped reverse the dynamic that had helped him win in 2024. This time around, it was the Democrats—especially the anti-establishment democratic socialists—who had the advantage of being able to present themselves as outsiders with no hand in bringing about this “affordability crisis,” but every intention of fixing it.
However, as we’ll see a bit over the next two years, and especially if they hold onto Congress and win the White House in 2028, the Democrats also have no interest in actually going after the central bank that lies at the root of this inflation crisis. They, like Republicans, merely want to steer it towards their own partisan ends. But, even more so than Republicans, the Left’s sought-after levels of government spending would require another significant increase in money printing—further fueling the crisis that’s currently helping them win.
Which means that, in all likelihood, the Democrats and democratic socialists will soon be in the same precarious position Republicans now find themselves in. When that happens, the public will look elsewhere for answers and leaders—untainted by having held office in recent years—who can offer a path out. It’s up to those of us who do understand the true cause and cure of the inflation crisis to be ready. Because the advantage we’ve seen swing around wildly may soon lie with us. And we cannot ignore that opportunity.
