Six Months of Falling Real Wages: Inflation Takes Its Toll

The Federal Reserve’s first rate hike since 2023 has done little to tame rising prices, with September’s CPI report showing both headline and core inflation accelerating well above the Fed’s two percent target. With wage growth falling short of price inflation for the sixth consecutive month, American workers are watching their purchasing power erode under a government committed to easy money and inflating away its debts.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Wall Street and the federal government are both addicted to artificially low interest rates, and to easy money. The federal government wants lower borrowing costs to help finance the $40-trillion federal debt. And, Wall Street and wealthy asset owners want monetary inflation to help ensure that prices for assets—i.e., real estate and stocks—continue ever upward. Yet, against the wishes of these interest groups, the Federal Reserve’s Federal Open Market Committee (FOMC) raised the policy interest rate last month. The Fed’s hand was essentially forced by political realities. As prices for food, energy, cars, and services have headed up in recent years, ordinary people have been squeezed. This has proven to dampen the popularity of the administration and the regime, so, after months of stalling, the FOMC at its September meeting finally raised the target interest rate. This was the first increase since 2023, and was a last resort in an effort to put a lid on price inflation. 

Yet, no sooner was the ink dry on the FOMC’s new policy than the easy-money lobby started formulating scenarios in which it was imagined that price inflation would fall enough in the new CPI data to justify a reversal of the FOMC’s policy. The new narrative was that we’d get a new cut to the policy rate at least as soon as early 2027. …