If you believe the CPI, inflation is at least close to being under control. But the PPI tells a different story.
So, what’s up with inflation?
In this episode of the Midweek Memo Podcast, host Mike Maharrey breaks down the inflation data. He explains why tariffs couldn’t be the sole factor driving the recent spike in producer prices and reveals the real culprit.
It’s government doing what government has done throughout history – devaluing your money.
So, what can you do about it?
Mike opens the show reminiscing about remodeling his house.
“We ran into a lot of inexplicable things. The previous owners took a lot of, shall we say, shortcuts when it came to home maintenance and repairs. For instance, there was some termite-eaten wood that they just painted over. … And no, the damage did not come after the paint. It was obvious it was a cover-up job. It’s hard to wrap my head around why you would paint over something like that, but out of sight, out of mind, I guess? Or maybe they did it right before they put the house on the market so people wouldn’t notice.
“But you know, a lot of people take shortcuts when it comes to fixing things…especially things they don’t want to or simply can’t fix.
“Iran is taking this approach with its money.”
Mike explains that the Iranian government is considering a plan that would remove four zeros from the country’s currency.
“Imagine if the U.S. government chopped a couple of zeros off a $100 bill, turning it into a $1 bill. It’s like that.”
Of course, this wouldn’t change anything for the Iranian people, other than make calculations a little easier.
“But it will make government people feel better because it might create the illusion of a stable currency – at least for a minute.”
How did Iran get in this position?
The government created significant inflation by borrowing money from the Iranian central bank to cover its spending deficits.
“When the bank funds these loans, it uses money created out of thin air. The U.S. central bank employs a similar (albeit less direct) scheme to fund federal government deficits. Through quantitative easing programs (QE), the Fed buys U.S. debt on the open market with money created out of thin air. The central bank basically puts its big fat thumb on the bond market, creating artificial demand for Treasuries, and allows the government to borrow more than it otherwise could at a lower interest rate. While less direct than directly loaning money to the government like Iran’s central bank, the process has the same inflationary effect.”
Mike points out that the plot of the Iranian’s story is almost as old as money itself.
“The government devalued the currency for its own purposes. It’s good old monetary debasement, and it’s been going on for thousands of years.”
Mike explains some of the ways governments have debased currency in the past, including coin clipping, lowering the purity of coins, revaluing gold, and good old-fashioned money printing.
“It’s easy to look at Iran with a critical eye and call them big dummies for lopping zeros off their money. However, the U.S. has pulled similar shenanigans. The federal government was just a little more sophisticated in its approach.”
Mike highlights some key moments in U.S. monetary history, including FDR’s confiscation scheme, his revaluation of gold, President Johnson’s coinage act, and Richard Nixon’s final blow to the gold standard.
“The sad reality is that governments will continue to debase your money because money creation is the lifeblood of big government. And governments will always look for ways to pull the wool over your eyes and make you forget that your purchasing power is declining by the day.”
So, what’s the inflation story in the U.S. today? The CPI seemed to indicate that it was generally under control. But the Producer Price Index (PPI) unexpectedly surged in July.
“Producer prices rose significantly more than expected in July, throwing markets into turmoil and calling into question that almost certain Federal Reserve interest rate cut in September.”
Keep in mind that the PPI is considered a leading inflation indicator.
But what caused this sudden surge in price inflation?
The mainstream says it’s tariffs. But Mike breaks down the data and reveals that tariffs couldn’t be the sole cause of the price spike. That’s because the service prices rose the most, and services aren’t subject to import taxes.
This raises yet another significant question: why did producer price inflation spike if it wasn’t tariffs?
“If you’re a regular listener to the podcast, you probably know the answer because I’ve been talking about it for months. Good old-fashioned monetary inflation is the most likely culprit.”
Mike explains exactly why he thinks the Federal Reserve never did enough to slay inflation, noting that monetary conditions have never been tight and the money supply has been increasing for over a year.
“This, https://www.moneymetals.com/news/2025/06/30/money-supply-expansion-this-is-inflation-004158">by definition, is inflation. It shouldn’t come as a shock that this monetary inflation is starting to bleed into producer and consumer prices.”
Mike also explains why tariffs don’t cause generalized price inflation. They raise some prices in an economy, but not all of them.
“There is only one thing that causes price levels to generally rise throughout the economy, and that is an increase in the supply of money and credit. As economist Milton Friedman put it, ‘Inflation is always and everywhere a monetary phenomenon.'”
Of course, the political class doesn’t want you to understand this. It wants you to blame inflation on other factors, keeping the focus off its culpability.
Mike points out that you can’t vote inflation away. But you can take steps to protect yourself from its impacts. You can hold real money — gold and silver.
That leads to the call to action: talk to a Money Metals’ precious metals specialist today. Call 800-800-1865.
Articles Mentioned in the Show
https://www.moneymetals.com/news/2024/04/02/what-is-quantitative-easing-and-how-does-it-work-003092" rel=”noreferrer”>What Is Quantitative Easing and How Does It Work?
https://fee.org/articles/inflation-in-one-page/" rel=”noopener noreferrer” target=”_blank”>Inflation in One Page: Henry Hazlitt
https://www.moneymetals.com/news/2024/06/28/what-in-the-world-happened-in-1971-003286" rel=”noreferrer”>What in the World Happened in 1971 (Nixon Closes the Gold Window)
https://www.moneymetals.com/news/2025/08/12/july-cpi-and-the-real-inflation-story-004261" rel=”noreferrer”>July CPI and the Real Inflation Story
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Financial Conditions Index
