<p><img src="https://www.moneymetals.com/uploads/content/Chart-1-Inflation-1970-2022-Peter-St-Onge-Money-Metals-min.jpg" width="400" height="256" alt="" style="display: block; margin-left: auto; margin-right: auto;" /></p>
<p>Bidenflation is over.</p>
<p>But if you feel like prices still aren’t falling, you’re not alone.</p>
<p>Since Donald Trump took office, inflation has plunged from a Biden-era 5 percent to just 1.4%.</p>
<p>This is actually below the Fed's target of 2%. Normally, at this point, the Fed would be trying to pump inflation since it's “too low.”</p>
<p>Of course, for the American people, 1.4% is not “too low.” What they want is falling prices, as in take it back to pre-Biden prices.</p>
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<p>Will that happen?</p>
<p>In short, no. Prices will never durably fall until we get rid of the Federal Reserve.</p>
<p>Because deflation — falling prices — is the #1 thing the Fed fears. Not unemployment. Not recession. Not nuclear war.</p>
<p>This comes from that core propaganda that created central banks: The false claim that deflation itself is bad.</p>
<h3>Good Deflation</h3>
<p>There are two very different kinds of deflation.</p>
<p>There's the healthy — in fact, normal — deflation you automatically get from a growing economy. And the unhealthy deflation when a central-bank financial bubble collapses.</p>
<p>So, walking through, inflation is about how much money is chasing how much goods.</p>
<p>More money gives you inflation — too much money chasing goods.</p>
<p>More goods gives you deflation — more goods for money to chase.</p>
<p>So if your economy is growing, it means you're producing more goods. So it takes fewer dollars to buy an apple — a dollar an apple when it used to be 2.</p>
<p>That deflation is good — it means you're growing.</p>
<h2>Central Bank Deflation</h2>
<p>But there's a second bad deflation called “debt deflation.”</p>
<p>This is where the amount of goods doesn't change, the amount of money collapses. Specifically, mass defaults that collapse the <a href="https://www.moneymetals.com/news/2025/02/08/debt-spending-and-economic-survival-peter-st-onges-take-003821" rel="noreferrer">money substitutes called debt</a>.</p>
<p>That means the surviving dollars also buy more — a dollar buys an apple. Not because there's more apples, but because there's effectively less money.</p>
<p><img src="https://www.moneymetals.com/uploads/content/Chart-2-Total-US-Debt-as-Percent-of-GDP-Peter-St-Onge-Money-Metals.jpg" width="400" height="245" alt="" style="display: block; margin-left: auto; margin-right: auto;" /></p>
<p>This normally doesn't happen — outside catastrophic war, you don't get massive economy-wide defaults.</p>
<p>Unless there's a financial crisis.</p>
<p>And what causes financial crises? Ironically enough, central banks. Who does it like clockwork?</p>
<p>They do this by making money artificially cheap with low interest rates and Quantitative Easing. And then slamming the brakes when the cheap money causes inflation.</p>
<p>The <a href="https://www.moneymetals.com/news/2025/06/19/central-banks-double-down-on-gold-as-dollar-demand-weakens-004134" rel="noreferrer">central bank boom-bust cycle</a>.</p>
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<p>Slamming the brakes causes widespread bankruptcies and defaults — less money. And it causes recession — less goods.</p>
<p>But in practice, the defaults far outrun the production. So less stuff, but a <em>lot</em> less money.</p>
<p>Sometimes this can be very big: in the 1919 and 1930's depressions peak deflation was 30 to 40 percent — a <a href="https://www.moneymetals.com/news/2025/06/13/dollar-hits-3-year-low-heres-what-it-means-for-precious-metals-004126" rel="noreferrer">dollar bought almost twice</a> what it used to.</p>
<p>Which was catastrophic for borrowers: A farmer or small business suddenly had to pay effectively twice as much on their loans. All thanks to the Fed’s boom-bust.</p>
<p><img src="https://www.moneymetals.com/uploads/content/Chart-3-Economic-Data-1920-1921-Recession-Peter-St-Onge-Money-Metals.jpg" width="400" height="457" alt="" style="display: block; margin-left: auto; margin-right: auto;" /><img src="https://www.moneymetals.com/uploads/content/Chart-4-Great-Depression-1920-1940-Peter-St-Onge-Money-Metals.jpg" width="400" height="417" alt="" style="display: block; margin-left: auto; margin-right: auto;" /></p>
<p>Nowadays, debt deflation is much smaller — it peaked at 2% in the 2008 crisis.</p>
<p>Because nowadays, central banks immediately jump in to dump freshly printed money into markets.</p>
<p>So, setting aside the hilarious irony that the Fed fights good deflation specifically because it creates bad deflation, this means even after a catastrophic inflation like Biden or the 1970’s the Fed will never let prices come back down.</p>
<p><img src="https://www.moneymetals.com/uploads/content/Image-Grocery-Store-Protest-Price-Inflation-Lower-Food-Prices-or-Close-Your-Doors-Peter-St-Onge-Money-Metals.jpg" width="400" height="269" alt="" style="display: block; margin-left: auto; margin-right: auto;" /></p>
