Americans are facing a cost-of-living crisis. Folks are falling hopelessly behind. Why?

In a nutshell: failed public policy. For the last four years, the federal government has been on a spending spree that would make even a drunken sailor blush. Despite tax revenues shattering records in the last several years, the federal deficit and debt have exploded by unprecedented amounts outside of a national emergency, like war or severe recession.

The culprit here is government spending—and lots of it.

Upon taking office, the Biden-Harris administration immediately began pushing their big-spending legislation through Congress. Vice President Kamala Harris was the tie-breaking vote in the Senate for two of the three largest spending bills, and she publicly supported every other spending bill.

The resultant multitrillion-dollar deficits were financed primarily by the Federal Reserve creating money out of thin air. But where did the value come from that was behind all the newly created cash? It was siphoned off from some of the value of all the dollars that already existed, in every wallet, savings account and paycheck.

As that freshly minted money sloshed through the economy, prices began to rise, not because things were more valuable, but because the dollar had lost value, and it took more dollars to buy the same thing as before.

It's like shrinking a yardstick from 36 inches to just 30 inches. It then takes 120 yards to cover a football field between end zones, instead of just 100 yards. The field isn't longer, but the yardstick has shrunk.

This is the phenomenon we call inflation, and it has cost American households dearly over the past three-and-a-half years. Prices have risen so much faster than earnings under the Biden-Harris administration that the typical American family has lost about $4,300 in annual purchasing power.

Unfortunately, the higher costs don't stop there. The Biden-Harris administration has also imposed severe costs through burdensome regulation, and official inflation metrics don't capture these regulatory costs.

That's one reason why people are so down on the economy. It's also why they're so vocal about today's higher prices, which have risen much faster than indicated by government tools like the Consumer Price Index. One study found that the Biden-Harris administration has added almost $5,000 per year, per household in regulatory costs, which is a burden above and beyond the losses from inflation.

But the same runaway government spending and borrowing that created 40-year-high inflation also pushed up interest rates on everything from auto loans to student loans. Mortgage interest rates have tripled since January 2021. Credit-card interest rates set new records.

For countless Americans, this has meant more financial pain. Unable to make it from paycheck to paycheck, families have relied on credit cards to make ends meet, racking up a record $1.14 trillion in outstanding balances. The lethal combination of record high debt and interest rates has resulting in Americans paying over $300 billion annually in credit-card finance charges for the first time ever.

The typical American family is now paying $3,600 more in annual interest payments across all kinds of debt as compared to January 2021.

For the first time since the Great Depression, a generation of Americans will likely have a lower standard of living than their parents enjoyed. The American dream of homeownership, raising children, and eventually enjoying retirement has become the exclusive purview of the wealthy.

If Americans want life to become affordable again, we must reverse the big-spending policies that created this mess in the first place.