You may have heard, “Inflation is cooling!” This is welcome news to families struggling to pay for food, rent and utilities. Finally, now they can make it to the end of the month without skipping some essentials or reluctantly digging out that credit card. They might even be able to save.

However, when they arrive at the grocery store, something is not right. Prices are still sky-high.

How is this possible? We just heard that inflation was cooling.

Yes, but when the Federal Reserve tells us inflation is cooling or easing, all it is saying is that the rate or speed of price increases is slowing.

In short, prices are still rising—just not as quickly.

The phrase “inflation is cooling” does not mean prices are coming down. This framing is clever but misleading.

So, why is everything still so expensive? Because the value of your dollar has been damaged.

Imagine a burning house. Even when the flames begin to die down or “cool,” the damage has already been done. That’s what has happened to the value of your dollar.

Since January 2021, prices on everything are up 20 percent, on average. That’s not the speed of the fire; it’s the total amount of damage. Since then, the typical American family has been paying $1,085 more monthly for the same goods and services. The family has to earn more than $13,000 annually to afford the same standard of living.

Everyone will agree that a 20 percent price jump in under four years is not normal, so what caused this? Simply, government spending and money printing. This spending and printing burned down the value of your dollars—increasing prices by 20 percent. That’s why it now takes more of them to buy the same things you usually do.

The higher prices Americans are paying result from a damaged or devalued dollar.

Some say corporate greed is the main reason for higher prices today. Are we to believe that greed fluctuates and that businessmen and corporations suddenly became greedier in the last four years?

Were they not as greedy in the decade prior, when annual inflation was steadily below or around 2 percent? Were business owners greedier in the 1970s than in the 1980s or now? The logic here does not hold up.

The only thing that can cause rising prices is the mass creation of new dollars, better known as “money printing,” to pay for federal government spending.

Let’s follow the money.

From January 2017 through December 2020, the federal government spent $20 trillion, creating a $5.5 trillion deficit. From January 2021 through December 2024, if current estimates remain on track for the fourth quarter, the federal government will spend $26 trillion—a 30 percent increase—adding an additional $7.9 trillion to the deficit.

Where did the money mostly come from to pay for these deficits? The government printed it. This spending and the deficits have fueled the fire of price inflation.

However, even if Congress could tame its habitual deficit spending sprees, the Federal Reserve (the country’s central bank) still aims to create 2 percent inflation yearly. This may sound reasonable, but 2 percent compounds and means that the fire of inflation is always burning, although sometimes, like in the last four years, it’s burning faster and hotter than others.

For American families, it means the value of their earnings and savings is being eaten away by 2 percent annually, at a minimum. Because of this, prices always move steadily upward—increasing at least two-thirds every generation.

As the great Tom Sowell said, “A $100 bill would buy less in 1998 than a $20 bill would buy in the 1960s. This means that anyone who kept his money in a safe over those years would have lost 80 percent of its value because no safe can keep your money safe from politicians who control the printing presses.”

In 2024, the fire of inflation may finally be cooling, but 20 percent of your financial house has already burned down. The damage to your family’s finances and quality of life has been done.

Don’t be fooled by word games. The bottom line is you are still paying more.

If you’re still not convinced, check out the Personal Inflation Calculator at myinflation.com to see how much more you pay monthly.