The Politics of Inflation: What No One Tells Americans About the Dollar
In this editorial, Piero Lorenzo examines how U.S. inflation is driven less by economic fundamentals and more by political choices, revealing what this means for the dollar’s long-term credibility and for global investors seeking real, tangible value.
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Why Inflation Is Not What It Seems
Inflation is not simply the result of a president’s mistake. It is a consequence of how the American economic system is structured. Yet neither party dares to explain it honestly to voters. On October 28, 2025, the Federal Reserve cut its benchmark interest rate by 0.25 percentage points, lowering it from 4.00% to 3.75%. According to Reuters and CBS News, the move aimed to sustain economic momentum amid signs of slowing growth and consumer spending. (Source: Reuters, “Fed cuts rates by 25 basis points, signals caution for next meeting,” October 29, 2025) After the pandemic, the Federal Reserve and Congress created trillions of dollars to prevent a full-scale collapse. Those dollars were not born out of ideology, but necessity. Without that massive liquidity injection, millions of families and businesses would have gone bankrupt. |
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Why Politicians Stay Silent
Explaining that “we printed money to save the system, and now we are paying the price through inflation” is not a winning message in a political campaign.
So politicians take the easy route: Republicans blame the government for rising prices, while Democrats stay silent, hoping the data will eventually speak for itself.
The truth is that both parties depend on the same mechanism — the constant creation of debt and liquidity that sustains the illusion of endless growth. It keeps markets high, consumers confident, and the dollar dominant, but it weakens the real purchasing power of Americans.
Explaining that “we printed money to save the system, and now we are paying the price through inflation” is not a winning message in a political campaign.
So politicians take the easy route: Republicans blame the government for rising prices, while Democrats stay silent, hoping the data will eventually speak for itself.
The truth is that both parties depend on the same mechanism — the constant creation of debt and liquidity that sustains the illusion of endless growth. It keeps markets high, consumers confident, and the dollar dominant, but it weakens the real purchasing power of Americans.
Trump’s Strategy: Short-Term Boom, Long-Term Risk
Today, Trump is pushing for policies that will likely stimulate inflation again: lower interest rates, industrial spending, and growth at any cost. Not because he wants inflation, but because he wants a short-term boom that feels like prosperity.
Politically, it works. Economically, it’s a gamble with the credibility of the dollar.
A period of moderate inflation can create the perception of economic strength: higher asset prices, rising wages, and strong markets. But if productivity does not keep pace, the risk is that the dollar’s global trust — the foundation of American power — will slowly erode.
Today, Trump is pushing for policies that will likely stimulate inflation again: lower interest rates, industrial spending, and growth at any cost. Not because he wants inflation, but because he wants a short-term boom that feels like prosperity.
Politically, it works. Economically, it’s a gamble with the credibility of the dollar.
A period of moderate inflation can create the perception of economic strength: higher asset prices, rising wages, and strong markets. But if productivity does not keep pace, the risk is that the dollar’s global trust — the foundation of American power — will slowly erode.
The Illusion of Perceived Wealth
The United States has mastered the art of creating perceived wealth through financial markets and innovation. Wall Street multiplies value through confidence, liquidity, and expectation.
Italy and much of Europe, by contrast, have historically preserved real wealth — homes, land, and tangible assets. America manufactures financial value; Italy safeguards physical value.
Both systems have strengths. But one is built on perception, the other on permanence. The world’s confidence in the dollar determines which one prevails.
The United States has mastered the art of creating perceived wealth through financial markets and innovation. Wall Street multiplies value through confidence, liquidity, and expectation.
Italy and much of Europe, by contrast, have historically preserved real wealth — homes, land, and tangible assets. America manufactures financial value; Italy safeguards physical value.
Both systems have strengths. But one is built on perception, the other on permanence. The world’s confidence in the dollar determines which one prevails.
About the Author
By Piero Lorenzo, Real Estate Broker and Economic Analyst specializing in cross-border investments between the U.S. and Italy.
Piero Lorenzo is a California-licensed real estate broker and founder of Lorenzo International Real Estate. With over 24 years of experience in both the U.S. and Italian markets, he provides cross-border advisory services for Americans investing in Italian property, while offering insights on global economic trends that shape real wealth and value.
By Piero Lorenzo, Real Estate Broker and Economic Analyst specializing in cross-border investments between the U.S. and Italy.
Piero Lorenzo is a California-licensed real estate broker and founder of Lorenzo International Real Estate. With over 24 years of experience in both the U.S. and Italian markets, he provides cross-border advisory services for Americans investing in Italian property, while offering insights on global economic trends that shape real wealth and value.
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High Inflation and Housing Affordability in the United States
By Piero Lorenzo — San José State University (ECON 100W, Fall 2025) Awarded 114/110. This research paper examines how high inflation erodes U.S. housing affordability through three main channels: purchasing power, construction costs, and borrowing rates. It combines economic theory with empirical data from the Bureau of Labor Statistics, FRED, and the Urban Institute, offering insights relevant to policymakers and real estate professionals alike. |
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Explore more insights on real estate economics and policy at Lorenzo International Real Estate.
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