All Roads Lead To Inflation

The perfect economic storm is here, and every policy is pushing prices higher.

By Dennis. M. Dodo

Aiden Consulting — Curated Analytics

March 10, 2026

Over the past few weeks, we have seen a convergence of conflict and policy that is squeezing the American consumer from every angle. It is not just one thing going wrong. It is everything, all at once. The protections that once helped the U.S. economy are being taken apart, replaced by a system where every decision seems to lead in the same direction: higher prices for working families.

And if you follow the president's own social media accounts, you will see him cheering on every single one of these policies in real time. The disconnect between the reality on the ground and the celebration online is honestly kind of wild.

Welcome to the new inflation reality.

The Geopolitical Problem

Conflict with Iran has sent oil prices above 100 dollars per barrel for the first time since 2022. But to focus only on the price of crude oil is to miss the bigger picture. The real problem is what happens next. Refining capacity around the world is incredibly tight. When tensions rise in the Strait of Hormuz, through which a fifth of the world's oil passes, it does not just cut off supply. It breaks the entire system.

Diesel powers our supply chains. It fuels the trucks, trains, and machinery that move goods from ports to warehouses to store shelves. When the price of diesel spikes, it is not just a problem at the gas station. It is an immediate tax on everything physical. Every product you see in a store had to travel there somehow. When travel costs go up, shelf prices follow.

The Tariff Wall

Tariffs are officially back. Despite legal challenges and market chaos, the administration has pushed forward with new duties. Average tariff rates have climbed to levels not seen in decades. The Yale Budget Lab estimates this costs the average household between 600 and 1,300 dollars every year.

But here is where it gets interesting. The president has been all over Truth Social bragging about this. In January, he posted: "Great Financial Numbers were released today. Our Country has never done better! So many people ask me the reason for this, and I tell them, in just one word. TARIFFS! We've taken in Hundreds of Billions of Dollars, with virtually No Inflation."

Virtually no inflation. That is what he said.

The problem? Harvard economists estimate that Trump's 2025 tariffs actually lifted the overall U.S. inflation rate by about 0.92 percentage points in January alone. That is the opposite of "virtually no inflation." This is not a trade war with another country. It is a tax hike on American consumers. And it is hitting at the worst possible time. Companies have been absorbing some costs to avoid upsetting customers, but that strategy has limits. When companies have used up their pre-tariff inventory and cannot shift supply chains fast enough, prices will adjust upward. There is no way around it.

The Workforce Problem

The immigration crackdown is creating shortages in places the economy can least afford them. Actions against undocumented workers are removing people from jobs in construction, farming, and food packaging. These are sectors where American-born workers have historically been less available.

When you cannot find workers to build homes, you get a housing crisis. Fewer homes built means higher rent for everyone. When you cannot find workers to harvest crops, you get a food crisis. The administration itself admitted in a federal filing that stopping the flow of immigrant workers threatens the stability of domestic food production and prices for American consumers. Construction companies have already cut thousands of jobs, which will slow new housing and keep rent prices high for years. We are trading workers for scarcity, and scarcity always costs more.

Turning Inward Backfires

While the United States turns inward, building walls and cutting ties, the rest of the world is moving on. The European Union has been quietly making major trade deals with India and South America, essentially rerouting the global economy around America.

This is not just about hurt feelings. It is about basic economics. By isolating ourselves, we lose the ability to buy cheaper goods from other countries. We force domestic industries to buy from more expensive local sources or from countries that charge higher prices. The long-term cost of this isolation is a permanent increase in the cost of making things in America. We are pricing ourselves out of the world, and then wondering why everything costs more at home.

The Fed Under Fire

Meanwhile, the president has been waging a very public war on the Federal Reserve. In late January, after the Fed held interest rates steady, Trump took to Truth Social to attack Chair Jerome Powell directly, calling him "Jerome 'Too Late' Powell" and claiming that "even this fool has admitted that inflation is no longer a problem."

Here is the thing though. Powell and the Fed have made it pretty clear that they are not cutting rates aggressively because inflation is still hanging around. The "core" inflation measure that the Fed watches most closely actually ticked up in recent months. Powell himself noted that higher goods inflation has been "boosted by the effects of tariffs."

So the president is demanding lower interest rates while pursuing policies that keep inflation elevated. Lower rates when inflation is still running hot would actually make the problem worse. It is like stepping on the gas and the brake at the same time and being confused why the car is shaking.

Confidence Is Shaking

The numbers are starting to tell a grim story. Consumer confidence has dropped to its lowest level in more than a decade. Surveys show that Americans are feeling worse about the future. They are pulling back on spending. Hiring is slowing down.

This creates a nightmare situation for the Federal Reserve. Normally, a slowing economy brings inflation down. When people spend less, prices stop rising so fast. But here, inflation is being driven by outside forces — war, tariffs, labor shortages — that do not respond to interest rates. You cannot fix a supply chain problem by making loans more expensive. This leaves the Fed paralyzed. They cannot cut rates to help the economy grow without risking even higher inflation down the road.

During the State of the Union, the president claimed that "inflation at record levels" is what he inherited and that now prices are "plummeting downward." But the numbers tell a different story. Inflation was actually down to 3 percent by the time he took office, and while it has eased a bit more to 2.4 percent, that is still above the Fed's target. And prices overall are not plummeting. They are still going up, just slightly slower than before.

On gas prices, he claimed they are "now below $2.30 a gallon in most states." The actual national average? 2.95. The only state even close to 2.30 was Oklahoma at 2.37. And the famous 1.99 gas he mentioned? Available at exactly four stations out of about 150,000 across the country.

The Stock Market Mirage

Record high stock prices have been something of a mirage. They were propped up by a few narrow factors: massive tech company profits, a long period of low oil prices, and a wave of cooling inflation. Two of those supports are now gone.

Oil is up. Inflation is up. Company profits are about to be squeezed as they are forced to choose between raising prices and losing customers. Major research firms have already downgraded their outlook for global stocks, warning that the spike in energy prices and the worsening global situation have significantly increased the chance of an economic downturn. When stock values fall under the weight of stubborn inflation and a consumer who cannot spend anymore, the landing will not be soft.

The president has boasted about "$18 trillion" in new investment commitments. But his own White House website tracks the number at 9.7 trillion, barely half of what he claims. And even that number includes pledges that experts say may never actually happen. Qatar and the UAE each pledged more than a trillion dollars, which is more than their entire GDPs. That is not a done deal. That is a press release.

The Dollar Problem Nobody Is Talking About

There is another piece of this puzzle that does not get as much attention but might matter even more in the long run. It is about the dollar itself and whether the rest of the world is starting to walk away from it.

For decades, the U.S. dollar has been the world's reserve currency. That means countries hold dollars in their central banks. They use dollars to trade with each other. They buy U.S. Treasury bonds as a safe place to park their money. This system has given the United States an incredible advantage. We can borrow money more cheaply than almost anyone else because there is always someone in the world willing to buy U.S. debt.

But that advantage is starting to show some cracks.

China Is Walking Away

The biggest story here is China. According to U.S. Treasury data, China has been selling off its American debt for eight straight years now. Back in 2013, China held about 1.3 trillion dollars in U.S. Treasury bonds. As of the end of last year, that number had fallen to just 683 billion dollars — basically a cut in half. China has fallen from the second largest holder of U.S. debt to third place, getting passed by the United Kingdom.

Other countries are doing the same thing. India sold off 36 billion dollars worth last year. Brazil sold about 33 billion. Among the BRICS nations, most are quietly reducing their exposure to the dollar.

The IMF Is Worried

Here is a sentence you do not see every day. The International Monetary Fund is running stress tests that include scenarios where the world suddenly dumps its dollar assets. The IMF's managing director, Kristalina Georgieva, said publicly that the fund is modeling "unthinkable" events, including the possibility of a run on the dollar. She pointed to concerns about tariffs, attacks on the Federal Reserve's independence, and broader worries about the rule of law in the United States.

Since Trump returned to office, the dollar has fallen more than 9 percent against a basket of major currencies and nearly 12 percent against the euro. That is a pretty big move for a currency that is supposed to be the world's safe haven.

And here is the part that should worry everyone. In April 2025, during a period of market chaos, something happened that economists had not really seen before. The dollar fell and interest rates on U.S. bonds went up at the same time. Normally, when things get scary, money flows into the dollar and U.S. bonds. That is the "flight to safety" that has protected us for decades. But this time, the opposite happened. Investors treated U.S. assets not as a safe place to hide, but as something they needed to be paid extra to hold.

Why This Matters for Inflation

So what does any of this have to do with prices at the grocery store? Everything.

If the rest of the world stops wanting to hold dollars and U.S. bonds, a few things happen. First, the dollar gets weaker. A weaker dollar means everything we buy from other countries gets more expensive. That is more inflation. Second, if foreign buyers do not show up at Treasury auctions, the U.S. government has to find buyers somewhere else — and those buyers are going to demand higher interest rates. Higher interest rates on government debt flow through to everything else: mortgage rates, car loans, credit cards.

Third, if countries are moving away from the dollar, they are moving toward something else. And right now, that something else is gold. Gold prices have smashed through record after record, recently hitting 5,000 dollars an ounce for the first time. Morgan Stanley pointed out that central banks now hold more value in gold than they do in U.S. Treasury bonds for the first time since 1996. When central banks buy gold instead of dollars, it is a pretty clear signal about what they think of the future.

The Contradiction

The president has spent months attacking the Federal Reserve, demanding lower interest rates, and pushing policies that make other countries nervous about holding dollars. At the same time, he has posted about how great the economy is doing.

But you cannot attack the independence of the central bank and expect the rest of the world to keep trusting your currency. You cannot threaten to take over Greenland from a NATO ally and expect European investors to keep buying your bonds without thinking twice. You cannot turn the Fed into a political tool and then wonder why the dollar is losing its status as the world's safe asset.

The Nomura Research Institute put it pretty directly. They said 2026 could be the year the dollar's status as the reserve currency begins to falter. The biggest reason? Political interference in the Federal Reserve, which erodes confidence in the dollar.

But Wait, There Is a Catch

Here is the weird part. Despite all of this, foreign investors are still buying U.S. debt. In fact, they bought more last year. Total foreign holdings of U.S. Treasuries actually went up by about 650 billion dollars. Japan and the UK have been big buyers.

Why? Because what else are they going to buy? European bonds have their own problems. The eurozone is dealing with slow growth and political fights. Japanese bonds pay basically nothing. Chinese bonds come with capital controls and a government that can change the rules whenever it wants.

As one economist put it, the U.S. dollar is like the tallest kid in kindergarten. It might not be very tall, but it looks taller than everyone else.

The Brookings Institution looked at the data and found that central banks are not actually dumping dollars in a panic. The share of global reserves held in dollars has been declining slowly for years, but there is no evidence of a sudden collapse since Trump took office. So the situation is more complicated than just saying the dollar is finished. It is not finished. But it is under pressure. And that pressure is going to show up in higher borrowing costs and higher prices over time.

What It All Adds Up To

These are not separate problems. They are the same problem, piling on top of each other.

Conflict drives up energy, which drives up transport costs. Tariffs drive up the cost of imported goods. Labor shortages drive up the cost of services and construction. Turning inward prevents us from finding cheaper alternatives abroad. A falling stock market destroys the confidence that kept consumers spending. And a weakening dollar makes everything we import more expensive while raising the cost of borrowing for everyone.

The president posts on Truth Social that tariffs are bringing in "Hundreds of Billions of Dollars, with virtually No Inflation." He calls other countries "cash machines" for the U.S. economy. He demands that the Fed slash interest rates because "even this moron admits inflation is no longer a problem."

But the economists keep running the numbers. And the numbers say something different. They say tariffs are adding to inflation, not magically avoiding it. They say prices are still going up, especially for things like beef and electricity. They say the Fed cannot cut rates without making everything worse. They say the slow erosion of confidence in the dollar will eventually mean higher costs for American families.

The Chinese government has been quietly telling banks to trim their Treasury holdings. European investors have pulled back after the Greenland threats. The IMF is running stress tests on a world where the dollar is no longer the safe asset everyone runs to.

All roads lead to inflation. And for the average American family, every road leads to a higher bill at the grocery store, the gas station, and for rent.

The perfect economic storm is not coming. It is already here.

You can track it yourself. Just watch the policy. Watch the prices. Watch what other countries are doing with their money. And maybe check Truth Social every now and then. The administration is telling you exactly what it is doing, in real time, in all caps. The only question is whether anyone is listening.