Inflation is much worse than Washington seems willing to admit. With each month that goes by, however, the evidence is increasing—just like prices.

The White House’s Office of Management and Budget (OMB) recently more than doubled its inflation forecast for the year. Their new estimate is 4.8% for 2021, but the numbers are not adding up—and that has been a trend this year.

In February, OMB predicted only 2% inflation for 2021. That estimate was made at a time when prices had already risen 1% in just the first two months of the year, according to the Consumer Price Index (CPI). The underlying fundamentals never supported such a low prediction.

The revised estimate of 4.8% is even more absurd. The only way the White House’s latest forecast can be accurate is if prices suddenly cease rising and stay at their July levels through December.

Someone at the White House is clearly out of touch with the math at work here.

After prices jumped a steep 4.4% in the first seven months of the year, a 7.7% annual rate, the White House suddenly expects those prices to flatline for five months and not budge upward at all. While the CPI for August has not been reported yet, anyone who has gone to the grocery store lately can see that prices are steadily continuing their upward climb.

On what basis could any economist make the forecasts being produced by the OMB this year? The economic data simply don’t support these forecasts.

The Bureau of Economic Analysis (BEA) recently released the revised estimate of Gross Domestic Product (GDP) for the second quarter of this year. The numbers show that nominal GDP grew 13.2% but real GDP grew only 6.6%, both annualized rates. Unlike nominal GDP, real GDP accounts for inflation and the decreased purchasing power of the dollar. That makes real GDP a much better indicator of true economic growth.

The troubling aspect about the report is the inflation rate.

Subtracting real GDP from nominal GDP yields the annualized inflation rate for the period in question. This simple calculation tells the reader that inflation was running very hot at an annualized rate of 6.6% from April through June of this year. As inflation continues to surpass OMB’s projections, it exposes the faulty assumptions in the president’s budget, displaying the direness of the long-term fiscal situation.

It seems unlikely that no one at the White House saw this official government report. Nevertheless, the economists there apparently think all the inflationary pressures in the economy ended in July.

Regardless of what the prognosticators at the White House—or anywhere else—see in their crystal balls, they ultimately have no control over inflation. The Federal Reserve (Fed) is continuing to purchase  $120 billion of securities a month. This is expanding its balance sheet, creating money, and causing inflation.

For inflation to end and for prices to stabilize, the Fed needs to drastically scale back (and perhaps even cease) its purchases of Treasuries and mortgage-backed securities. Interest rates must be allowed to float freely, and a reserve requirement should be reinstated to ensure banking institutions maintain a reasonably safe quantity of deposits on hand.

Until these things happen, prices will unrelentingly march higher, robbing Americans of their wealth one day—and one dollar—at a time.

In fairness to those leading the Fed, achieving price stability is an arduous task, made even more difficult by profligate deficit spending in Congress. That is just one reason why the country needs fiscal rules to rein in spending.

Along with price stability, the Fed has an unachievable mandate to also promote full employment in the long run. The country would be much better served if the Fed was replaced with monetary rules. A small group of people trying to manage the money supply has proven disastrous. Inflation under a Fed with no gold constraint has averaged 20 times higher than before the Fed was created.

Continuing down the current monetary road will only precipitate further harm. Clearly, the people positioned at the levers of power did not think this through.