Much of today’s economic debate is plagued by a basic category error. Policymakers, commentators and even central bankers talk endlessly about inflation, when what households actually experience is something different: prices.

Inflation is the rate at which prices are changing. Prices are today’s cost. And for millions of Americans, the problem isn’t that prices are rising quickly — it’s that they already are too high and have been so for too long.

This distinction matters because it reveals a deeper government failure. Monetary policy is good at influencing inflation over time. It is far less effective at reducing specific prices or restoring affordability once structural distortions are baked in. Confusing the two leads to bad economic policy.

The affordability crisis, especially in housing, health care and education, is not about Federal Reserve decisions. High prices in these areas are the result of non-monetary policy choices that restrict supply, subsidize demand or both. Treating them as monetary problems invites a response that is ineffective at best and counterproductive at worst.

Start with housing. The United States suffers from constrained supply, which cannot keep up with growing demand. Zoning rules, permitting delays, environmental reviews and local political vetoes have made it difficult or impossible to build where people want to live. These constraints raise prices by design. Families that own their homes want to protect their investment, which requires restricting supply growth. Their gain comes at the expense of inadequate shelter for millions, mostly younger workers and families.

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