Incentivize economic growth and innovation by reducing corporate and individual tax rates. For most Americans, inflation has become public enemy number one. After all, the rate of inflation is at a 41-year high of 8.5%, costing the average American family $327 per month, with no sign of abating anytime soon.

While much has been made regarding who or what is to blame for the present inflation crisis, a much more relevant query remains overlooked too often: How can we solve it?

Fortunately, based on past precedent, we know there is a very simple solution that, if implemented, would make inflation wane.

The solution is predicated on a two-pronged approach.

First, increase the value of the dollar.

Second, increase production of goods and services.

Because inflation, at its most basic level, is too many dollars chasing too few goods and services, reducing the money supply while ratcheting up production of goods and services addresses both of these problems in one fell swoop.

Of course, this is easier said than done.

Since the 2008 financial crisis, the Federal Reserve has printed money at an absolutely appalling and unsustainable pace.

In 2007, the Federal Reserve's balance sheet totaled less than $1 trillion. Today, it stands at $8.9 trillion. Even more telling, the M2 Money Supply – which measures the total number of dollars in circulation – has grown from $7.5 trillion in late 2007 to a whopping $22 trillion as of this writing.

For far too long, the Federal Reserve has pumped money into the system via super-low interest rates, debasing the value of the U.S. dollar in the process.

Although it will be painful in the short term, it is imperative that the Federal Reserve reverse course and raise interest rates. Fortunately, it seems like Jerome Powell, chair of the Federal Reserve, has finally come to this conclusion. However, it remains to be seen if he will stay the course or resort back to "loose" monetary policy if an economic downturn occurs in the meantime.

While reducing the money supply tackles part of the inflation problem, it is also vital to put forth policies that incentivize economic growth and innovation. Arguably, this is best done when the government lowers taxes on individuals and corporations while reducing regulations and other barriers to economic growth.

Currently, the U.S. corporate income tax rate stands at 21%. Although many Democrats are calling for this and other taxes to be raised, that would have a deleterious impact on current levels of production. On the contrary, if the corporate income tax were to be lessened, businesses would be flush with cash, which would spur job creation, innovation and more prosperity.

Reducing (and simplifying) individual tax rates would also have a tremendous impact on economic growth because it would put more money in people's wallets, allowing them to increase their discretionary spending while raising their standard of living.

Although tax rates tend to be a central focus of policy wonks, we would be remiss to ignore the economic effect of the regulatory leviathan across all levels of government in the United States. As the U.S. Chamber of Commerce notes, "Beyond the federal level, small businesses have to deal with a maze of red tape from state and local governments to start a business, apply for a business or occupational license, hire employees, pay taxes, enforce contracts, and even close a business. Regulatory complexity is death by a thousand cuts to America's small businesses."

Fortuitously, for those who champion these commonsense solutions, we also have ample historical evidence that proves they are a winning formula for slaying inflation.

In the early 1920s, the United States was caught in the grips of the post-World War I recession. Due to exorbitant wartime spending, a mammoth regulatory state to steer wartime production and onerous taxes to bear the wartime costs, the U.S. economy was in the dumps. However, this all changed rather quickly, when President Warren G. Harding entered the Oval Office and slashed spending, cut red tape and reduced taxes, which ushered in a decade of prosperity known as the Roaring '20s.

This same playbook was used by President Ronald Reagan, who inherited an economy stuck in stagflation. By raising interest rates, then cutting taxes, reducing regulations and at least trying to rein in federal spending, Reagan's inflation-slaying policies produced a 30-year economic boom that gave birth to the Information Age.

As mentioned before, enacting these policies is easier said than done. Austerity is not always popular in the short term. Neither is raising interest rates, which makes large purchases such as cars and homes much more expensive.

However, for far too long we have allowed these problems to fester. The more we wait, the worse it will get. At this point, we simply must take our tried-and-true economic medicine.

• Chris Talgo (ctalgo@heartland.org) is senior editor at The Heartland Institute.