Fed Turkeys Gobble Up the Value of the Dollar - The American Spectator | USA News and Politics
Fed Turkeys Gobble Up the Value of the Dollar

The American Farm Bureau Federation estimates a Thanksgiving dinner for 10 at $53.31, a 14 percent increase from last year and by far the most expensive meal in the 36-year history of the holiday survey.

Do not blame farmers for a pricey Thursday. The turkeys that made the stuffed birds at the dinner table extortionate come not from rural America but from Washington.

Farmers did not make their harvest more expensive. The Fed cheapened our money.

When Jerome Powell assumed his seat as the chairman of the Federal Reserve in 2018, the central bank’s balance sheet stood at $4.4 trillion and dropping. It now stands at $8.7 trillion and climbing.

Supply and demand influence the value of everything, including, especially, money. In doubling the money supply, Powell necessarily burdened consumers with higher prices. It works that way no matter our penchant for denying this basic law of economics.

President Joe Biden renominated Powell to his post on Monday. The alternatives floated may conjure visions of Venezuela or Zimbabwe, so if not ideal, then Powell juxtaposed next to other claimants at least suggests it could actually get worse. But in rewarding Powell for reckless policies, Biden assured a continuation of reckless policies. Given the Build Back Better Act and gargantuan schemes not yet revealed, the president needs the Federal Reserve to finance his schemes through cheap money.    

“Put directly, at this moment of both enormous potential and enormous uncertainty for our economy, we need stability and independence at the Federal Reserve,” the president said Monday. “Jay’s proven the independence that I value in the Fed chair. In the last administration, he stood up to unprecedented political interference and in doing so successfully maintained the integrity and credibility of this institution. It’s just one of the many reasons that Jay has support from across the political spectrum.”

Unfortunately, Powell stood up to neither the Trump administration nor the Biden administration. He succumbed to the pressure that all first-term presidents seeking reelection put on the Federal Reserve.

Exorbitant spending pushed by both Donald Trump and Joe Biden led to exorbitant prices experienced by all. Both Trump and Biden needed cheap money to pay for massive government spending. Neither showed any will to raise taxes or cut spending elsewhere to pay for it. And their wish for Candyland-low interest rates meant that even if investors wanted to part with such enormous sums to buy the treasuries needed to finance leviathan, the deal essentially meant paying the U.S. government for the privilege of lending it money.

So how does a government fund insane fiscal policies? By nudging a central bank towards insane monetary policies. 

Creating so much money so quickly, not the “supply chain” boogeyman politicians favor as an explanation that waves off their own culpability, primarily catalyzed the higher prices.

The extreme spikes in gasoline (49.6 percent annual increase) and used vehicles (26.4 percent) illustrate the larger, across-the-board trend: in 20 price categories examined by the Bureau of Labor Statistics, 19 experienced hikes (most more modest than gas and used vehicles but far above the Fed target of two-percent inflation) over the last year. If turkeys alone witnessed a spike, then maybe the dinner-table conversation could unite in damning farmers or supermarkets. When everything, save for medical care commodities (whose minor decline stemmed from issues pertaining to the unique health crisis over the past year), jumps in price, then it seems ridiculous to scapegoat particular problems in this or that sector for the universal rise.

What do turkeys and regular unleaded and used Ford F150s all share in common? It takes money to buy them. A Wizard-of-Oz, pay-no-attention-to-that-man-behind-the-curtain vibe rings through the mantra of “supply chain issues” as the catchall explanation for price spikes. The supply chain most responsible for sticker shock is the money supply.   

And central bankers continue to expand that money supply so long as the approach of politicians to spending finds summation in gobble, gobble, gobble, gobble.

Daniel J. Flynn
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Daniel J. Flynn, a senior editor of The American Spectator, is the author of Cult City: Harvey Milk, Jim Jones, and 10 Days That Shook San Francisco (ISI Books, 2018), The War on Football (Regnery, 2013), Blue Collar Intellectuals (ISI Books, 2011), A Conservative History of the American Left (Crown Forum, 2008), Intellectual Morons (Crown Forum, 2004), and Why the Left Hates America (Prima Forum, 2002). His articles have appeared in the Los Angeles Times, Chicago Tribune, Boston Globe, New York Post, City Journal, National Review, and his own website, www.flynnfiles.com.   
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