Joe Biden identifies as the president of Zimbabwe when the mood strikes.
The Bureau of Labor Statistics (BLS) reported this week that prices rose year-to-year by 6.2 percent. It isn’t exactly Robert Mugabe. But ain’t Paul Volcker, either.
The last time the annual consumer price index (CPI) reached such heights occurred in November of 1990, when Vanilla Ice’s “Ice Ice Baby” sat atop the Billboard Hot 100, Home Alone reigned at the box office, and the Soviet Union, Frank Capra, and Eastern Airlines still existed.
Joe Biden blames an act of God instead of government.
“On the one hand, we’re facing new disruptions to our supplies,” he explained Wednesday in Baltimore with ships in the background. “At the same time, we’re also experiencing higher demand for our goods because wages are up as well as people have money in the bank. Because of the strength of our economic recovery American families have been able to buy more products. But guess what? They’re not going out to dinner and lunch and local bars because of Covid. So, what are they doing? They’re staying home and ordering online and they’re buying product.”
Okay, so maybe he blames not the scheming in the Eternal Kingdom but the Middle Kingdom. Either/or, he still refuses to see inflation as a problem created in Washington but felt in wallets. Covid did it. Mysterious supply chains did it. Our printing presses did nothing of the sort. The president continued in Baltimore, “With more people with money buying product, and less product to buy, what happens? The supply chain is the reason.… Prices go up.”
The BLS noted that gasoline spiked by 49.6 percent, used vehicles by 26.4 percent, and food by 5.3 percent since a year ago. But your service station proprietor, used-car salesman, and grocer did not raise their prices. The Federal Reserve, at the instigation of the federal government, devalued your money.
When just about everything skyrockets in price — just one (medical care commodities) of the 21 BLS line items diminished in cost over the last year — the supply-and-demand issue usually involves a macro (currency debasement) phenomenon and not numerous micro (supply issues with this, demand issues with that) trends.
The Federal Reserve’s balance sheet now exceeds $8.5 trillion. In September of 2019, when the consumer price index stood near the Fed two-percent target at 1.7 percent, the balance sheet registered just beneath $3.8 trillion. It more than doubled in 26 months.
It does not take Friedrich Hayek to grasp cause and effect. Salma Hayek could. A sudden, dramatic glut in currency means a sudden, dramatic rise in prices.
President Biden thinks otherwise.
On Wednesday in Baltimore, he acknowledged that “getting prices down” confronts as “one of the most pressing economic concerns of the American people.” Then he boasted that his trillion-dollar infrastructure bill, which he promises to sign Monday, serves to “reduce the costs of goods.” He then urged passage of his “totally paid for” Build Back Better Act.
He misses the point on inflation or, more likely, he misleads Americans on the cause of inflation. Fiscal overreach led to monetary bailouts. Because Biden wants more fiscal overreach, he devalues its central role in devaluing dollars.
We struggle to pay for necessary products now because the government paid for wasteful programs for the last two years without taxes or bonds to pick up the tab. With returns on securities suppressed to artificially low levels, foreigners normally eager for a reliable return on investment balked at lending the Treasury money. But even if they had jumped at the chance, trillions of dollars do not grow on trees — even in Beijing, Tokyo, London, and other financial meccas that enable U.S. debt. They do not possess enough money to bankroll Washington’s expensive fantasies.
So, President Biden, and President Trump before him, pressured the Federal Reserve to loosen the money supply. This eventually tightened your budget. The U.S. monetized its debt. This cheapened the money in our pockets, stealthily raised taxes on millions pushed into higher brackets, and dissuaded so many thinking about lending money to us from doing so because of the dishonesty in transforming $1 into 94 cents in one year.
Should fat people make a pound 19 ounces or short people lobby for a ten-inch foot?
Inflation, a euphemism for dishonest money, amounts to just that. It certainly does not amount to the dollar in your pocket the day before yesterday.