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The Biden Administration’s Cure for Inflation: Spend a Little Less (Unless You’re the Government)

Posted on Monday, June 20, 2022
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by David Lewis Schaefer
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87 Comments
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AMAC Exclusive – By David Lewis Schaefer

Biden

In a speech to the AFL-CIO last week, Biden unrepentantly remarked that he didn’t want to hear “lies” about his “reckless spending” since it was “changing people’s lives.” His remarks perfectly captured why inflation has become such a persistent problem in American life today, and why it is unlikely to go anywhere anytime soon – namely, that Biden himself either won’t acknowledge or doesn’t understand the role of his own policies in causing this crisis.

Early in his administration, Joe Biden proclaimed that we weren’t living in the age of Milton Friedman anymore. Perhaps the Friedmanite insight that Biden (or his speechwriter) had most in mind was the observation that inflation is “always and everywhere a monetary phenomenon.” That is, inflation in the strict sense is the result of governments generating a surplus in the supply of money, which results in money-holders bidding up the supply of goods.

Friedman’s observation was not a novelty. In his 1748 classic The Spirit of the Laws, the great French philosopher Montesquieu explained how the Spanish colonization of South America, which was used chiefly to extract gold for shipment home, ultimately impoverished rather than enriched Spain. Since gold has relatively few uses itself, its chief function (just like today’s fiat currency) was as a medium of exchange for real goods.

As the supply of gold rose, prices – but not the country’s real wealth – rose correspondingly. Hence Spain’s wealth and political influence declined within a century, even as the wealth and power of the free, commercial regimes of England and Holland rose. Simply giving away money to people does not in the long run make the recipients or their host country richer – a centuries-old truism that is still instructive today.

Biden’s rejection of Friedman’s teaching served as a justification for enacting vast new spending programs, ostensibly for COVID relief, even though the worst of the lockdowns had already been lifted. In actuality, the $1.9 trillion “American Rescue Plan,” the $1.2 trillion “infrastructure” bill, and the proposed $3+ trillion “Build Back Better” Act were setting the United States up for the same economic woes that plagued the Spanish centuries ago. Though Senate Republicans were able to block Build Back Better (for now), more than $3 trillion in spending in a matter of months after the trillions in spending during the COVID lockdowns was enough to send the country into the inflationary spiral we are witnessing today.

Biden claimed that increasing the amount of Federal giveaways would actually help to combat inflation, since the recipients would be better able to afford paying higher prices for goods. Reportedly, as an additional appeal to voters, the administration is looking at canceling billions of dollars in college student debt – a benefit that would flow largely to upper-income taxpayers and again leave lower-income Americans (many of whom did not go to college) footing the bill.

Now, however, facing an electorate increasingly troubled by inflation that has reached a 40-year high, the President and sympathetic academic supporters have moved closer, in a sense, to Friedman’s insight. As the Associated Press reported last week, “Biden faces a delicate trade-off as he tries to help his fellow Democrats in the November elections,” needing consumers “to pull back just enough so inflation eases,” though “not so much that the economy risks plunging into a recession.” Hence “the problem with inflation” is that despite rising prices, Americans “have yet to significantly cut back” their spending. (For instance, according to the Energy Department, gasoline usage has fallen only 1.8% during the past year, despite the enormous increases in fuel prices.)

Betsey Stevenson, a University of Michigan economist sympathetic to progressives’ big-spending agenda who worked as an adviser in the Obama White House, similarly called on Americans to reduce their spending so as to “allow supplies to catch up.” Acknowledging that high gas prices might be engendering “broader dissatisfaction,” she observed that “cars seem to be important to people’s sense of control,” depriving them of the ability “to just hop in your car and go where you want.” In other words, the underlying problem isn’t government policies (ranging from higher deficit spending to restrictions on oil and gas drilling and transmission), but rather a psychological one: American consumers are control freaks. They want to enjoy the freedom to go where they want – including, to work!

So maybe inflation is a monetary problem after all: a money supply increasing faster than the supply of goods. Note, however, that the Biden administration and its Democratic allies have given no sign of considering a Friedmanite solution to the problem: cutting government spending. As Biden made clear in his AFL-CIO speech, more government spending is the only solution to every problem facing Americans today.

Instead, it must be consumers who curb their spending to combat inflation. To hear Biden tell it, it’s up to “patriotic” Americans to help out the administration by relaxing their “sense of control” over their lives and learning to live on less (just temporarily), even as Democrats push to increase federal spending without any effort at “control.” And while the current administration may not be able to achieve the right balance between too much and too little spending, it’s counting on individual citizens to make those precise calculations.

But the administration – and Democrats in Congress – may soon find that the calculation voters make is to swiftly remove them from power.

David Lewis Schaefer is a Professor of Political Science at College of the Holy Cross

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Kim
Kim
1 year ago

Typical of the democrats, they blame everyone else for the country’s woes. Biden wants us–the American people–to spend less so we’re less affected by the sting of inflation. Spending less spells doom for a million small businesses, as we saw when Covid lockdowns prevented them from operating. What a screwy way to look at economics! In fact, because everything costs so much more now than they did 2 years ago, we’re forced to prioritize spending!

People who can’t afford to live close to work must spend a sizable portion of their paycheck on gasoline, so this $5.00/gal is hurting the lower and middle income earners more than it is the wealthy. I hope they make that connection between why they have less money for rent and food while biden and the dems are in power. What a huge mistake America made in November 2020.

Betsey Stevenson’s implying that we’re “control freaks”–well, yeah…I want to control my life and how to run it. But liberals want to keep all the control for themselves by taking as much of our money as they can. They’re the control freaks!

We should thank democrats Joe Manchin and Kirsten Sinema (I think she voted against it) for stopping the Build Back Batter plan. But I still think we’re in for a major recession.

Bill on the Hill
Bill on the Hill
1 year ago

I am fully prepared right this moment, effective immediately to cut back on a tyrannical federal governments reckless spending at my expense…
Bill… :~)

Richard
Richard
1 year ago

2000 was proof Biden lost the election, invest in 2000 mules. God bless Trump if he needs any organs he should receive from the Reagan family

PlainTalkJane
PlainTalkJane
1 year ago

This won’t get better folks until we “decrease our spending.” Start by not sending your hard earned money. Declare a 2-3 year tax revolt. Dead serious.

Bill T
Bill T
1 year ago

It’s never been so obvious as to right now that this is a government and administration hell bent on only one objective SOCIALISM and a tyrannical government against our constitutional freedoms. This is an extremely dangerous administration and the policies they are implementing are an attack on our country and our founding fathers vision of a free and prosperous society. These last almost 2 years are probably the most destructive and harmful times in our countries history. I’m a true conservative and believer of GOD and all our freedoms and liberties that our great country deserves and has fought for since our founding. Biden is trying desperately to collapse our infrastructure and change our landscape with constant executive orders and couldn’t care less about the dire consequences that are already resulting from them, the collateral damage in a very short time will be beyond our imagination and if not reversed immediately will put our country into a death spiral that simply will change everything, it’s exactly what there intentions are.The corruption involved with our entire political spectrum is unbelievable and I quite honestly don’t believe or trust any of them at all. We probably will need an entire new political party right now to save our democracy and our country.

Craig Driver
Craig Driver
1 year ago

Susan Rice is advising Bidden. So we essentially have a third Obama term in the White House. Democrats do not care about American citizens and our Constitution. We and it are in their way. Beyond the Democrats are their bosses, the global Elite’s. What they have planned for all of us is not pretty. If they succeed you can say goodbye to freedom, your personal property, your family, your freedom of will. You will own nothing because you will be owned by the world government. Klaus Schwab of the World Economic Forum has said, “You will own nothing and you will be happy”.

tika
tika
1 year ago

this may be the only thing joe ever gets right. the less i spend the less of my money the marxists get to use against me, thus fulfilling his own demise. the marketers get the message real quickly, too as their sales, profits fall they stop being “supporting-lackies” of marxism. Matthew 10:16

Susan Miller
Susan Miller
1 year ago

Make sure you vote in person with paper ballots.

Steve Weidert
Steve Weidert
1 year ago

Coming from a man that believes 1+1≈5.

JEFFREY JONES
JEFFREY JONES
1 year ago

SAVE THE U.S.A….Arrest and deport all democrats ,libturds, and socialists to GITMO for treason and punishment!… It’s time to declare a civil war against the far-left loonies!

Duane
Duane
1 year ago

It is very disingenuous for this writer to suggest that Biden perhaps doesn’t understand the stupidity of his economic policies and, perhaps he doesn’t, in his mental state, but his controllers do. The obvious truth to intelligent people is that this is all part of a scheme to completely destroy America’s free enterprise system.

CoNMTX
CoNMTX
1 year ago

Why would anyone, at anytime, anywhere, listen to one word uttered by Joe or any other Marxist? They are Godless, evil, lying Marxists who’s intent is to destroy America and build back Marxist in the Globalist government. In the first place, Joe is a natural liar, always has been. In the second place, his brain is rapidly turning to oatmeal. He becomes more incoherent daily. He, and the demo/Marxists cannot be trusted or believed on anything.

paul
paul
1 year ago

Oh please and thanks but let us not forget McConnell and the part republicans played to this fiasco and just when they had a chance to do something meaningful . They dropped the ball on us poor taxpayers just like the Democrats.

paul
paul
1 year ago

I spend less Joe because thanks to you and your little minions I have less to spend.

Casey C Matt
Casey C Matt
1 year ago

Too bad the Drooler in Chief was wearing a helmet and too bad he didnt land directly on his aneurysm filled cranium…………coulda saved the country in the only way he can.

Stephen Russell
Stephen Russell
1 year ago

Hell Feds Spend MORE daily

TPS
TPS
1 year ago

I am spending less, because all my utility companies want more. Maybe lights and heat every other day and just two showers a month. But the government should keep spending money on cell phones and cell plans for all the illegals who continue to cross the border, oh and anything else they need of course.

Nobody’s Business
Nobody’s Business
1 year ago

I used to think Democrats were stupid Why can’t they see what they’re doing is harming everyone and the country! But now I realize they want to ruin the country and doing a good job of it. And there are plenty of Republicans helping them along. Every government spending has kickbacks that come back to the politicians, both Democrat and Republican, we need to get rid of any politician that has turned themselves rich after becoming a politician. It needs to stop! America First ; the country , not the politicians.

Kay
Kay
1 year ago

These morins get everything for free including a per diem that is not taxable but they expect us to be their slaves. We need Term Limits immediately to stop these wages and make these morins work like the rest of us.

Judy K.
Judy K.
1 year ago

It’s getting to where I don’t even need to read these articles. They’re informative, but there is never a viable solution to whatever the continued complaints are about. Thank you AMAC for keeping us informed though, it’s just so discouraging anymore to see and hear how much more damage is being done to this country by Satan’s Tooles.
God has the only answers, and this time, we may not like them. Depends on whether he’s willing to help us, or not.
God isn’t being worshipped or praised for who he is anymore in this country. This is an evil and perverse generation. When we don’t heed his warnings, we suffer the consequences.

I will continue to acknowledge my God and his righteousness, and pray only to him, and praise his Holy Name!

FedUp
FedUp
1 year ago

Biden is a democrat and to democrats, it’s ALWAYS somebody else’s fault. Plain and simple.
And it doesn’t help that he’s also a moron.

James J
James J
1 year ago

a viable solution to the destruction of the United States that is going on, with pedo joe and his communist administration. is to charge them all with Treason. It sure would be a very easy case to Win and to find them all Guilty. After that is done and the sentence is carried out. TERM LIMITS should be put into effect Immediately..

Jeb
Jeb
1 year ago

Kind of hard if the kids are hungry and the house needs some basic utilities and you need gas to drive to work.

Linda C.
Linda C.
1 year ago

We are spending more and getting less in return. Everything costs more thanks to the Idiot in Charge and his backers! In less than a month, we will start radiation treatments for my husband and that will cost AT LEAST an extra $300 in gas expense over the course of 8 weeks going to the treatment center and back. More $$$ for groceries, utilities everything! More doctor bills. We’re seniors, my husband has a part time job, and we’re barely making it! Cancel debt for people with huge medical bills instead of cancelling student loans. Those with medical bills didn’t choose that. There’s talk of another COLA increase from Social Security for 2023. Will.Medicare raise premiums again and suck that up? Seems like we can’t win! Thank you, AMAC, for your informative articles.

Rick Diggs
Rick Diggs
1 year ago

How about we no longer vote for an incumbent. Politics should not be a career

D.P.
D.P.
1 year ago

It’s the same old “merry-go-round” that came on the scene during Carter’s admin…and others…..print more money, feed the fire of inflation….print more money…..feed the fire of inflation…..lie about it all along the way and play the blame game. That’s the story of how this administration thinks they will save the day. Spending is not the problem…..and we all know that…..at least all of us who work for a living and see the truth of government intervention that never succeeds at solving a problem. All the talk, all the shifting of blame, all the dancing and prancing, lying and double talk…..it’s not new and it’s not news. Every time the gov. gets into the mix, it’s a mess…..not matter how small or large the issue.
History always tells us what is coming when we look at what came.

Ken
Ken
1 year ago

Well Biden is right about one thing: His “reckless spending” is “changing people’s lives.” Unfortunately, it’s changing them for the worse!!

Robert
Robert
1 year ago

Just got back from the grocery store. Biden and his idiots and their policies are killing us.

Bill T
Bill T
1 year ago

Looks like the RHINOS have taken sides with the corporate and special interests ????????$$$$$$$$$$$$$$$$$our country has been completely sold out, Mitch our leader of our Republican Party is nothing more than a democrat sleeze bag and completely compromised trader of everything our country stands for. He’s married to a communist Chinese corporate family member. It’s time for a new and real party for our American citizens.

spitfire?1940
spitfire?1940
1 year ago

Buy a lot less but spend a lot more this idiot masquerading as a president really means.

BAE
BAE
1 year ago

The cure for inflation is to get rid of the Biden Administration, so out of touch. The know nothings!

johnh
johnh
1 year ago

President Joe Biden needs to watch movie Forrest Gump & take notes on how to have a little common sense. It seems like both Trump & Biden do not understand that increasing the Federal Debt is not good for the USA.

Steven Tapper
Steven Tapper
1 year ago

We’ve all heard the old saying about history repeating itself and it especially true in politics. The truth is we all know what works for a strong economy and what doesn’t work. It’s very clear that the Biden/Obama policies are all geared to reduce and eventually eliminate capitalism.
We are now repeating the woes of the Obama years where we are being told that we have to expect less. The United States is the most prosperous, entrepreneurial, successful country in the world and under the Democrats we are being told that we have to regress backward!
To make the dramatic turnaround in the economy all Donald Trump had to do was reverse everything that the Obama Administration did to this country! Whoever the Republican Nominee will be in 2024 their agenda is clear. Just reverse everything Biden is doing, remove the regulations, open up the pipeline, build the wall and declare a moratorium on ALL Immigration until Congress passes a realistic and practical Immigration Law. This isn’t rocket science folks. It’s called Common Sense.

Garye
Garye
1 year ago

The blatant lies of the marxist democrat party, and the sickening attitude towards the Real American Citizens struggling to support their families ,should anger enough voters to THROW THEM OUT!
The arrogant, self serving, swamp politicians are a disgrace to Our Great Country!
ANY/ALL elected official who doesn’t put America and its Citizens FIRST is NOT qualified to represent We The People!
Our Veterans, Seniors and Mentally Challenged CITIZENS ,must be considered and supported BEFORE foreign countries or illegal immigrants period!
America First – it makes the World a better place!

Hamnes Dèluth
Hamnes Dèluth
1 year ago

I hate this SOWB.

Michael
Michael
1 year ago

In is beyond comprehension, that we have fought the world over to destroy Communism. Just to have our federal government join the global Communist community. Knowing all the blood and, treasure we have spent to remain a Constitutional Democratic Republican. The American Veteran are the ones who bear the most pain in their hearts for defending a document that is being ripped apart in front of their eyes.

Dave H
Dave H
1 year ago

It is difficult to impossible for people to cut back on spending when the prices of basic goods are increasing as rapidly as they are.

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