Small errors, when multiplied, become huge. Inflation is like that. The error started with Biden hyping COVID and pushing mass federal spending. This was untargeted, late, not well administered, and expensive. To that, he added trillion-dollar spending on programs most do not want; the nation could not afford. Then came a clampdown on fossil fuels, higher taxes, and executive orders slowing growth. Impact? Inflation.
Biden’s response – and backpedaling by Congressional Democrats – falls into four categories; Inflation is “transitory,” spending was necessary to stop COVID, necessary to save the planet, and Russia did it.
None of this holds water, and Americans know it. The inflation spike is like a freight train downing downhill; it builds momentum – as the Fed is well aware. Once it has built a head of steam, reinforced by reckless fiscal policies, it is hard to turn back. It is anything but “transitory.” Nice word, no dice.
Second, mass COVID spending, excessive federal unemployment adds of $600, then $300 dollars a month (which shrank labor participation), hammering landlords with federal eviction bans (which the Supreme Court declared unconstitutional), leveraging OSHA fines on employers over 100 who did not demand employees get vaccinated (overturned by the Supreme Court), and similar actions – were all wrongheaded. See, e.g., Inflation Surge To Continue: Here Are 3 Reasons Why; Commentary: Overspending is fueling US inflation;
They put federal money that disincentivized work, fear by employees and employers, and go-slow, spend-more, forget-the-cost policies in place, which did what you might expect. The labor pool got smaller, driving wages higher, bankrupting some, slowing consumption, and slowing growth.
These policies created greater individual and corporate dependence on the federal government while also raising federal debt, in turn taxes and interest rates, slowing the economy – as inflation took off.
The idea that we could turn off all US fossil fuel exploration, fracking, drilling pipelines, production, refinement, self-sufficiency, and export was also a “pipedream,” somehow forgetting that sun and wind power does not begin to power the electric grid, that coal and oil burning powers the electricity that, in turn, powers “clean” electric cars.
More to the point, keeping homes warm in winter and powering most cars and trucks takes the power generation that Biden and the Democrats turned off. Unwise? Yes, rather obviously. Inflationary? Yes, because it demands we become dependent on foreign oil – which is expensive, more so when they know they have us over a barrel, literally.
All this was unwise – and bound to create inflation hard to slow – long before Saudi Arabia declined Biden’s request to pump more oil or lower prices, long before Russia invaded Ukraine, and long before Americans began looking at five-dollar-a-gallon gas, which may now shoot toward ten. See, e.g., Former Obama adviser: Don’t blame Russia, blame Biden for inflation rates.
Is this someone’s misjudgment? What do you think? 18 months ago, America was energy independent, states and vaccine companies, not the federal government, were effectively managing COVID’s containment. In that time block, spending was limited, socialism was just a goofy idea, taxes were lower, and life was manageable.
Today, inflation just his 7.9 percent, meaning your last year’s dollar is worth about 92 cents, next year’s likely to be worth 80-some cents, following year’s maybe 70-some cents. Is that the trend you want? Costs you want at the pump, for groceries, everything? Do you think wages will keep up? No. See, e.g., US inflation soared 7.9% in past year, a fresh 40-year high; Inflation rises 7.9% in February, a new 40-year high.
In short, we are on the wrong track. Someone let the inflation monster out of the cage that held it for 40 years. The Administration and Congress are controlled by one party. Think about that … next time you shop.