AMAC Exclusive – By David Lewis Schaefer
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
We hope you've enjoyed this article. While you're here, we have a small favor to ask...
Support AMAC Action. Our 501 (C)(4) advances initiatives on Capitol Hill, in the state legislatures, and at the local level to protect American values, free speech, the exercise of religion, equality of opportunity, sanctity of life, and the rule of law.Donate Now
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.
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.
I hate this SOWB.
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!
Problem is….how many Democrats really believe that this is their Dem leadership’s doing ( Biden, Pelosi, Obama, Schumer etc.)?I’ve heard
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.
Steven – well said!
We know the marxist democrats dirty little secret, they hate America,Freedom and Citizens are in their way.
Thank God We the People are fighting for Our Country, because the swamp politicians are NOT !
We’re literally having an invasion at our southern border, if it keeps up we’ll all be surrounded by newly indoctrinated illegals, and very well cared for ones. Who do you think is going to do there dirty work. And vote only for these Marxist traders of our country
NO admin could be this incompetent creating one crisis after another, if not by design. Going just as planned!! Remember, America is not exceptional. Every policy has weakened America and emboldened our enemies with this imposter and his cowards pulling his strings in the backroom.
When have we heard the words God, Family or Patriotism from this admin.?
GOD ….is the Government
FAMILY….. under attack. Marginalizing the role of parents in raising their children.
PATRIOTISM ….where one does not have to stand or recite the pledge and tear down historic monuments without consequences.
We’ve had realistic/practical immigration laws for a hundred or two hundred years. The problem is Bidum has not followed these or other Constitutional Law and he should be impeached, removed and prosecuted for these crimes. My Ancestors and almost surely yours, immigrated to America, following those laws. An application for a Visa was the first requirement, that started the “vetting” process to make sure immigrants would make good citizens. A certain amount of American history and language was required to become citizens. They had to have a sponsor, as they could not be on the public dole. There was a limit of 250,000 legal immigrants per year, until the Demoncraps raised that to
1 million although we knew an additional million illegals were already jumping the border every year.
Yes this was “Common Sense”, something America used to have.
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.
The cure for inflation is to get rid of the Biden Administration, so out of touch. The know nothings!
That is just a start in draining the cesspool!
Buy a lot less but spend a lot more this idiot masquerading as a president really means.
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.
Just got back from the grocery store. Biden and his idiots and their policies are killing us.
Well Biden is right about one thing: His “reckless spending” is “changing people’s lives.” Unfortunately, it’s changing them for the worse!!
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.
You are right, look back around 1980 & Volcker of Fed Reserve took a tough stanch and remember “WIN” buttons is old enough. And interest got up to 21% before, Fed started to stop runaway. This time, the Fed was working on Zero during Trump term & so is way behind the 8-ball this time around with interest rate.
How about we no longer vote for an incumbent. Politics should not be a career
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.
So sorry to hear your misfortune, but here’s the facts. We’re exactly what these Marxist traders of our country want gone. We’re the last of the true American constitutional followers and we’re a huge problem for these communist liberals haters of our country. If the young American citizens are indoctrinated into the socialist system then it’s exactly what they are doing. Then it’s a tyrannical government controlling everything and everyone. Sorry but that’s exactly what this entire strategy and Covid disaster is all about.
Eliminating the dissenting voices is exactly the way to eliminate Freedom!
If We the People don’t end this NOW, 2022 and again in 2024, the marxist democrat party wins and Freedom is gone in America!
Not a threat, a promise from them.
Kind of hard if the kids are hungry and the house needs some basic utilities and you need gas to drive to work.
Exactly but he dont care
Yet they always find money for foreign countries,illegal immigrants????
Just self serving,greedy marxist democrats,and Republicans who pretend to have Conservative,America first beliefs.
THROW THEM OUT
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..
Win the House and Senate in 2022, and enact swift justice for these traitors! Not years if dragged out hearings for political drama.
I suggest cutting off any pensions,benefits,perks that they entitled themselves and a ban from future public office at any level.
Let them try to exist as an unemployed person under the systems they created!!
Term limits will never happen. Why would they kill the golden goose?
you are right it will never happen… why I say this, is because, its people like you that forgot one thing. They steal, cheat, lie, spend, Our Tax Money and then Tax us into Oblivion to do what they want, because We the People a.k.a. Employers. will Not stand up to these Employees… most people like You, will say there is nothing we can do.. then You Ops, and others like You are the Problem.. if you need to ask, What can we do?? then You sir deserve what is happening..
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.
Fed-up- time to change it!
No excuses for the marxist democrat party and their RADICAL hatred of America and its Citizens, no excuses for their destructive policies or fleecing of American Taxpayers, no excusing their attempts at taking away Our God Given Rights,or Our Constitutionally guaranteed Freedoms!!
ENOUGH of swamp politicians who FORGOT that they WORK FOR US!
We the People control America – It’s time to THROW THEM OUT!
Who do these LOSERS think they are???
NO MORE – This is AMERICA,
FIRST FOREVER and ALWAYS!
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!
He is the solution.
Judy,hang in there. The SOLUTION is You and I , We the People exposing and REMOVING swamp politicians who are destroying Our Country!
It’s the only way, Our turn to fight like hell for America,Freedom and Our God Given Rights!
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.
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.
The dem politicians are fiendishly clever. Their followers are stupid.