Treasury Secretary Janet Yellen said over the weekend that we’re going to have to “put up with inflation for a while longer,” which means that she has now held just about every possible — and almost always wrong — position on an issue about which she is supposedly an expert. Is it any wonder nobody trusts elites anymore?
Yellen was on CNBC over the weekend and, when asked whether inflation had peaked, said:
“Well, it may have peaked, but … I think the shocks emanating from this unjustified attack on Ukraine will prolong inflationary pressures. So, the outlook is uncertain. As you know, the Fed is taking steps to bring inflation down, but I think we will have to put up with high inflation for a while longer.”
Let’s leave aside Yellen’s dubious claim that Russia’s invasion of Ukraine has had any meaningful impact on inflation. Why would it? Iraq’s invasion of Kuwait, which was far more disruptive to the global oil market, bumped oil prices up for a short period but had no broader inflationary effect.
The Putin-is-to-blame for skyrocketing prices is one of team Biden’s big lies meant to deflect blame. But the press never calls them on it.
No, what’s really troubling is the fact that Biden’s Treasury secretary has been so utterly clueless about inflation since joining his cabinet.
Let’s look at what Yellen has claimed about inflation since early last year and the actual results. The chart shows what inflation was doing when she made these statements.
- February 2021: “I’ve spent many years studying inflation and worrying about inflation, and I can tell you, we have the tools to deal with that risk if it materializes.”
- March 2021: “I don’t think it’s a significant risk. And if it materializes, we’ll certainly monitor for it, but we have tools to address it.”
- May 2021: “I don’t think there’s going to be an inflationary problem, but if there is, the Fed can be counted on.”
- June 2021: “Supply bottlenecks have developed that have caused inflation. I believe that they’re transitory, but that doesn’t mean they’ll go away over the next several months.”
- October 2021: “I don’t think we’re about to lose control of inflation.”
- November 2021: “If we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do.”
- January 2022: “If we’re successful in controlling the pandemic, I expect inflation to diminish over the course of the year and hopefully revert to normal levels by the end of the year around 2%.”
- February 2022: “I think people heard ‘transitory,’ and to them it meant a couple of months. Maybe a better word could have been chosen.”
- March 2022: “We’re likely to see another year in which 12-month inflation numbers remain very uncomfortably high.”
Keep in mind who we are talking about here. Yellen has a sterling resume. A doctorate in economics from Yale. Professorships at Harvard and the University of California, Berkeley. On the faculty of the London School of Economics. President of the Western Economic Association and vice president of the American Economic Association. Head of the Council of Economic Advisors under President Bill Clinton. President of the Federal Reserve Bank of San Francisco. Chairwoman of the Federal Reserve.
So how in the world can her pronouncements about inflation under President Joe Biden be as reliable as the weather forecast? Is her understanding of economics tainted by liberal ideology? Is she just doing the bidding of an incompetent and desperate Biden administration?
Does it matter? Yellen is a shining example of why so many in this country feel betrayed by the people who claim lordship over them.
— Written by the I&I Editorial Board
Good academic pedigrees and past political service get you the job, but do not make you automatically right. Jerks come with and without academic pedigrees. The problem is the disappearance of free market determination of interest rates, and the substitution of central planning bureaucracies staffed by those with good academic pedigrees and a lack of real world experience. But why should they care? Screwing up on inflation means bigger pension payouts for retiring government workers, the ruling party’s constituency. For a Fauci level bureaucrat, a $400,000 annual pension payout with a 10% cost-of-living increase will mean an extra $40,000 per year ($440,000). Count on USA.gov to use arm shipments to Ukraine to prolong the coveted war against Russia and boost inflation and their pensions. Raising interest rates and shrinking the money supply, a Fed strategy which failed spectacularly in the 1930s, will boost their pensions even more by making it harder to borrow money to remedy supply chain bottleneck and shortages. Idiots governing in their own self interest.
She like most of the clown show is delusional, we are going into (if not already in) a recession. A bad one,with an empty bunch of suits and a lost tool box.
The problem is that she as much as any other economists know the truth but they cover for biden and democrats so they just tell lies to appease the people at least until after the elections
They are telling us that the fed will fight inflation by reducing their balance sheet and hiking rates , the going theory is that by reducing the ammount of money inflation will be reduced !
Well i am not a economist but i can tell you that it wont work at least not in the US .
The american economy runs on borrowed money , people use credit cards , finance their cars vacations and other things and have a mortgage on their back , companies borrow money to finance R+D expenditures or capital equipment too .
if the Fed raises rates interest rates go up on everything from mortgages to credit cards giving people less money to spend not to mention the sale of homes and capital goods drops as people cant afford to take up loans and mortgages
Bouncing? The inflation ball seems to be filled with helium and continues to ascend.
The author’s error is in assuming that Yellen’s statements were intended by her to convey meaningful information to her audience. Her true function is more akin to the airline stewardess reassuring the passengers that all is well, as the plane’s third engine of four flames out.
Inflation is fueled by a reckless increase in the money supply, unaccompanied by huge gains in productivity. The money supply increase is fait accompli now. But an additional inflationary impetus is the expectation of further inflation. If one expects one’s money is shrinking in purchasing power, it changes one’s economic behavior, and in ways which are themselves inflationary.
Who would not purchase a house now if you knew the house would cost twice as much by next year? Even paying over the present market price of the house, now, would be rational if the price would be double in twelve months. Similarly, no thinking person would sign an employment agreement unless it contained a cost of living adjustment. Inflation is a self-fulfilling prophecy as well as a monetary phenomenon.
Since the Fed is unwilling to raise interest rates as Volcker did, lest the Democrats’ electoral prospects decline even further, and the government’s debt burden become insupportable, Yellen is reduced to attempting to calm the passengers. If they notice the inflationary spiral, she insists it is minor and temporary. And the Fed has the tools to take care of it (so don’t worry.) Eventually she is reduced to insisting inflation is someone else’s fault, Covid or the invasion of Ukraine. Don’t blame the artificially low interest rates and the wide-open Congressional money spigot.
We have learned, especially in the last 2+ years of the Wuhan, that experts are dumber than your average Joe.
I checked all the quotes, and found that the one for June seems to date from October 4. Not that that detracts much from your thesis.
Yellen believes in Keynesian economics. A key feature is government spending. to aid the economy. It does not work most especially on borrowed government money. This has never worked ever in the history of the world. We see the result in the massive spending and resulting inflation.
“Yellen said over the weekend that we’re going to have to “put up with inflation for a while longer,” . . . ”
Yeah, like maybe for the next ten years. I was a newly minted lawyer during the Jimmy ‘Peanut’ years and the Reagan first term. It took between six and seven years to ‘fix’ THAT fiasco. So more much money is involved this time ’round. I would NOT be surprised if THIS problem takes several years longer–assuming that it is even fixable. Stolen election by corrupt, communist pols has consequences in case you haven’t noticed yet!
Inflation is a plus to big government. It decreases the actual debt. It is a hidden tax, felt most by the poor and working classes.