Issues & Insights
Price roll up. Photo: puuikibeach. Licensed under Attribution 2.0 Generic (https://creativecommons.org/licenses/by/2.0/).

How The White House Fumbled The Inflation Football And Lost The Game

Wasn’t it not even a year ago we were told that inflation would, in fact, be a “good” thing? That it was “transitory”? Not a serious threat. Now we’re finding that the media, Wall Street economists, Fed officials, but most of all, the Biden administration, were all wrong. Does anyone pay a price for gross incompetence anymore?

Last year, headlines were filled with inflation cheerleaders. We searched the term “inflation is good” and got back 508 million hits.

What’s troubling about this expert consensus is that inflation, now at a 40-year-high, isn’t good for anyone.

It skews business and personal decisions, wrecks family budgets, makes millions of low-income families even poorer, destroys personal thrift and wealth, undermines faith in the economy, distorts financial markets, and discourages investment and innovation.

And, eventually, it destroys real economic growth, undermining the very underpinnings of our prosperity and standard of living. We’re on the way to that now.

Which brings us to our main point: The failure of our “experts,” “elites” and elected officials to attack the root causes of inflation, namely runaway government spending and the Fed’s relentless money printing, based on bogus Modern Monetary Theory, that makes the spending possible.

No one in the Biden administration wants to step forward and accept responsibility for the inflation mess. That’s why it looked almost brave as one person finally stepped forward this week to admit there was a miscalculation.

“I think I was wrong then about the path that inflation would take,” Treasury Secretary Janet Yellen told CNN’s Wolf Blitzer this week, after he asked about her calling inflation a “small risk” just last year.

Good start. But in the next breath, she fobbed off blame on a host of other factors:

“As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I, at the time, didn’t fully understand, but we recognize that now,” she said.

Excuse us, but the causes of our inflation problem were evident even back in 2021.

The administration was repeatedly warned, as we noted, by some of its own party (hello, Larry Summers) about the inflationary impact of $1.9 trillion in added COVID spending, along with the still-alive proposal to spend another $5 trillion on the foolish pork-barrel “Build Back Better” infrastructure plan.

And Yellen knew about the record surge in the money supply in 2021, a clear indication that our economy was headed for soaring inflation. The Fed helped the government print $14.5 trillion in new money from April 2020 to June of 2021, the biggest money supply surge in the nation’s history. It didn’t boost output that much. Inflation was inevitable.

As Fed chief from 2014 to 2018, Yellen must know that latter point. Too bad she comes from the Keynesian school of economics, which denies such self-evident economic truths.

She, as do so many others, seems to have forgotten or ignored the clear lessons of the 1970s, when soaring spending (a 269% real increase in government spending during the decade), and out-of-control money printing to pay our monthly oil bill from the Mideast, set off scary levels of inflation that peaked at close to 15% in 1980.

We’re in a similar place now. Only, our president doesn’t seem to get it.

This week, he basically admitted he didn’t fully understand the baby formula shortage, which has sent prices for formula spiraling as much as 300% in some markets. “I don’t think anyone anticipated the impact of the shutdown of one facility – the Abbott (Laboratories Inc.) facility,” President Joe Biden told reporters Wednesday.

Except, it was his administration that shut the plant in February due to safety concerns, leading to a formula shortage. And Biden was fully apprised of it in a meeting with manufacturers three months ago.

“We knew from the very beginning this would be a very serious event,” said Robert Cleveland, senior vice president for North American operations of the Reckitt Co., as reported by RealClearPolitics.

And contrary to the idea that inflation’s “good,” news in recent days shows just how wrong that is:

“Nearly 60% of those surveyed said that inflation has adversely affected their personal finances, of which about one in four said that they have felt a major impact,” according to the Center Square. “As a result of inflation, 36% of Americans have reduced their savings and 21% have reduced their retirement savings. A quarter of Americans will need to delay their retirement.”

Biden has privately raged at aides about inflation, but only to blame others for the catastrophe caused by his own policies. It’s a disaster that could cost his party control of Congress and him the presidential election in 2024, if he runs again.

As our friend Stephen Moore noted, “In this administration, it’s always someone else’s fault. Inflation is now the No. 1 concern of voters, so the White House first blamed COVID. Then Donald Trump’s tax cuts. Then Vladimir Putin. Then meatpackers and the poultry industry, Big Oil and pharmaceutical companies.”

A report from the University of Pennsylvania’s Wharton School said that inflation cost the average family $3,200 last year. Newer estimates say inflation could cost families as much as $5,200 this year, according to Bloomberg. That’s quite a cut in a family’s standard of living, especially since wages aren’t keeping up with inflation.

All this was foreseeable by our media and our elected leaders. Those who told us inflation would be a “good thing” were wrong as hell. So were those who told us it would be transitory. Don’t worry, none will be fired.

Worst of all, the White House has once again shown why it is now one of the least popular administrations in modern history: It is incapable of acting in the public interest, and responds only to one side of the political spectrum. But political arrogance has a cost, and we’ll likely see that result in this year’s midterm elections.

— Written by the I&I Editorial Board

We Could Use Your Help

Issues & Insights was founded by seasoned journalists of the IBD Editorials page. Our mission is to provide timely, fact-based reporting and deeply informed analysis on the news of the day -- without fear or favor.

We’re doing this on a voluntary basis because we believe in a free press, and because we aren't afraid to tell the truth, even if it means being targeted by the left. Revenue from ads on the site help, but your support will truly make a difference in keeping our mission going. If you like what you see, feel free to visit our Donations Page by clicking here. And be sure to tell your friends!

You can also subscribe to I&I: It's free!

Just enter your email address below to get started.

Share

I & I Editorial Board

The Issues and Insights Editorial Board has decades of experience in journalism, commentary and public policy.

6 comments

  • On day one when Biden entered the office the USA was energy independent even exporting natural gas.On day one Biden began his destruction of the America’s oil and gas industry leading to the highest prices for gasoline,diesel fuel,aviation fuel and the myriad of other products used in many industries.When the cost to transport people,food stuffs and goods inflation is the result.

  • Call it sludge or bureaucratization of a micromanaged and over-regulated, self-aggrandizing system, it all begins with hubris, the flawed idea that a politics of self-interest first can quickly and efficiently solve problems the system itself has generated. The Founders created a self-regulating society that leaves us spellbound to this day. Several centuries later we find ourselves mired in the petty jealousies of the small-minded, a politics of all-or-nothing rather than compromise, and a media festooned with slander, lies and obfuscation. We should harken back to Ben Franklin’s advice that we have a republic but only if we can keep it, and put mature politicians back in charge.

  • Joe Biden is like a dysfunctional relative who forces his way into your home, invites his freeloading buddies in, destroys your credit, empties your accounts, breaks the furniture, punches holes in the walls, and tells you to shut up or silences you when you you criticize his irresponsibility, destruction, and dysfunctional behavior.
    He embodies Rev. Wright’s, “God damn, America!”
    He doesn’t realize that Providence will raise up America from the ruinous Biden gang’s depravity, dishonorable conduct, and prevaricated constructs.

  • “inflation, now at a 40-year-high, isn’t good for anyone…The failure of our “experts,” “elites” and elected officials to attack the root causes of inflation, namely runaway government spending and the Fed’s relentless money printing, based on bogus Modern Monetary Theory, that makes the spending possible.” -article

    Technically “government” is not a person, but that entity known as “government” is the big beneficiary of inflation when that government has gone on a spending and money-printing binge. Government inflates people into higher income tax brackets, thereby collecting more of peoples’ increasingly devalued currency to pay debt-holders. Individuals get the double whammy of higher prices and higher taxes. However, selected individuals working for government are very big beneficiaries: Nancy Pelosi awarded congressional staff 27% pay increases to compensate for inflation. So, within congress a constituency of government workers potentially cheer-leading inflationary policies (limitless spending & infinite money-printing) is being created (student debt is much easier to pay if Democrats take us to Zimbabwe, Venezuela or Argentina style inflation. Evil politicos are Clever.

  • I am convinced that the ongoing destruction of the dollar is a deliberate, well thought out policy. It destroys savings above all other things — and what would be more congenial to an administration that wants as many persons utterly dependent on the State as possible?

    “Never attribute to malice what can be explained by stupidity,” said someone or other. But sometimes malice is the correct explanation. I believe it is in this case.

  • I am convinced that the ongoing destruction of the dollar is a deliberate, well thought out policy. It destroys savings above all other things — and what would be more congenial to an administration that wants as many persons utterly dependent on the State as possible?

    “Never attribute to malice what can be explained by stupidity,” said someone or other. But sometimes malice is the correct explanation. I believe it is in this case.

We Could Use Your Help

Help us fight for honesty in journalism and against the tyranny of the left. Issues & Insights is published by the editors of what once was Investor's Business Daily's award-winning opinion pages. If you like what you see, leave a donation by clicking on the Tip Jar image above. You can also set up regular donations if you like. Ad revenue helps, but your support will truly make a difference. (Please note that we are not set up as a charitable organization, so donations aren't tax deductible.) Thank you!

About Issues & Insights

Issues & Insights is run by the seasoned journalists behind the legendary IBD Editorials page. Our goal is to bring our decades of combined journalism experience to help readers understand the top issues of the day. We’re doing this on a voluntary basis, because we believe the nation needs the kind of cogent, rational, data-driven, fact-based commentary that we can provide. 




Share
%d bloggers like this: