Two years ago today, the New York Times ran an article headlined: “Biden and Fed Leave 1970s Inflation Fears Behind.”
That story has not aged well. Neither have the troika of ideologues and imbeciles behind the rebirth of ‘70s-era inflation.
On Tuesday, the Bureau of Labor Statistics reported that prices climbed 0.5% in January, which is up from December’s 0.1% hike. Prices were up 6.4% over the year before, which is higher than economists had been predicting and comes amid warnings that inflationary pressures are building again.
This all comes one week after President Biden reassured the nation that “here at home, inflation is coming down.”
And it comes two years after the New York Times reported how Biden, Treasury Secretary Janet Yellen, and Federal Reserve Board Chairman Jerome Powell were all in agreement that spending $1.9 trillion to stimulate an economy that was already roaring back from the COVID lockdowns would not set off an inflationary spiral.
“Administration and Fed officials argue that workers not getting enough stimulus help is a larger concern than potential spikes in consumer prices,” the Times wrote on February 15, 2021.
The story quotes Yellen saying “I have spent many years studying inflation and worrying about inflation. But we face a huge economic challenge here and tremendous suffering in the country. We have got to address that. That’s the biggest risk.”
The Times notes that Powell gave a speech in which he pushed back on the idea that Biden’s spending splurge combined with easy money when the economy was roaring back from the COVID lockdowns would spark inflation.
He said that prices could show a brief pop in the coming months, as they rebound from very low readings last year, and he said the economy could see a ‘burst’ of spending and temporarily higher inflation when it fully reopened. But he said he expected such increases to be short-lived — not the sustained spiral that many economists worry about.
Biden himself repeatedly insisted that any price spikes were “transitory,” that they were just an artifact of the COVID rebound, that somehow Vladimir Putin was to blame, and that prices would soon be on their way back down.
For the record, when Biden signed his $1.9 trillion “American Rescue Plan” into law in March 2021, the nation’s GDP had already regained all the ground it had lost during the COVID lockdowns. Unemployment had been falling faster than expected.
This wasn’t a secret. It was plain as day in the government data. Yet Biden, Yellen, and Powell continued to insist that the economy was in dire straits and in need of a massive stimulus on top of the trillions already poured into the economy during President Trump’s last year in office.
What happened? Prices took off as soon as the ink was dry on the “American Rescue Plan.” And they kept climbing, faster than wages, leaving workers worse off than had they never gotten any COVID stimulus check at all. (See the chart below.)
When it comes to inflation, apparently, there are no parties, genders, classes, or races. Only pain.
Home sales have tanked as mortgage rates more than doubled, with annualized sales of new homes are off nearly 40% from 2020.
Meanwhile, home heating, gasoline and other energy costs have jumped sharply, averaging a 23% monthly gain in 2022, along with grocery prices, up 11% on the year. One egregious example: Due to shortages of baby formula, which have driven prices sharply upward as supplies stay tight, stores now routinely keep baby formula under lock and key.
Even fast-food chains and other restaurants have jacked up prices 8.3% in the last year just to keep up with hikes in the minimum wage, rising rents and increased transportation costs.
Which means that Biden, Yellen, and Powell had it exactly wrong two years ago. And the inflation that Biden’s spendthrift ways set off is creating far more suffering than the COVID lockdowns did.
If these three “leaders” were in the private sector, they’d have each been out on their ear long ago for their epic stupidity.
Instead, they are still calling the shots. And we keep paying the price.
— Written by the I&I Editorial Board