So it's not Putin anymore: Joe Biden has a new plan to fight inflation with...more inflation
So it's not Putin anymore.
Joe Biden came out with his big solution to inflation, which is driving his poll numbers into the toilet — and all he produced was a muddled mess.
Here's what his handlers put under his byline as his plan in an op-ed for the Wall Street Journal:
I ran for president because I was tired of the so-called trickle-down economy. We now have a chance to build on a historic recovery with an economy that works for working families. The most important thing we can do now to transition from rapid recovery to stable, steady growth is to bring inflation down. That is why I have made tackling inflation my top economic priority. My plan has three parts:
Part one is to Be Kind to the Fed.
First, the Federal Reserve has a primary responsibility to control inflation. My predecessor demeaned the Fed, and past presidents have sought to influence its decisions inappropriately during periods of elevated inflation. I won't do this. I have appointed highly qualified people from both parties to lead that institution. I agree with their assessment that fighting inflation is our top economic challenge right now.
That's it? Be nice to the Fed, and inflation will go away? Trust the experts, same as we trust the experts on COVID and global warming, right? Sounds like a plan.
Part 2 is even worse.
Second, we need to take every practical step to make things more affordable for families during this moment of economic uncertainty — and to boost the productive capacity of our economy over time. The price at the pump is elevated in large part because Russian oil, gas and refining capacity are off the market. We can't let up on our global effort to punish Mr. Putin for what he's done, and we must mitigate these effects for American consumers. That is why I led the largest release from global oil reserves in history. Congress could help right away by passing clean energy tax credits and investments that I have proposed.
How'd that Strategic Oil Reserve release do on the matter of bringing down high energy prices? Last I checked, average gas prices were now above $4 a gallon nationally and above $6 a gallon in greenie mandate–filled California. Joe released about half the Strategic Oil Reserve, and now we have even higher oil prices, and...half our strategic oil reserves are gone, which were supposed to be there for emergencies, not policy errors.
As for tax credits, bzzzt! Tax credits won't fix inflation, Joe. The ongoing inflation will eat up the value of these credits before the tax forms can be turned in.
It gets worse:
We can also reduce the cost of everyday goods by fixing broken supply chains, improving infrastructure, and cracking down on the exorbitant fees that foreign ocean freight companies charge to move products. My Housing Supply Action Plan will make housing more affordable by building more than a million more units, closing the housing shortfall in the next five years. We can reduce the price of prescription drugs by giving Medicare the power to negotiate with pharmaceutical companies and capping the cost of insulin. And we can lower the cost of child and elder care to help parents get back to work. I've done what I can on my own to help working families during this challenging time — and will keep acting to lower costs where I can — but now Congress needs to act too.
He proposes to spend more money to build housing units as his solution to inflation? Another pricey government spend-a-thon? And we can get the government to muscle Big Pharma into discounts for consumers at a time when inflation is eating up their profits, too? These same pharmaceutical companies that 60 Minutes ran a segment on recently, claiming that they had shut down many important pharmaceuticals for manufacture because they were no longer profitable? Sounds like a plan, Joe — that'll fix 'er on the inflation front.
The problem with all of this is that he fails to see inflation as a monetary phenomenon. He sees a high price in one product and attempts to force a lower price on the individual item instead of going to the root of the matter, which is too much currency and other monetary units in circulation, which won't do a thing to solve the actual problem, which is the monetary one. What he is proposing, in fact, is a textbook recipe for shortages, of which we already have plenty.
Inflation = printing money. Period. Prices are measured in dollars. If we create too many dollars, that causes the value of the dollar to fall in terms of goods and services. This “inflation” started 18 months ago. Shortages and supply chain issues are a separate issue.— Brian Wesbury (@wesbury) May 11, 2022
Or as the great Milton Friedman used to say: inflation is always and everywhere a monetary phenomenon.
Toward the end of his piece, Biden makes his third point, which is to get the deficit down, a sort of implicit nod that money-printing to pay for monster government spending is the problem, but then he whiffs when he declares that his do-nothing approach is already in place and working. Ummmm...doing more of the same of what you are doing and manipulating numbers to make it appear that you are cutting spending is not going to fix this, Joe...
But he's convinced that if he repeats it often enough, we will believe him. Inflation, and the hideous economy he's created from the rising one he inherited, you see, is all in your head. He's the Chesa Boudin of inflation presidents.
The worst of it is that Biden was primarily focused on himself, and on what inflation was doing to his poll numbers. He spent the top half of his Journal op-ed declaring what a good job he was doing and splashing out a mishmash of irrelevant data on how great the economy is.
Tom Bevan at RealClearPolitics wasn't impressed:
Jim Geraghty at National Review concurred:
There is something classically Biden about looking at the state of the U.S. economy at this moment and concluding the problem is that he isn't getting enough credit for all the good news. As Politico notes, "Telling [Americans] that their day-to-day worries are not supported by macroeconomic data — or, as Biden writes, that 'the U.S. is in a better economic position than almost any other country' — is risky and could come across as tone-deaf, something frontline Democrats in swing districts have been concerned about." No kidding!
Now Biden is slated to meet Tuesday with Fed chief Jerome Powell for...who knows what. Powell is a proponent of Modern Monetary Theory, which AT's Andrea Widburg explained well here:
MMT, beloved of leftists like Bernie and AOC, holds that a government with fiat money — that is, money that has value only because the government gives it value (e.g., paper money as opposed to gold coins) — can print money indefinitely because it makes up the value as it goes along. In other words, money really does grow on trees in the world of MMT.
But that's nonsense. Ultimately, fiat money must represent the actual wealth of a nation. As I used to tell my kids, a candy bar is always just a candy bar, whether it's priced at 5 cents in pre-inflation money or $5 in post-inflation money. The only real thing in that equation is the candy bar. But once you start printing money like crazy, so that there are so many dollars floating around that the candy bar is priced at $5,000, while the candy bar hasn't changed, you've bankrupted everyone in the country.
Employers aren't part of printing money. And savings accounts definitely aren't in on that government printing press. While the government goes on a spending spree, everyone else lags behind. Speculators and cronies may get rich, but the economy eventually falls apart.
Putting Biden in a room with Powell will send the whole blame cycle around and around again, as the heart of the matter — federal money-printing to pay for Joe's vastly expanded and expanding government — is the last thing that will fix this.
On inflation, Joe Biden hasn't a clue as to what he's doing.