Joe Biden Is Catastrophically Wrong on Inflation
On June 3, following a meeting between Joe Biden and Federal Reserve chairman Jerome Powell, the U.S. President stated that fighting inflation is his “top economic priority.” He blamed the soaring rate of inflation on two factors : the fact that the U.S.has entered “the most robust recovery in modern history” and “Putin’s price hikes” (conveniently scapegoating Russia for his own failed economic policy).
To address the first cause he identified, he pledged to take action to make the “transition from rapid recovery to stable, steady growth to bring inflation down.” The key to this, he said, is “giving the Federal Reserve the space they need to operate.”
Somehow, he was allowed to gloss over the fact that the Fed has had a lot of space, and has used it since 2008, and especially since the 4th Quarter of 2019, to massively increase the money supply, pumping large volumes of cheap credit into the hands of speculators. This is hardly a sign of a “robust economy”, but rather an example of a Ponzi scheme run through the largest banks and financial institutions.
President Biden further claimed — falsely — that since he took office, “families are carrying less debt, their average savings are up…and more Americans are feeling financially comfortable.” In reality, household debt is up, and total consumer debt is at a record high; the personal savings rate has dropped from 16% of disposable income to 4.5% — who can save during a period of sustained inflation? — and polls show that nearly 80% of Americans place inflation worries at the top of their list. Moreover, the Consumer Price Index is up 8.6% from May 2021, the largest twelve month increase since 1981. The food index is up 10.1% since May 2021, and the energy index is up 34.6% above last year.
Joe Biden may place his trust in the Federal Reserve, but the last two chairman of that bank admitted they got it wrong on inflation. Both Janet Yellen and her successor Jerome Powell had been promoting the line that inflation would be “transitory.” Yellen, now Biden’s Treasury Secretary, excused her failure by saying that she had not anticipated “multiple variants” of COVID and the food and energy price rises due to the “Russian invasion”. False again, as inflation began before the COVID pandemic struck and before Russia’s operations in Ukraine.