Tag: inflation

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inflation and inflationism national politics & policies

Quips & Stunts

Donald Trump, Kamala Harris, economy, inflation, democracy, government

The Epoch Times has produced a handy policy comparison between the two major-​party candidates for the presidency of the United States, former President Donald Trump and current Vice President Kamala Harris. 

Maybe issues don’t matter so much now, though: more talked-​about is Trump’s stunt scooping fries at McDonald’s, which got Democrats so upset (to their detriment), or Kamala Harris’s bizarre quip at a rally where two young men shouted “Jesus Is Lord!” and “Christ Is King!” as they were being thrown out. The Veep’s response that they were at the wrong rally was construed by many to suggest that her supporters aren’t Christians.

Nevertheless, The Epoch Times is right to emphasize policy. It’s a big subject, so let’s just compare the candidates on “The Economy.”

Donald Trump “Pledges to reduce inflation by increasing American energy production, cutting wasteful government spending, and preventing illegal immigration,” and “Seeks to lower commodity prices by ending global wars.” Are these “good for the economy”? Probably; mostly. But distant from the heart of inflation. 

Worse, Trump allegedly “‘Strongly’ feels presidents ‘should have at least a say’ in the Federal Reserve’s monetary policy decisions.” The Fed is indeed key, but the only way to reduce inflation immediately is through the kind of policies presidents tend to hate — for example, the deflation that Fed Chairman Paul Volcker performed on Jimmy Carter’s economy that helped get Reagan elected.

Kamala Harris sticks to progressive standards, proposing “a federal ban on corporate price gouging on food and groceries to tackle inflation,” which would backfire into a major economic debacle, complete with shortages and calls for rationing and worse. It fits in nicely with another typical progressive plank, calling for “raising the minimum wage,” which would lead to less employment partly through increased robotization of businesses now employing the workers affected, the low-​skilled (the ones Trump calls “great”).

Looking over their substantive policies, it’s easy to see why “culture war” issues prevail.

This is Common Sense. I’m Paul Jacob.

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inflation and inflationism international affairs too much government

Is Milei Making It?

After libertarian economist Javier Milei surprised the rest of the world by winning the presidency of Argentina in 2023, the question became whether — or how quickly — he could slash government programs, privatize nationalized firms, and set free a flatlining government-​controlled economy.

A president can do some things on his own. But Milei requires the cooperation of the legislature to institute many substantial reforms. And for months his legislative agenda has stalled.

Now some of it is being enacted. On June 28, the Chamber of Deputies passed a sweeping package of bills that Reuters dubbed Milei’s “first big legislative win” and Bloomberg’s Manuela Tobias characterized as “deregulat[ing] vast swaths of the economy and boost government revenues.…”

The enacted reforms include provisions to make it easier for employers to fire workers and to deregulate the oil and gas industry. Milei was able to privatize only a few of the dozens of state firms that he wanted the government to unload.

Tobias notes that the passage of Milei’s reform package, “albeit significantly watered down,” is impressive considering that members of Milei’s own party constitute less than 15 percent of the lower chamber.

Milei’s most obvious success has been fighting inflation, which according to Deutsche Welle is “down from around 25 percent per month last December to 4.2 percent this May.” This is a major achievement for a figure outside the mainstream of globalist standard opinion, who has called himself an “anarcho-​capitalist” (of all things) and was labeled by the German paper “right-​wing populist and economically liberal.”

Terms mean different things in different countries: it’s pretty obvious that Milei’s program has nothing to do with that of American “liberals” such as President Biden and his partisans.

This is Common Sense. I’m Paul Jacob.

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The False Gospel of the Printing Press

inflation, economist, monetary theory

It’s been a while since I’ve mentioned “Modern Monetary Theory,” popularly known as MMT.

While MMT is not popular here, it is gaining adherents outside the ranks of Common Sense readers like a new Ponzi scheme taking on suckers.

Modern Monetary Theorists go on and on about the gospel of printing money, like they just discovered that the Fed-​and-​Treasury act of borrowing within the banking system isn’t the only way to inflate the money supply.

You can indeed “just print money”!

Granted, the MMTers do a lot of fancy footwork, or silver-​tongue-​work — the closest they get to hard money — to avoid the infamous consequences of monetary inflation, “price inflation” being just one of them. They are so enamored of the money press that they’re like teenagers discovering sex: didn’t you old folks know about this great thing?

It would be comical were it not … inflationary.

At the present moment in history, of course, MMT is in a tricky situation: huge increases in the money supply during the COVID period resulted in no small amount of … huge price increases.

“Whatever you call it, MMT is printing money,” Matt Taibbi just wrote in a terrific May 18 piece, “and no matter how sure you might think you are that it will work, you aren’t, and can’t be. Sure, our leaders have been doing it, printing $4 trillion through multiple rounds of QE and $5.5 trillion more in the CARES Act, and sure, that last spree only inspired about 20% inflation so far. Still, any economist who says with a straight face he or she is sure this experiment won’t end with your kids using dollars as toilet paper is lying.”

Or just engaging in old-​fashioned money-crankism. 

The old get-​something-​for-​nothing racket. MMT’s just the latest form.

This is Common Sense. I’m Paul Jacob.

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Accountability folly political economy

Inflation & the Infirm Incumbent

Joe Biden, inflation, economy

“From President Joe Biden’s point of view, Americans ought to be thrilled with the recent trends in inflation,” writes Eric Boehm at Reason, who quotes the president: “Wages keep going up and inflation keeps coming down.”

True enough, but, Mr. Boehm goes on, “pointing at the charts and regurgitating economic figures doesn’t seem to be as convincing as the president might hope.”

You’ve seen the left-​of-​center memes mocking Americans for thinking the economy is bad when it is, instead, g‑gr-​great!

But prices for food and gasoline, after the big bulge caused by all those COVID checks and subsidies, did not go back down to previous levels. And rising wages after the “Great Suppression” of the lockdowns seem at best a verypartial return to better times.

Boehm offers some context. “It makes sense that the recent run of inflation would leave a psychological scar. After all, the peak inflation rate of 9.1 percent in June 2022 was not only the highest annualized rate seen in more than four decades, it was also more than twice as high as the average inflation rate in any year since 1991.…” And inflation has not stopped. “In March, the annual inflation rate was 3.5 percent. Yes, that’s 60 percent lower than the peak rate in June 2022, but that’s still higher than the average annual rate in every single year between 1991 and 2021, except for 2008.”

And then there’s the higher interest rates, which, Boehm plausibly asserts, compounds our perceptions that “inflation is a major problem.”

This is a huge issue for Biden. Boehm cites the political lore: “If you’re explaining, you’re losing,” and notes that, “unfortunately for Biden, his task in the run-​up to November’s presidential election is explaining to people that they shouldn’t feel like inflation is still a problem.”

Who you gonna believe: Your cash register receipts or a feeble, corrupt, multi-​millionaire lifelong politician?

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies political economy

Shrinkflation, Shrunk Nation

Joe Biden, inflation, ice cream, economics

In another pathetic pre-​recorded speech, played before Sunday’s Super Bowl, President Joe Biden lambasted America’s corporations for “shrinkflation.” 

“As an ice cream lover,” he explained in the vid, “what makes me the most angry is that ice cream cartons have actually shrunk in size but not in price.”

The Guardian expands upon the president’s gripe: “Inflation dropped to 3.1% in December but some companies are thought to have responded to rising costs by marginally shrinking the size of products — shrinkflation — as well as changing recipes to reduce the amount of more expensive ingredients — sometimes known as ‘skimpflation.’”

My, oh my, so businesses must adjust to inflationary pressures as well. 

When the costs of their inputs go up, they do not automatically become charities. Knowing that consumers do not sport infinite incomes and demand schedules utterly “inelastic” — buying the same goods in the same quantities even at higher prices — they often adjust by reducing quality or quantity.

It is one of many ways that inflation hurts us.

Inflation has even been referred to as the sneakiest of all taxes, taking from the masses and giving to the insider class, those closest to government (those who receive newly-​created money first).

Biden calls “shrinkflation” a “rip-​off” and insists that “the American public is tired of being played as suckers.”

Well, that will prove true only if the American public rejects those politicians who push the policies that led to the inflation — politicians like those in the 116th and 117th Congresses, Donald Trump, and Joe Biden himself.

This is Common Sense. I’m Paul Jacob. 

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deficits and debt national politics & policies political economy

The Economy Is Great-ish

Joe Biden, economy, inflation, Bidenomics

“We have the highest share of working-​age Americans in the workforce in 20 years,” Biden recently told reporters. “It’s no accident. It’s Bidenomics.”

Bidenomics being that old standby, tax-and-spend-omics.

So why do so many Americans think the economy is getting worse? Why do 84 percent say that their costs have gone up?

Well, says President Biden, the media mislead them. “You all are not the happiest people in the world [in] what you report,” is his view. “You get more legs when you’re reporting something that’s negative.”

The media do often mislead us; the negative news bias is real.

But I don’t think that our left-​leaning, in-​the-​tank-​for-​Biden media can be blamed for the impression so many of us have that it’s harder to make ends meet.

Biden isn’t the only one professing puzzlement. Breitbart Business Digest observes that a “small army of establishment media types and economists” are intent on “unraveling what they take to be the great mysteries of our time.” As described by a recent Brookings Institution paper, this mystery is the “disconnect between consumer sentiment and the state of the macroeconomy.”

As BBD points out, the Brookings researchers simply start by assuming that everybody is wrong, then try to figure out why.

“A simpler explanation would be that the economy is falling short of the public’s expectations” because of things like high inflation, higher interest rates, and greater difficulty paying for groceries, Christmas presents, vacations. And rent, and medical bills, and tuition.

Saying it’s all in our heads won’t make tough times go away.

This is Common Sense. I’m Paul Jacob.

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