The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.
Vladimir Lenin
Inflation, dormant for 30 years, is back because the federal government has repeated the mistakes of the sixties and seventies. The Biden administration disavows the Carter Presidency, but their situations and styles are eerily similar, especially when it comes to inflation. Inflation seeds were sown before they entered office, but Biden (like Carter) ignored inflation upon entering office. And to ignore inflation is to incite higher prices.
Biden actually defined “inflation” correctly as too much money chasing too few goods. He just says nothing about “inflationary behavior” – which is what ruined Carter’s presidency. This president should be actively lowering energy costs, increasing global supplies of everything, and holding federal debt and spending in check. But no. Mr. Biden has been inactive; thereby inciting inflationary behavior in businesses and consumers.
To Achieve a Green Economy, Biden Invites Inflation
One cannot underestimate the role carbon-based energy plays in the US economy. Every year, Americans drive and fly more miles, heat more houses, export more food, and buy more stuff than any other country. The US and Canada are the top per-capita energy users in the world, consuming twice the China average and five times the world rate (source: IEA). Thus, because the US economy is so energy-driven, it is extremely vulnerable to rising energy costs.
Jimmy Carter inherited a US economy that was the most Arab oil dependent ever. In 1976, the US imported 22% of its fuel and used 30% of the world’s energy (source: WJU Energy Index). Already, US support of Israel had triggered an OPEC embargo, but a gallon of gas still cost $0.39 when Nixon left office in 1974. Fault Carter for not doing everything necessary to hold energy costs in line. He left office in 1981, when a gallon of gas cost $1.19, and everything – from produce to packaging – cost more.
In contrast, Joe Biden is doing everything possible to inflate fuel costs. His executive orders have reduced domestic oil production 2 million barrels a day; thereby driving a gallon of gas up from $2.31 a year ago to $3.41 today, and costing the US economy $50 billion a year (at $83 a barrel). Biden’s anti-carbon zealots, despite predictions of $5 gas by summer, still plan to kill a Michigan pipeline. Their goal is obvious: inflate petroleum prices to force suffering citizens into electric vehicles.
Biden Is Sailing America into a Supply Side Recession
Joe Biden promised to bring “competence” and “experience” to the presidency to restore “normalcy” in America, but he’s stoked supply-side inflation and (probably) recession. Transportation gridlock, employee walk-outs, and business closures are high-inflation triggers. Where’s the “competence” when 80,000 truck drivers are still needed and 400,000 containers are stuck outside California ports? Those crises are driving up the price of everything.
CNBC reports 1 in 4 Americans have quit their jobs since Biden entered office: 3.9 million workers in July, 4.3 million in August, and 4.4 million in October. Moody’s Mark Zandi sees a connection between extra jobless benefits and “a workers’ market” that lets employees “exert pressure on their employers.” The President owns this problem because, upon hearing employers “can’t find workers” in June, he scolded, “pay them more.”
Worker walk-outs beget inflationary work stoppages. Widespread wage increases beget widespread price increases. Get a load of “normalcy” under Biden: bragging to workers that wages are up 4% since he took office, when consumer prices have risen 6.2% since April. Do the math, Joe (at least Jimmy Carter was an engineer).
In an odd twist, Kamala Harris acknowledged America’s long-term inflation driver: “Sadly, one-third of our small businesses have closed.” Bingo! The primary check on price gouging is the competitor down the street, and I don’t need CNBC for what I can see firsthand: availability replacing affordability in everybody’s value proposition. At least in the Carter-Reagan years, discounters Costco, Home Deport and Walmart were starting up. Now we have Lucid, whose starter model sedan costs $78,900.
The Biden Misery Index Will Mimic Carter’s
Economists agree the runaway inflation of the 70s was the result of 60s government excesses, primarily a divisive war in Vietnam that cost $168 billion and Great Society legislation that ultimately created 80 welfare programs and cost $22 trillion. The Great Lesson from the 60s is the Democrats deceived (the Pentagon Papers) and lowballed costs (Medicare) to hold onto power. Thus, the Johnson-Carter past is prologue to the Obama-Biden present.
Kennedy and Johnson ran the Vietnam debacle. Bush and Obama ran the Iraq-Afghanistan money pit. All four entrenched a greedy industrial-military complex, whose lobbyists ensured defense outlays grew from $47 billion in 1960 to $731 billion in 2019 (source: World Bank). The national debt grew from $10 trillion to $19.5 trillion on Obama’s watch, and $910 billion in Afghanistan and $1 trillion in Iraq were part of the problem.
In 1964, LBJ claimed Medicare would cost $500 million annually, but it cost $799 billion in 2019, when Medicaid also cost $613 billion (source: the Kaiser Family Foundation). Appropriations for the entire War on Poverty were $1 billion in years one through three, but have averaged $440 billion to date. Let it suffice to note Obamacare and Build Back Better will cost far more than CBO estimates, inviting higher inflation with middle-class entitlements, more taxes, and more debt.
Inflation hawks raised red flags when Trump injected $225 billion (Families First Act), $1.9 trillion (CARES Act), and $335 billion (PPPHCE Act) into a strong economy momentarily crippled by COVID. After Trump added another $915 billion (Response & Relief Act) last December – with vaccines rolling out and the economy clearly recovering – Democrat Larry Summers warned that was too much stimulus and Biden needed to tap the brakes. His warning went unheeded.
Biden entered office with $1 trillion of Trump stimulus in the pipeline, so the $1.9 trillion American Rescue Plan was overkill, and the $1.2 trillion infrastructure bill and $1.7 Build Back Better bill guarantee future inflation. That’s reckless because, all in, that’s $8.1 trillion in twenty months – on top of a $27 trillion national debt.
Does Biden Understand – Or Just Not Care?
Do we really care if runaway inflation results from stupidity or dishonesty? With Joe Biden, it’s a little of both, but he’s scary wrong to promise Build Back Better will “be a force for achieving lower prices for Americans.” Secretary Yellin is wrong that Americans in “the medium-term” will “see inflation decline.” Jen Psaki is wrong that “no serious economist” is “suggesting there’s unchecked inflation on the way.” Sadly, we’re stuck with these folks.
The only good news is Biden’s handling of the economy is creating an opportunity like Jimmy Carter created for Ronald Reagan, whose campaign appeal is worth repeating…
A recession is when your neighbor loses his job. A depression is when you lose yours. And recovery is when Jimmy Carter loses his.
Ronald Reagan (who killed inflation)
