The Administration and Their Lies About Inflation

The word "lies" might be a bit harsh sounding because it implies they really know that what they're telling everyone is false and it's entirely possible that the whole lot of them are simply too stupid to know it's a lie.  Does, "... and Their Idiocy About Inflation" sound better?  Seems about the same to me. 

Today's post is a result of one from Ron Paul on the Mises Institute website: "Respect the Fed?  No, End the Fed."  The great Milton Friedman famously said, inflation is “always and everywhere a monetary phenomenon” and thus the responsibility of central banks. and in this case, it's primarily due to the insane monetary creation that has been going on under the Bidenistas and really since the early 2000s.  It accelerated due to the Quantitative Easing (QE) episodes and ZIRP (Zero Interest Rate Policy) under "Helicopter" Ben Bernanke, chairman of the Federal Reserve before Janet Yellen.  

Before I go to Ron Paul's argument, I want to remind everyone of a great quote from Thomas Sowell, one of America's most brilliant economic thinkers.  

“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”

That lesson, that politicians disregard the realities of economics, is visible everywhere.  You don't have to go to the extreme that the ruling class is systematically trying to destroy the country and everyone in it, although I sure won't argue it necessarily isn't that.  It's possible they're not so much malicious and evil as they are incompetent idiots, who are also drunk, stoned, or otherwise impaired.  I mean, have you ever actually listened to what people like AOC or Elizabeth Warren say? 

Within moments of taking office, Biden acted to destroy American energy independence and started spending trillions that was created by fiat - by declaring money to be there to spend.  Those two by themselves would kick off terrible inflation, especially in fuel prices (which add to everything else we buy), but they're just the start.  There are many more idiotic policies that have added to it.  Now they say they're creating policies to counteract inflation, which is to say to counteract their previous policies.  Feel better?

Biden announced a three part plan.  First, the plan has government agencies “fix” the supply chain problems that their policies created, such as shutting down the country for a year.  These have led to real shortages of many things, adding legitimate supply vs. demand pressures to the mix.  

The second point, is spoken of as deficit reduction, but (of course) they're going about it completely wrong.  They're not proposing cutting welfare or warfare spending, they're creating tax increases.  At this point, repeat the mantra that tax rates are not the same as tax revenues - it's called Hauser's Law.  Lots more at that link, but regardless of the tax rates, in postwar America tax revenues have remained at about 16.8% of GDP.  Yes, as a general rule tax rate cuts have increased tax revenues and tax rate increases have cut tax revenues.  Also, as Ron Paul points out, "History shows that tax increases unaccompanied by spending cuts end up increasing the deficit."

Finally, they're calling on the Fed to fix things, saying that the Federal Reserve “has the primary responsibility to control inflation.”  Riiiight.  Unless they do things to reign in monetary creation and cut deficit spending, nothing good will happen.   

I'll leave final words to Ron Paul.

Treasury Secretary and former Fed Chair Janet Yellen and Chairman Powell have both admitted they were wrong to publicly dismiss inflation as “transitory.” The fact that the two most recent Fed chairs made such a huge blunder (or purposely refused to admit what was clear to many people for over a year), shows the folly of relying on a secretive central bank to manage monetary policy. Instead of “respecting the Fed’s independence,” President Biden should work with Congress to audit, then end the Fed.