The Government Has Tried To Do Something About Inflation Or Something

Even though there are a few points where this The Hill piece softly slaps the Biden administration, it mostly seems to be taking the position of “well, Los Federales tried, but, you dumb citizens aren’t helping.” Now, if this were happening under Trump, the headline and Blamestorming would be much different, including the headline

The government has tried to stop inflation. Why isn’t it working?

Biden Brain SuckerNo matter what the federal government does, inflation keeps rising with no clear end in sight.

Consumer prices jumped 1.3 percent higher in June and a whopping 9.1 percent over the past 12 months, according to data released Wednesday by the Labor Department, despite the best efforts of the Biden administration and Federal Reserve to bring inflation down.

While a June surge in gas prices was responsible for much of the overall increase in inflation, prices grew across almost every sector. That’s a troubling sign for the U.S. economy after the federal government scrambled to stop the highest annual inflation in more than four decades from getting worse.

“It’s going to be a long and tough road ahead. This is not going to come down very quickly,” said Derek Tang, co-founder and economist at research firm Monetary Policy Analytics.

After waiving off the threat of inflation for much of 2021, the Biden administration and Fed pivoted sharply toward bringing prices down.

In other words, Biden and his people were ignoring the issues. They weren’t engaged. Manufacturers knew issues were going to happen all the way back in mid-2020. A lot of Asian car manufacturers saw the shipping and cost issues, and moved a lot of the manufacturing to North America. So many who make and sell other products saw the shortages and price increases, and adjusted accordingly. Did you wonder why there really weren’t that many sales when stuff started opening in certain areas in 2020, or for Christmas 2020? Yeah, they projected everything out, because they understand economics, supply chains, etc and so on, things that most in the Biden admin do not. Most haven’t worked in the private sector anytime recently. Biden hasn’t since the early 70’s. So many might know teaching and law, but, not much else.

The Fed began raising its baseline interest rate in March in a bid to slow the economy enough to bring down inflation without causing a severe economic downturn.

But as inflation has steamed ahead, the Fed has hiked rates at an even faster pace. The bank in March boosted rates by 0.25 percentage points, followed by a 0.5 percentage point hike in May and a 0.75 percentage point hike in June — the largest single increase since 1994.

The Fed also ceased its monthly purchases of Treasury and mortgage bonds and will soon allow its holdings to expire, which will pull billions of dollars out of financial markets and into the central bank each month.

That’s literally all the government has done. What has the Biden admin done? The story really doesn’t say. Because there’s not much of consequence to discuss. They really have hurt more than helped.

“There is still a lot of pent-up demand in the economy, especially around leisure, hospitality and tourism, as people appear prepared to run down accumulated savings and pay higher prices to do things they missed out on over the past couple of years,” wrote James Knightley, chief international economist for ING, in a Wednesday analysis.

“To get inflation meaningfully lower quickly we need demand to better match the supply capacity of the economy. Ideally this would come via the supply channel,” Knightley added.

High inflation is often caused by a mismatch between the goods and services that consumers and businesses want to buy and the economy’s ability to supply them.

Demand is normal, has been normal post COVID, and actually dropping because of the lack of goods. There was a short period of demand, especially in the travel sector, but, what we’re seeing now is demand destruction, where people are just not buying a lot of things.

In a Wednesday statement, President Biden dismissed the June inflation report as “out-of-date” given the steady decline of gasoline prices throughout the last month. Even so, those supply shocks are far from settled as long as the war in Ukraine rages on.

Yet, gas is still way, way above where it was when he took office, and it’s still a nationwide average of $4.65, and the higher gas and diesel prices are baked into the cost of goods for months. He has no real idea what’s going on, and doesn’t seem interested in asking those in the private sector who know. And should have asked early in 2021.

Of course, maybe his people wanted this to happen.

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7 Responses to “The Government Has Tried To Do Something About Inflation Or Something”

  1. Elwood P. Dowd says:

    Inflation is up globally. 9% in UK; 8.3% in Belgium; 8.1% in EU; 7.4% in Germany; 69% in Turkey!…

    Supply chain disruptions, Ukraine war…

  2. Elwood P. Dowd says:

    Teach types: Of course, maybe his people wanted this (inflation) to happen.

    How did “his people” engineer global inflation? US inflation is not helping the Democratic Party at all, so why would “his people” want inflation to happen?

  3. Professor Hale says:

    Robert Reich (democratic party activist) is making the rounds telling people there is no inflation. It’s just the economy recovering from all the damage Trump did.

  4. The June year-over-year inflation rate was, unexpectedly!, 9.1%. The distinguished Mr Dowd tries to deflect blame on this from President Biden, but you can bet your last ruble that he’ll give credit to Mr Biden because gasoline prices have recently declined, though by nowhere close to the amount they rose.

    Mr Dowd wrote:

    Inflation is up globally. 9% in UK; 8.3% in Belgium; 8.1% in EU; 7.4% in Germany; 69% in Turkey!

    Though Mr Dowd may have missed it, I did not: the euro, which was normally in the $1.15 to $1.22 range against the dollar, is now right at $1.00. The EU didn’t deliberately devalue it; that’s entirely market action. The dollar has remained reasonably strong because it remains the world’s reserve currency.

    We’re actually pretty lucky, and sort of propped up by other nations in a way that few understand: because our debts are always denominated in dollars, and not other nations’ currencies, we can always pay our debts. The type of hyper-inflation that has hit other countries trying to pay debts denominated in dollars rather than their own currencies can’t hit us.

    How did inflation hit Europe? Vladimir Vladimirovich has demanded payment for Russian oil and natural gas in rubles, and the mechanism that was set up for the EU to save face about continuing to buy from the USSR Russia has propped up the ruble and helped devalue the euro. It’s now costing the EU nations more euros to buy the same things from nations.

    What we need now are President Ford’s Whip Inflation Now buttons!

  5. I’m old enough to remember the high inflation rates of 1974-1982, and what it took to end them: a deep recession in 1982.

    Well, our GDP contracted by 1.6% during the first quarter — the initial guesstimate was -1.4% — and the second quarter is now over; the official first guesstimate is set to be released on Thursday, July 28th, with the second guesstimate on Thursday, August 25th. If it’s again negative, we will officially be in a recession.

    The President’s, and the Federal Reserve’s, policies cannot stop inflation, and cannot really control the economy; at best, they can influence things in one or the other direction. But the President, regardless of whom it is, always takes credit for whatever good things happen — though virtually nothing good has happened under the dummkopf from Delaware — and place the blame for bad things that happen on someone else, but the public never really swallow that last bit; the President always gets the blame as well.

    So let’s hang this millstone on Joe Biden’s scrawny neck, and vote the Democrats out, out, out!

  6. Elwood P. Dowd says:

    The Reagan recession of the early 80s was intentional to squelch inflation by slowing the economy, throwing millions of the American middle class out of work (this is how monetary policy works). Unemployment reached nearly 11%.

    Ronald “government is the problem” Reagan made no effort to control spending, and gov’t spending is a known recession killer! US spending during the Reagan recession was higher than during any subsequent recession. The national debt doubled under Mx Reagan. “We’re all Keynesian now!” No post WWII prez increased the debt as much as the anti-government Reagan!

    Today, the last thing nuCons want is to end inflation. They want DonJon tRaitor back because he hates who they hate!

  7. david7134 says:

    You can really get things wrong. Reagan submitted a budget that would have cut government, but the Dem led congress did not pass it and in fact increased spending. Get your facts straight, but then you would be a conservative if you really knew how the world turns.

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