Biden has been wrong repeatedly about inflation. Don't count on him being right now.
The Biden administration apparently believes that government fiscal activism is an inflation cure-all.
- Reports that inflation in America has spiked were wishful thinking.
- Inflation kept rising, but the denials kept coming.
Is inflation on the downslide? Some claimed that the dire inflation numbers last week came with a ray of hope.
Bank of America analysts said inflation has “likely peaked.” Reuters also reported that inflation has likely peaked. Forbes tells us that experts believe inflation has topped out, and that consumer inflation likely peaked in March. Investor’s Business Daily and MarketWatch also say we are “likely” at the summit.
That is good news, if true. But we have heard it before.
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One note of concern in the most recent data is that the producer price index is rising faster than consumer prices. Historically, this tends to indicate more inflation ahead, not less, and the jump in March was the highest on record.
Biden misjudged inflation's duration
Of course, it is easy to poke fun at the experts who get things wrong. But it is less amusing when the government in charge of keeping the currency stable cannot get it right.
In July, as inflation reached high enough levels to cause public concern, President Joe Biden assured us that it was “temporary” and “expected” as the world emerged from the disruptions of the global COVID-19 response.
When prices continued to rise, the White House blamed supply chains and made the case that the United States could spend its way out of it with November’s infrastructure bill, which was supposed to lower inflation.
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The Biden administration apparently believes that government fiscal activism is an inflation cure-all. While defending the failed $1.75 trillion “Build Back Better” agenda, the White House claimed that "no economist out there is projecting that this will have a negative impact on inflation."
Well, maybe one – former Trump National Economic Council Director Lawrence Kudlow commented, “There is no living human being that agrees with this view.”
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Inflation kept rising, but the denials kept coming. In December, Biden said that we were at the “peak of the crisis,” which was only a “bump in the road.” As inflation has continued to spiral we have heard COVID, supply chains and corporate price gouging all get the blame.
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Now, the White House is trying to sell the bumper-sticker argument of “Putin’s Price Hike” to explain an upward oil price movement that began more than a year ago, in part because of Biden's restrictive energy policies.
The administration will blame anything for inflation except its own actions. Trillions of dollars of deficit spending on “COVID relief” and other programs over the past two administrations has sent the dollar into a tailspin.
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Yet, they should have seen this coming. In February 2021, former Clinton Treasury Secretary Lawrence Summers warned that the latest deficit-financed $1.9 trillion “COVID relief” bill would “set off inflationary pressures of a kind we have not seen in a generation." Summers proved that at least some experts can get it right.
And now Summers is pointing out the obvious, that inflation is a symptom of a disconnect between government spending and monetary policy.
Biden wants to spend more
Plus, it is worth noting that after all that spending, COVID-19 is still with us. Biden’s answer? More spending.
Biden has an opportunity to restore public confidence and bring a hard-eyed sense of monetary responsibility to the Federal Reserve. Yet, the White House continues to push the nomination of Lisa Cook to the Board of Governors. Cook has slim qualifications in monetary policy, and her academic interests include studying reparations for slavery.
One estimate places the reparations tab at $12 trillion. Can the government just print that money, too? If so, it would not be worth much.
The fact is that the value of our money is the product of policy. We are faced with a White House that will not admit that massive deficit spending and misguided energy strategy have boosted inflation, coupled with a Fed that may become a playground for progressives' expensive pet projects.
Has inflation likely peaked? You don’t have to be an expert to doubt it.
James S. Robbins, a member of USA TODAY's Board of Contributors and author of "This Time We Win: Revisiting the Tet Offensive," has taught at the National Defense University and the Marine Corps University and served as a special assistant in the office of the secretary of Defense in the George W. Bush administration. Follow him on Twitter: @James_Robbins