The evolution of the inflation discussion has been popcorn entertainment. Inflation will not happen. It is transitory. High inflation is good for you. Inflation fears are unjustified. Blame Corporate America’s greedflation, Russian President Vladimir Putin, and mom-and-pop shops. The latest narrative just dropped: It is all your fault for the price pressures prevalent throughout the US economy, according to a prominent left-leaning publication.
Who’s to Blame?
The Atlantic published a recent article titled “Inflation Is Your Fault,” arguing that because consumers causing higher prices simply by spending money. Well, sorry for living! “People hate inflation, just not enough to spend less: This is one of the central tensions of today’s economy, in which things are going great yet everyone is miserable. And in some ways, Americans have nobody to blame but themselves,” the author wrote.
The magazine was perturbed that online shopping during the Thanksgiving holiday weekend was up 7.8% compared to a year ago. Of course, a significant portion of this consumption was fueled by the buy-now-pay-later scheme, credit cards, and savings. But while the rest of the content is highly questionable (no mention of the Federal Reserve’s $6 trillion money-supply expansion), the crux of the argument contradicts everything the public has been told for the last few years.
The article states that people should be spending less to reduce inflation. But here’s the deal, Jack: Shouldn’t this argument apply to the federal and state governments, too? The Leviathan represents as much as one-third of the US economy, and President Joe Biden conveyed to the voters that the Inflation Reduction Act was necessary because it lowered the budget deficit (the legislation did not) that contributed to the inflationary climate in the first place. Where are the calls for the government to stop spending to trim inflation?
See, when the crowd of media activists are trying to run defense for Washington, be it the White House or the Eccles Building, they sprint into a wall of logic. They keep contradicting themselves.
Fill ‘er Up
It’s morning in America again. Why? After tapping into the inventory for political objectives, the Biden administration has gradually refilled the Strategic Petroleum Reserve (SPR). In the wake of collapsing to a 40-year-low of 346 million barrels, the country’s emergency stockpiles have risen at a snail’s pace, touching 351 million for the week ending December 1. Now the White House aims to replenish the SPR.
The Department of Energy announced on December 8 that it hopes to purchase three million barrels of crude oil for delivery in March. The news, in addition to the skirmish between Guyana and Venezuela, resulted in a 3% rally in West Texas Intermediate futures on the New York Mercantile Exchange. US crude topped $71 per barrel, but it lost for the seventh consecutive week. Still, it posted a 4% weekly decline, adding to its year-to-date decline of more than 11%.
But why is the Energy Department’s acquisition over one month instead of a single day? Officials are ostensibly worried that accelerating the refill process would push oil prices higher. That said, if this is the speed the administration is adopting, it will take roughly eight years to bring the SPR to where it was when Biden started raiding the energy rainy-day fund.
If Democrats only allowed former President Donald Trump to buy vast amounts of crude oil when it was trading at $10, $15, or even $20 a barrel!
Like America, Like China
China, the world’s second-largest economy, has joined the United States in being slapped with a downgrade. Moody’s Investors Service lowered China’s debt outlook from “stable” to “negative,” citing the country’s collapsing property sector and skyrocketing local government debt. Analysts say that Beijing will likely need to intervene and extend support to state-owned organizations and municipalities that present “broad downside risks to China’s fiscal, economic and institutional strength.”
Like their US counterparts that scoffed at both Moody’s and Fitch, Chinese officials dismissed Moody’s warnings, saying that the economy would be fine and the mountain of debt was under control. “Moody’s concerns about China’s economic growth prospects, fiscal sustainability and other aspects are unnecessary,” the Ministry of Finance said in a statement.
It appears that burying one’s head in the sand is the new fiscally responsible posture.