At the start of the new administration, the consensus in Washington, from the White House to the Federal Reserve, was that inflation concerns were unfounded, despite the myriad of evidence to support this worry. Fast forward to the present, the central bank and the Oval Office concede that inflation is here, it is hot, and the skyrocketing cost of living could linger heading into 2022. But would the newest line from the nation’s capital excite the likes of Paul Krugman and modern monetary theory advocates? Inflation is good, and it suggests how strong the post-pandemic economic recovery is going. Yes, the adults are back in charge.
Dude, Where’s My Treadmill?
Speaking during her daily press briefing, White House Press Secretary Jen Psaki dismissed the supply chain crisis that has crippled global commerce and impacted individuals and businesses, referring to it as “the tragedy of the treadmill that’s delayed.” Psaki told reporters that President Joe Biden has formed a task force to address this issue and now the administration is concentrating on ports and extending COVID vaccines to nations where manufacturing facilities have been closed because of the pandemic.
This is not the first time that the White House has been flippant about the plethora of economic challenges affecting millions of Americans. In September, Brian Deese, the director of the National Economic Council (NEC), presented the compelling case that if you do not count goods and services contributing to rising inflation, it would not be high.
White House Chief of Staff Ron Klain recently retweeted a message that suggested inflation and supply chains “are high class problems.” Psaki appeared on CNN with host Jake Tapper and defended Klain’s dismissive viewpoint of a genuine hurdle that could prove tough to overcome for the United States.
“The fact is that the unemployment rate is half of what it was about a year ago.
More people have jobs, more people are buying goods, that’s increasing demand. That’s a good thing. At the same time, we know supply is low because we’re coming out of the pandemic.
What people should know is inflation is going to come down next year, economists have said that, they’re all projecting that.”
Many media outlets, including one prominent Washington newspaper, are defending the administration’s philosophy. The Fourth Estate is purporting that a sky-high consumer price index (CPI), producer price index (PPI), and personal consumption expenditure (PCE) price index are great for the economic recovery and that this should be the new normal moving forward. But is inflation that exceeds the Eccles Building’s 2% target rate beneficial for low- and middle-income households after all?
Speaking Without Saying Anything
All the president’s men and women keep regurgitating the lines that everything unfolding in the marketplace, no matter how dire for Main Street, is a sign that the economy is firing on all cylinders. But let’s dissect two particular talking points: shortages and cash in Americans’ wallets.
In today’s international marketplace where everyone is demanding everything simultaneously, shortages have become commonplace. As current supplies and present output levels fail to satisfy demand, consumers flush with cash are scooping up everything they can before they run off the shelves. It is comparable to a Black Friday sale where everyone is invading a store and fighting each other to purchase a 55-inch television that is 25% off.
Jen Psaki (Photo by Kevin Dietsch/Getty Images)
Indeed, many shoppers are starting to hoard common goods and panic buy vast sums of products before they go missing or become more expensive. Be it gasoline or canned meats, households are stocking up, which will inevitably lead to higher prices in the coming months, especially as winter approaches. Even retailers are urging their customers to complete their Christmas shopping early in case children’s toys and the annual festive sweater vest for Uncle Phil are absent from brick-and-mortar stores this year.
Meanwhile, yes, Americans who were hardly affected by the COVID-19 public health crisis have lots of dollars and cents in their pockets. For the first time in a decade, the household savings rate is above 10%, topping out at 34% in the early days of the pandemic. In other words, there have been pent-up savings as millions of Americans were placed under house arrest and forced to eat at home and imbibe the entire Netflix catalog on the sofa. Moreover, now that the economy is reopening, consumers are spending again and creating immense demand.
As Liberty Nation’s Mark Angelides noted, “You don’t congratulate someone for going on a diet when they starve for five days and then eat 30 hamburgers.”
The Vision of the Anointed
Eminent economist Murray Rothbard famously wrote in Anatomy of the State, “It is no crime to be ignorant of economics … But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” It is no secret that economics has never been a practiced discipline in the blood sport known as politics, with policymakers embracing the three true outcomes for their expenditure blitzkriegs: taxing, printing, and borrowing. But when their arrogance exacerbates an authentic threat to struggling households trying to make ends meet after being denied a livelihood by politicians and bureaucrats, this ignorance metastasizes into malfeasance.
~ Read more from Andrew Moran.
