Politicians often appear to live in alternative universes. There, they act as if the pure power of their words could unilaterally exempt the laws of economics. President Joe Biden continues a long tradition and has given the latest example of this phenomenon.
“If your main concern right now is inflation, you have to be more enthusiastic about this plan,” the president said in a recent statement in support of his trillion-dollar spending plan. “These steps increase our productivity, raise wages without raising prices, and do not increase inflation. It will relieve inflationary pressure.”
As Americans slowly emerged from the pandemic closure, they were, of course, concerned about rising prices for homes, consumer goods, food, and cars. They don’t imagine things. The consumer price index, which measures inflation, soared in June and is at its highest level in 13 years.
Most people don’t track government statistics, but they are facing sticker shocks. House prices soared 20% last year and are now typical of bidding wars. The additional dealer market is the norm for new cars, with average used car prices rising almost one-third since the same period last year.
The president is correct that the abnormal COVID-19 condition is partially responsible. Car prices are rising as manufacturers delay production due to a shortage of computer chips. These chips are essential because cars are highly computerized. The shortage caused hot demand in the second-hand market. Supply chain disruptions are also causing appliance shortages.
But Biden is in Fantasyland if he believes that spending another $ 3.5 trillion on stimulus and using an additional $ 550 billion of infrastructure bills will ease inflationary pressures. Republicans have the right to raise the ghosts of Jimmy Carter’s time. It’s a dire time for gas lines after the oil price shock pushed inflation to double-digit levels. The crisis severely undermined his presidency.
The president needs a review of the economy. Federal debt has exceeded $ 28 trillion. When the government prints money and circulates it in the economy, it pushes up prices. If the government provided all Americans with a $ 10,000 subsidy to buy new cars, for example, the price of those cars would probably rise to around $ 10,000. This is seen throughout the economy as federal student support is pushing up college tuition.
The price shock of the 1970s stemmed from the great social spending of the 1960s. “In fact, prices began to rise in the mid-1960s, when the federal government was spending a lot of money on both the Vietnam War and the great society,” NPR recalled. President Richard Nixon exacerbated the problem of price controls that created shortage, but eventually said that “price bounced even higher.”
Republican presidents and lawmakers only seem to discover the dangers of government spending when Republican presidents and lawmakers are out of power. During President Donald Trump’s administration, debt increased by $ 7.8 trillion. This is one of the largest economic growths in American history.
Unfortunately, Republicans discovered debt problems when the Democrats were in charge, and vice versa. Liberal economists once again downplay spending concerns and assure us that inflation is only a temporary event. Sadly, as mentioned earlier, Americans may have to endure long inflation, given that politicians do not always tackle reality.
Federal spending binge obviously linked to inflation – Press Enterprise Source link Federal spending binge obviously linked to inflation – Press Enterprise