Mark Ballard: Despite politicians’ claims, stimulus spending is not the only cause of inflation | Marc Ballard
Just before Thanksgiving, US Senator John N. Kennedy rose to speak in the Senate to say, and rightly so, that this holiday season people will see more expensive groceries and gasoline due to inflation. strongest in 31 years.
But the real message from the Madisonville Republican seemed to be that the fault for the price hike lay in the multibillion-dollar packages that Democratic President Joe Biden pushed through Congress this year.
âThis Thanksgiving,â Kennedy said, âI hope my Democratic friends give up on tying grindstones around the neck of the American economy.â
Even as US Senator Bill Cassidy, R-Baton Rouge, performed a victory lap for the passage on November 6 of a $ 1.2 trillion program to modernize the country’s infrastructure – a proposal of Biden, whose final draft he helped negotiate – the former Senator hinted at a previous spending bill as the cause of inflation.
“In part, it was the Biden administration that invested a lot of money earlier in the year when it was not clear we needed it” Cassidy told KSLA-TV on Monday in Shreveport.
He was referring to the US $ 1.9 trillion bailout law, enacted on March 11 against GOP opposition. This funding has revived the economy after more than a year of lockdowns caused by the COVID-19 pandemic.
“President Biden’s program has dramatically increased inflation, and they are trying to pour gasoline on this fire,” he added. said Steve Scalise, the House Minority Whip, R-Jefferson.
A QuoteWizard Survey by LendingTree LLC Last week, 59% of Louisiana consumers were found to have “light to moderate” or “very difficult” meeting expenses.
As satisfying as it may be in this partisan world to tie inflation to the donkey’s tail, keep in mind that the ‘Blame Biden’ storyline has a lot to do with stoking heightened anxiety as well. of voters in the run-up to the 2022 Congressional elections.
Biden makes no excuse for spending billions of dollars to help individuals and businesses find their niche after COVID-19. The administration also argues that inflation has many causes and that picking a single official does little to solve the problem.
A Pew Research Center analysis released on November 24 revealed higher inflation rates in 39 economies around the world relative to consumer prices before the 2019 pandemic. Germany, UK, Saudi Arabia, Sweden and other market-oriented economies all have higher prices.
All of these nations, like the United States, have pumped money into their economies to help their people recover from the near complete shutdown that has blocked the delivery of raw materials and finished goods, and threw away millions of dollars. unemployed people, all to slow the spread of the highly contagious virus. and often fatal COVID-19.
âExplanations for the current phenomenon put forward to date include continued disruptions in global supply chains amid the coronavirus pandemic; turbulence in labor markets; the fact that today’s prices are measured against prices during last year’s COVID-19-induced closures; and strong consumer demand after local economies reopen, âPew wrote. “Understanding why the inflation rate has risen so quickly could help clarify how long the surge could last – and what, if anything, policymakers should do about it.”
A counter-offensive against one of these multiple strands began last week.
Many economists say inflation has been exacerbated by the Federal Reserve’s years-old policy of strengthening state and local governments by helping buy bonds used to borrow money for public projects. As successful as the policy is, some economists say that in this new world where the federal government is spending trillions to stimulate the economy, supporting state and local bond purchases is fueling inflation.
Fed Chairman Jerome Powell told Congress on Tuesday that the Fed will forgo such purchases and focus more on price controls.
The pandemic continues to put pressure on the economy.
Although the unemployment rate fell to 4.2%, the US Department of Labor reported on Friday that employers created fewer jobs in November as businesses brace for another increase. The Omicron variant appeared in South Africa a few weeks ago and has already been found in five US states.
Biden said in a speech he wanted to avoid a shutdown and the problems causing the economy. But it’s going to require more people to get vaccinated.
âWe have done everything possible to defeat this virus. And that is what we must continue to do. This is how we keep our country, our businesses and our schools open, âBiden said Thursday night. âI know COVID-19 has been very divisive in this country. It has become a political issue, which is a sad, sad comment.