If someone were to set out with the goal of learning how to rapidly increase our inflation rate in the shortest amount of time possible, they should start by pulling up a chair, breaking out a notebook, and keeping a close eye on the economic approach of President Joe Biden’s administration. With White House Press Secretary Jen Psaki serving as Adjunct Professor, and President Biden himself as Dean of Curriculum, the Biden Administration is beginning that free Community College education they’ve promised by offering what is essentially an Economics course titled Achieving Inflation 101. And we can certainly give at least an honorary title to First Lady Dr. Jill Biden – America’s favorite doctor who doesn’t treat sick people. Let’s call Dr. Jill the School Chancellor.
Before we examine the effectiveness of Biden’s tactics for blowing up inflation, we should first consider what inflation is, and the impact it has on citizens. Inflation can be defined as “the decline of purchasing power of a given currency over time.” Inflation means goods and services cost more, and your money buys less. In other words, inflation is bad; really, really bad. And while millions of younger Americans have never experienced high inflation rates, they’re about to get a front row seat for a crash course on its effects.
For decades now, the United States has enjoyed low to moderate inflation rates (aka Consumer Price Index, or CPI). The last time we had inflation over 5% was in 1990 when the annual CPI was 5.4%, and the last time we had double-digit inflation was in the aftermath of President Jimmy Carter’s disastrous administration in 1981 when the annual CPI was 10.4%. For millennials and Gen Z, true inflation, problematic inflation, is an abstract concept. We can tell they haven’t experienced true inflation because if they had they would be gravely concerned with the actions of the president they so enthusiastically support; Mr. Biden.
What is Its Impact?
When inflation sets in and prices begin rising, the effect on wealthy folks is minimal. If a gallon of milk costs $4 today, and $5 by the fall, and then $6 at Christmas, it’s no big deal to a millionaire. It’s the same with gasoline, or automobiles, or pot roasts. The fat cats just shrug their shoulders, start up the Mercedes, and head to the golf course. Anyone with wealth knows inflation is inevitable and has already adjusted their investment strategies, shifting perhaps to tangible assets such as real estate or precious metals. Inflation is merely a nuisance to the rich, but it’s devastating to the poor and middle class.
Democrats claim to be party of the poor. They’re the ones who are looking out for you, and are going to stick it to the wealthy, because the wealthy don’t pay their fair share. When President Biden announced his $1.9 trillion so-called COVID Relief Bill a few months back, the left and their media clapped like circus seals over the fact that the $1,400 “stimulus” checks would only be going to the poor and middle class. “Yeah, screw those rich dudes.” Meanwhile, those rich dudes didn’t give a damn because $1,400 is a pittance to them, and the resulting debt and inflation from those handouts will barely make a dent in their portfolios. But inflation can be catastrophic for the poor and middle class.
For the 85-year-old widow living on her husband’s pension and modest Social Security checks, her income is fixed. She has a tight budget. If she allocates $175 per month for groceries, and $50 per month for discretionary spending, inflation will force her to make choices. If prices jump up by 5%, perhaps she must buy hot dogs instead of chicken breast, and maybe she needs to settle for the no-frills brand of paper towels. If prices jump 10%, maybe she has to do away with paper towels altogether and cancel that trip to the movie theater with her senior citizens group. And if prices jump 15%, she may be forced to merely tell her grandson she loves him instead of writing that $20 check like she did previously.
Inflation is coming, and to some degree it’s already here. Leading indicators such as the producer price index (PPI) are surging, and the prices for various commodities such as steel, lumber, and dairy products are also spiking. Unfortunately, inflation is about to get a lot worse due to the Biden Administration’s policies. Intentional or not, their actions will cause the CPI to skyrocket, and the phenomenon is entirely predictable.
Drive Up Inflation Step One – Increase Demand
The law of supply and demand should be easy to grasp. If people want more of something they buy it, and the supply of that something goes down. When the supply goes down, the price increases, and voilà, inflation. When Biden sent out the aforementioned $1,400 checks in March to folks, they were unnecessary, generally speaking. The economy had already been coming back, and people had money. Those additional funds however, provided folks with even more money to spend, and spend they did; and are. That spending is one of the main drivers of the current and future inflation we’re seeing, and it’s only going to continue to increase prices, and thereby the CPI.
Drive Up Inflation Step Two – Spend Money That Doesn’t Exist
The COVID Relief Bill was more than just the $1,400 stimulus checks, a lot more. So is Biden’s $2.3 trillion so-called Infrastructure Bill, and his $1.8 trillion so-called American Families Plan. Biden’s spending plans are full of pork, everywhere. Bailing out irresponsible blue states after their own spending sprees, paying off Democratic Party cronies such as public and private unions, and splurges on ridiculous Green New Deal-type nonsense.
There is only a finite amount of goods and services that exists in our economy, and those goods and services are known as our Gross Domestic Product (GDP), and our GDP has specific values. When the government simply starts to pump money into the economy without a corresponding increase in our GDP, inflation is the result. Biden has been in office for little more than 100 days at this point, and he’s already proposed over $6 trillion in additional spending; spending that doesn’t include our normal budget and spending. That money doesn’t exist. It’s not real. No taxpayers have paid those dollars, they’re imaginary funds. And if Biden continues this pace, that will be over $87 trillion in additional spending.
Drive Up Inflation Step Three – Increase the Labor Costs for Producers of Goods and Services
When the economy was shut down at the beginning of the COVID pandemic, extending unemployment benefits and implementing a moratorium on landlord evictions was prudent. Public health and safety was the priority, and government shutdowns stopped people’s ability to earn wages; fair enough. But we’re over a year into COVID now, and many states have returned to normal. There’s no need to have federal unemployment benefits extended into September, as they are currently thanks to Congress and Biden. It’s unnecessary.
Those unemployment benefits mean many people can choose not to work. When they choose not to work, the supply of labor decreases. When the supply of labor decreases the demand for labor increases, which means higher costs for labor. And when it costs more to pay employees, producers of goods and services charge their customers more money and prices go up. Inflation, plain and simple; supply and demand. Our federal government has artificially created a labor shortage, and that shortage is driving up inflation.
There are a lot more than these three factors that are causing inflation. Taxing, regulating, and demonizing corporations drives up their costs, and when corporations incur costs, guess what they don’t do? They don’t sit by idly and eat those expenses. They pass them along to you and me via price increases. Attacking fossil fuels in the name of climate justice – whatever that means – by regulating, taxing, and applying impediments to production drives up the costs of energy, and everyone uses energy. Therefore, more price increases, more inflation. Virtually everywhere we look, the policies by Biden and the Democrats are a recipe for inflationary disaster.
The Biden Administration appears to be backing off some of its spending rhetoric, and even some on the left are starting to worry about inflation. And they should. Sen. Joe Manchin has signaled that he won’t support Biden’s plan to extend the unemployment benefits past September. Moderate Democrats in the House and Senate seem leery of signing off on any more spending bills. And even Treasury Secretary Janet Yellen has indicated that inflation is a concern.
But it’s inevitable that the horse has left the barn. We are going to be hit with inflation, and we’re going to be hit hard. Our economy doesn’t turn on a dime, it takes time. It’s like an ocean liner making a U-turn. No one seems to have an appetite for austerity, and President Biden least of all. And even if we were to practice some newfound fiscal responsibility and cut back on spending, it would be likely to be too little too late. Inflation is on the horizon, and it’s very possible that inflation will be severe; and when it hits, we need not look any further than President Joe Biden and the Democratic Party to determine who’s at fault.
P.F. Whalen is a conservative blogger at TheBlueStateConservative.com. His work has appeared in multiple publications, including Human Events, the Western Journal, and American Thinker. Follow him on Parler @PFWhalen.