Joe Biden is the Master of Inflation.
We know, because key agencies of the federal government – the Internal Revenue Service and the Social Security Administration – have quietly acknowledged raging inflation by adjusting their payments and schedules for next year: Social Security recipients will get a 8.7 percent cost of living adjustment, IRS tax brackets will rise by about 7 percent, and contribution limits to 401(K) and other tax-deferred retirement plans will rise by a record 9.8 percent.
Worse, Biden’s personal penchant for refusing to tell the truth has spread beyond him, to the rest of his administration. For instance, the words “closed” and “secure,” when applied as adjectives to the word “border,” now mean the exact opposite of what they once meant, and the word “recession” has been entirely redefined.
So, let’s get this straight: The inflation we are currently suffering under – the worst in 40 years! – is the result of decisions made by Biden and his congressional Democrat allies, who control both sides of Capitol Hill, and did not need a single GOP vote to enact the policies and make the laws that led to this inflation.
Inflation is – as Nobel laureate Milton Friedman famously reminded us – “always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
There are two sides to that equation – money and output. As long as output is increasing at the same rate as the money supply, an increase in the quantity of money won’t necessarily lead to inflation. But when the supply of money rapidly increases as output stalls or even declines, inflation is the inevitable result.
That’s exactly what Biden and congressional Democrats did. On the one hand, in the spring of 2021 they fueled rapid growth in the money supply with their reckless $1.9 trillion spending bill. Then they passed a $1.2 trillion infrastructure bill. Then they passed a $280 billion “chips” bill, and then they passed the $740 billion “Inflation Reduction Act.”
And while we’re talking about reckless spending and rapid increases in the money supply, let’s not forget Biden’s outrageous student loan payoff scheme, which, by some estimates, could cost taxpayers as much as another $1 trillion.
One of the measures included in all that reckless spending was a provision that paid people to stay at home. This had the effect of shrinking the workforce, and meant that employers not only had to compete against one another to hire workers, they had to compete against a government check that induced people to stay home.
The economy had already stalled earlier, as a result of the enforced lockdowns in 2020. By the time Biden was inaugurated, the economy was coming back, but supply chain problems had already emerged.
Nevertheless, because of his commitment to the radical environmentalists who control today’s Democrat Party, Biden did his best to shut down domestic energy production by executive order – terminating the Keystone XL pipeline, ordering a moratorium on all oil and natural gas leasing activities in the Arctic National Wildlife Refuge, declaring a moratorium on new oil or gas leases on public lands or in offshore waters, and rejoining the Paris Climate Agreement, among others.
The consequences of Biden’s war on domestic energy production were inevitable: We produced less than we would have, and what we had became more expensive. And because the cost of energy affects the prices of everything in our economy, everything in our economy became more expensive.
Increase the money supply, decrease output. Result: worst-in-40-years inflation.
To break inflation, we’re going to need to put in place policymakers who understand the fundamentals of basic economics. While we’re at it, it would be helpful if we could find some policymakers who understand the fundamentals of basic economics AND are willing to tell us the truth.
Joe Biden is neither.
Jenny Beth Martin is Honorary Chairman of Tea Party Patriots Action.