As the pandemic subsides and the new lockdown measures higher demand for goods and services cause prices to fall, leading to more spending, the economy should rebound. But—as anyone with two eyes, a bank account and a need to eat can attest—this is not the case.In fact, consumer prices Reached a high point not seen in 13 years.
The reason is not mysterious: the Biden administration and general Democrats are investing the country in the persistent structural inflation that some conservative experts insist. Biden claims that the high price is only temporary.
Job Creators Network President and CEO Alfredo Ortiz (Alfredo Ortiz) discussed Biden’s planned infrastructure spending of US$1.2 trillion on the basis of the proposed overall spending plan of US$3.5. The media stated, “This kind of expenditure will further erode the U.S. dollar and further [contribute] To our inflationary plight. “
“Jimmy Carter 2.0 is here,” Ortiz said.
This feels right at the moment, but don’t expect Biden to take any responsibility for it. He has already begun the process of shifting responsibility to the Federal Reserve.
He writes it down on monday “Independence of the Central Bank,” The Fed can — and may — take measures to raise interest rates, which further harms the losses of small businesses that have suffered a year of lockdown and disappointing reopening.
Wall Street Journal The editorial board has done an admirable job of disregarding the view that the Fed’s actions are completely independent of political manipulation:
In his speech, Biden bowed to the Fed’s “independence” ceremony. But he ignored that someone must fund Mr. Biden’s new rights, and the more Democrats spend, the more difficult it is politically for the Fed to raise interest rates, because the Treasury’s cost of financing the deficit is higher. But if the Fed does not raise interest rates as soon as possible, inflationary pressures will increase.
With the end of the government’s lockdown measures, Mr. Biden should enjoy the economic prosperity brought about by the pandemic subsiding. On the contrary, his policies contributed to a surge in inflation that exceeded wage growth. Telling people not to believe what they see with their own eyes is rarely a good political strategy.
In short, although the Fed takes a partisan line, that inflation is temporary and they will try to keep interest rates low, if the situation is unstable, they will take the same measures the Fed has always done to deal with inflation: raising interest rates. but now, The central bank is adopting Biden’s narrative.
The Fed has stated that it will keep its benchmark short-term interest rate close to zero until it believes that it has reached maximum employment and the annual inflation rate moderately exceeds 2% for a period of time. Central bank policymakers say they are prepared to accept inflation above the target to make up for inflation that has been below 2% for many years.
Powell admitted on Thursday that inflation is currently well above 2%, adding that “of course we are not comfortable with it.” But he pointed out that the unemployment rate also remains high at 5.9%, and believes that the Fed does not want to raise interest rates to deal with it. Think temporarily higher prices.
Economist Steven Moore made it clear on the news conference call with Ortiz that because the Biden government’s spending has nothing to do with any form of economic success, it is unlikely to lower prices.
“A lot of expenditure has nothing to do with economic output…it will not increase output, it will only increase the demand for services,” Moore said. “If spending continues, there is no doubt…interest rates will rise.”
When they do, pay attention to the narrative shifting from the government to blaming the Fed.
