According to the law of supply and demand, when the government prints/borrows trillions of U.S. dollars, the U.S. dollar depreciates and prices rise. This is called inflation.
According to President Joe Biden, when the government prints/borrows trillions of dollars, the value of the U.S. dollar will not fall, and the price will also fall. This is the so-called borrowing of Bidenism, malarkey.
According to the president, “My plan for better reconstruction will be a force that will push Americans to achieve lower prices in the future. This is another reason why these investments are so important.”
So, injecting vitality into the economy with $6 trillion in new spending (the price tag of Biden’s “Rebuild Better Plan”) will lead to a drop in prices? That is utter nonsense.
Biden’s remarks came exactly one day after his administration entered the Oval Office six months later. In the past six months, inflation has become a long-term problem for the entire US economy.
According to reports Bureau of Labor Statistics:
After an increase of 0.6% in May, the Consumer Price Index (CPI-U) for all urban consumers in June rose by 0.9% seasonally adjusted…this is the largest since the index rose by 1.0% in June 20081 Month changes. In the past 12 months, the All Projects Index rose 5.4% before seasonal adjustment; this was the largest 12-month increase since the 5.4% increase in the period ending in August 2008.
In fact, inflation has Steadily increasing Every month during Biden’s presidency.
Considering that the Biden administration has huge spending plans, this trend does not bode well for the future.
President Biden has signed a $1.9 trillion American rescue plan with the Democratic-controlled Congress. However, this is only the tip of the iceberg of expenditure.
This week, the U.S. Senate will hold a preliminary vote on Biden’s $3.5 trillion “human infrastructure” spending bill. This is the basis of the $1 trillion “traditional infrastructure” package that Biden and his congressional colleagues seem to have agreed on. Both bills have been passed in the US House of Representatives.
Therefore, as inflation soars to levels not seen in decades, Biden’s solution is to use trillions of dollars we don’t have to stimulate the economy. This is the secret of economic disaster.
Fortunately, Americans realize that inflation has arrived.According to a Recent polls, 86% of Americans are worried about inflation. To make matters worse, 88% of Americans are “some” or “very” worried about the rising cost of living.
People hope that Biden is at least aware of Americans’ anxiety about inflation.
However, according to his remarks, Biden believes that more government spending, especially in the form of direct charity, is a panacea for any inflation problem.
Biden said: “The strategy we designed is not only to provide a temporary boost, but to lay the foundation for long-term prosperity that allows everyone to move forward. … We saw a good example last week. Almost. Every working family raising a child in the United States of America begins to pay monthly. Thanks to the expanded child tax credit in the American Relief Program: each child under the age of 6 goes out for $300 per month, and each child between the ages of 6 and 17 $250 per month, every month for the next six months.”
He added: “This money can change the rules of the game. For some people, it’s a lifesaver.”
The money may also stimulate more inflation.
The inflation “solution” of the Biden administration to increase spending is a completely wrong strategy. It will only make inflation worse.
For older Americans and history majors, we have seen this situation before. In the 1970s, the U.S. economy was crippled by chronic inflation. More spending does not help. There is no artificial reduction in interest rates. Those just prolonged the problem.
The solution to inflation that has stood the test of time is simple: raise interest rates, reduce government spending, and lower taxes to promote real rather than nominal economic growth.
This worked in the 1980s, when the country experienced the scourge of inflation, stagnant economic growth, and high unemployment (also known as stagflation).
If the Biden administration refuses to recognize the reality that inflation is imminent, and the $6 trillion in new spending will make the situation worse rather than better, then we may fall into the reduction in stagflation of the 1970s.
Chris Targo ([email protected]) Is the senior editor of The Heartland Institute.
