Mish: Don’t Fall For Joe Biden’s Big Lie On Inflation
Let’s investigate Biden’s claim that his proposals will not cause inflation.
No Inflation In Sight
Here are excerpts from Biden’s July 19 Press Conference on the Economy.
My administration understands that if we were to ever experience unchecked inflation over the long term that would pose real challenges to our economy. So while we’re confident that isn’t what we are seeing today, we’re going to remain vigilant about any response that is needed.
If we increase the availability of quality, affordable childcare, eldercare, paid leave, more people will enter the workforce. These steps will enhance our productivity — raising wages without raising prices. That won’t increase inflation. It will take the pressure off of inflation, give a boost to our workforce, which leads to lower prices in the years ahead.
And we’re going to pay for them responsibly as well, by ensuring that our largest corporations and the very wealthiest among us pay their fair share by reforming our international tax system with a minimum global tax, which we’ve led the world to agree to.
And that does not even include Biden’s tax on energy to achieve 80% clean energy by 2030.
What Others Say
Business Insider: High-profile economists want to shut down Biden’s stimulus over fears it could cause a damaging inflation spike. But recent history suggests otherwise.
Washington Post: Inflation isn’t a real danger. But its prophets may hold the economy back.
A Word From Experts
“Our experts believe and the data shows that most of the price increases we’ve seen are — were expected and expected to be temporary,” said Biden.
Those experts were the same experts at the Fed who forecast 2.4% inflation for 2021 in March and 3.4% in June.
Fed’s Preferred Measure of Inflation is Only 4.0%, Anyone Believe That?
It’s Transitory … If
I said several times myself that inflation was likely transitory. But the transitory case depended on neither the Fed nor Congress doing anything blatantly stupid.
Three rounds of “one time” fiscal stimulus, one by Trump (and he wanted another), then two by Biden, certainly fueled inflation.
The last one was the most damaging. It extended unemployment benefits paying people more being unemployed than they made being employed.
Wage hikes are now spiraling. Still, one could make a case that these hikes would end up being transitory.
However, belief that businesses will take huge tax hikes and increase wages without passing costs on is ridiculous.
80% Clean Energy by 2030
80% clean energy is the new goal of the Biden administration and one he did not mention in his July speech.
For me, that is the ultimate kicker.
It is impossible to impose those conditions not only on US businesses but an all imports such that the world has to bow to Green demands and not get huge inflation out of it.
Under the clean energy mandate, businesses will have to phase out more and more natural gas every year, opting for unreliable wind and solar no matter what it costs.
The plan culminates with a preposterous proposal of 80% clean energy by 2030. Because it’s an import tax, the demand applies to the whole world (if they wish to export tariff-free to the US).
It is economically absurd to believe more expensive energy, free childcare, free paid leave, free education for two years, and higher taxes won’t increase inflation and slow growth.
The Stagflation Threat is Very Real
On July 26, I commented The Stagflation Threat is Very Real but Congress Holds the Key
“If stagflation is what you want, call your Congressional representatives and tell them ‘I want higher prices, lower growth, and higher unemployment. Please vote for the Stagflation Guarantee Act of 2021.'”
Nine House Democrats to Block $3.5 Trillion Bill Unless Infrastructure Passes First
It appeared increasingly likely we were headed for a severe bout of Stagflation until Nine House Democrats Threatened to Block $3.5 Trillion Bill Unless Infrastructure Passes First.
Now it’s difficult to know.
But if the Greens get their way, expect “Transitory Stagflation” for as long as their demands hold.
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Mon, 08/16/2021 – 15:30