Biden loses the inflation blame game.

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neverfail
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Biden loses the inflation blame game.

Post by neverfail » Tue Jun 21, 2022 10:13 pm

https://asiatimes.com/2022/06/biden-los ... lame-game/

Virtually all of the increase in fuel and food prices occurred before Russia invaded Ukraine last Feb. 24. The price increase that ensued from the Ukraine War, to be sure, had nothing to do with Putin’s actions—Russia did not cut oil or food production—but rather from sanctions that made Russian oil harder to sell. Some increase in grain prices can be blamed on the inability of Ukraine to transport its harvest.

Where inflation is concerned, the elephant in the parlor is the explosion of federal spending to about 30% of Gross Domestic Product, compared with a range of 18% to 23% during the preceding fifty years.

The jump in spending, to be sure, began under the Trump Administration, which spent about half of the $6 trillion in total federal stimulus. But the Trump administration undertook the stimulus program in the Spring of 2020, when the economy was paralyzed by Covid-19.

The Biden Administration continued pumping money into the economy at the same rate even after the pandemic subsided and the economy recovered, offering massive handouts to its political constituencies.
Did not someone in his entourage warn Biden before hand that if you spend lots of public money at a time that the inflation rate is already on the rise you will only exacerbate the problem?

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Doc
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Re: Biden loses the inflation blame game.

Post by Doc » Tue Jun 21, 2022 11:19 pm

neverfail wrote:
Tue Jun 21, 2022 10:13 pm
https://asiatimes.com/2022/06/biden-los ... lame-game/

Virtually all of the increase in fuel and food prices occurred before Russia invaded Ukraine last Feb. 24. The price increase that ensued from the Ukraine War, to be sure, had nothing to do with Putin’s actions—Russia did not cut oil or food production—but rather from sanctions that made Russian oil harder to sell. Some increase in grain prices can be blamed on the inability of Ukraine to transport its harvest.

Where inflation is concerned, the elephant in the parlor is the explosion of federal spending to about 30% of Gross Domestic Product, compared with a range of 18% to 23% during the preceding fifty years.

The jump in spending, to be sure, began under the Trump Administration, which spent about half of the $6 trillion in total federal stimulus. But the Trump administration undertook the stimulus program in the Spring of 2020, when the economy was paralyzed by Covid-19.

The Biden Administration continued pumping money into the economy at the same rate even after the pandemic subsided and the economy recovered, offering massive handouts to its political constituencies.
Did not someone in his entourage warn Biden before hand that if you spend lots of public money at a time that the inflation rate is already on the rise you will only exacerbate the problem?


A lot of money was spent. What they aren't telling the general public is who they spent the money on.

“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

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neverfail
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Re: Biden loses the inflation blame game.

Post by neverfail » Wed Jun 22, 2022 4:58 pm

Janet Yellen, current US Secretary for the Treasury, with her past experience as Chair of the US Federal Reserve Bank would have surely advised Biden against profligate public spending considering that 1.) the Trump tax cuts had already stoked up the inflation rate a notch or two even before Biden could be even sworn in and 2.) with the US unemployment rate at an historical low further abnormal public spending was bound to exacerbate the problem. But it seems that her advise was ignored by Biden.

Frankly I am puzzled by how government works in the USA. Used as I am to a parliamentary system of government that incorporates collective effort and shared responsibility by an entire cabinet and Ministry within its agenda I sometimes gain the impression that in a US cabinet the President is the only one with the power to make the big decisions and the members of Cabinet are often little better than window dressing. I am suggesting here that Janet Yellen should have held enough power in her own right to decide upon government spending priorities and Biden, as co-ordinator of government business, should have deferred to that authority.

Certainly when something goes wrong in the US it always seems to be the president who is targeted with the blame. There must be a reason for it.

Also puzzling to me is the role played by Congress, the legislative wing of government. Since it is the Houses of Congress who need to legislate the money bills that release public moneys for use by the executive wing of government (checks and balances?). That Congress as the final bulwark against improvident government policies did not kerb Biden's big spending impulse for the national good does not speak well of the apparent dearth of comprehension of economic cause-and-effect within the two US legislative houses. Congress has not been doing its job properly.?

Could other posters help me sort out my thoughts on the matter of who holds governmental responsibility in the US?

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Re: Biden loses the inflation blame game.

Post by SteveFoerster » Wed Jun 22, 2022 6:21 pm

neverfail wrote:
Wed Jun 22, 2022 4:58 pm
Janet Yellen, current US Secretary for the Treasury, with her past experience as Chair of the US Federal Reserve Bank would have surely advised Biden against profligate public spending considering that 1.) the Trump tax cuts had already stoked up the inflation rate a notch or two even before Biden could be even sworn in and 2.) with the US unemployment rate at an historical low further abnormal public spending was bound to exacerbate the problem. But it seems that her advise was ignored by Biden.
It's amusing how sure you sound about that. But one doesn't get to be Secretary of the Treasury in a Democratic administration by being a voice of fiscal reason.
neverfail wrote:
Wed Jun 22, 2022 4:58 pm
Frankly I am puzzled by how government works in the USA. Used as I am to a parliamentary system of government that incorporates collective effort and shared responsibility by an entire cabinet and Ministry within its agenda I sometimes gain the impression that in a US cabinet the President is the only one with the power to make the big decisions and the members of Cabinet are often little better than window dressing. I am suggesting here that Janet Yellen should have held enough power in her own right to decide upon government spending priorities and Biden, as co-ordinator of government business, should have deferred to that authority.
While president, Harry S Truman was famous for having a sign on his desk saying "The buck stops here." And that's how the executive branch works, Cabinet officials are appointed by and work for the president. How much authority they have varies quite a bit from administration to administration.
neverfail wrote:
Wed Jun 22, 2022 4:58 pm
Certainly when something goes wrong in the US it always seems to be the president who is targeted with the blame. There must be a reason for it.
Journalistic laziness, in my opinion. The president (regardless of party) is assigned far too much credit for things that go well and far too much blame for things that go poorly. I don't remember a time when that wasn't so. For example, right now Biden is taking a lot of blame for price inflation when there's really only so much he can do about it, given the actions of his predecessor, Congress, the Federal Reserve, and, of course, the whole rest of the world.
neverfail wrote:
Wed Jun 22, 2022 4:58 pm
Also puzzling to me is the role played by Congress, the legislative wing of government. Since it is the Houses of Congress who need to legislate the money bills that release public moneys for use by the executive wing of government (checks and balances?). That Congress as the final bulwark against improvident government policies did not kerb Biden's big spending impulse for the national good does not speak well of the apparent dearth of comprehension of economic cause-and-effect within the two US legislative houses. Congress has not been doing its job properly.?
That's an understatement. Constitutionally, all spending bills must originate in the House of Representatives. But the deliberative nature of that body has been watered down in recent decades until the House leadership controls everything in a top down fashion, and that usually means working closely with the White House. Justin Amash, the Libertarian former member of Congress, has written a great deal about this phenomenon.
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Re: Biden loses the inflation blame game.

Post by Milo » Wed Jun 22, 2022 7:59 pm

Economic policy is never cut and dried. Inflation is just one factor among many. If Spengler thinks there’s too much cash on the street, maybe he thinks Biden should raise taxes? I’m thinking, no?

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neverfail
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Re: Biden loses the inflation blame game.

Post by neverfail » Thu Jun 23, 2022 4:03 am

SteveFoerster wrote:
Wed Jun 22, 2022 6:21 pm

It's amusing how sure you sound about that. But one doesn't get to be Secretary of the Treasury in a Democratic administration by being a voice of fiscal reason.
Does that mean that in political terms the Democrats Party has a suicidal urge?

Does it also mean that Yellen's Cabinet appointment is mere window dressing to lend the Biden administration more credibility than it deserves?

(Apart from that, thanks for the briefing Steve. :D )

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neverfail
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Re: Biden loses the inflation blame game.

Post by neverfail » Thu Jun 23, 2022 4:05 am

Milo wrote:
Wed Jun 22, 2022 7:59 pm
Economic policy is never cut and dried. Inflation is just one factor among many. If Spengler thinks there’s too much cash on the street, maybe he thinks Biden should raise taxes? I’m thinking, no?
Well, would not raising taxes be an effective way to soak up excess liquidity?

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Re: Biden loses the inflation blame game.

Post by SteveFoerster » Thu Jun 23, 2022 5:48 am

neverfail wrote:
Thu Jun 23, 2022 4:03 am
SteveFoerster wrote:
Wed Jun 22, 2022 6:21 pm

It's amusing how sure you sound about that. But one doesn't get to be Secretary of the Treasury in a Democratic administration by being a voice of fiscal reason.
Does that mean that in political terms the Democrats Party has a suicidal urge?
Considering how most Democrats excoriate Joe Manchin (the Democratic Senator closest to the centre) when he dares to ask how new spending will be funded, one could make that argument.

Then again, the tax cut that passed the Republican-controlled Congress during the Trump administration wasn't accompanied by any spending cuts, which is just the same problem on the other side of the ledger.

So it's probably fairer to say that policymakers from both major parties are more concerned with short term political advantage than with the long term health of the US economy.
neverfail wrote:
Thu Jun 23, 2022 4:03 am
Does it also mean that Yellen's Cabinet appointment is mere window dressing to lend the Biden administration more credibility than it deserves?
Well, they got her to take the job, which I can't imagine she would have done had she merely been warming a chair. But I wouldn't know anything about their internal conversations.
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Milo
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Re: Biden loses the inflation blame game.

Post by Milo » Thu Jun 23, 2022 12:18 pm

neverfail wrote:
Thu Jun 23, 2022 4:05 am
Milo wrote:
Wed Jun 22, 2022 7:59 pm
Economic policy is never cut and dried. Inflation is just one factor among many. If Spengler thinks there’s too much cash on the street, maybe he thinks Biden should raise taxes? I’m thinking, no?
Well, would not raising taxes be an effective way to soak up excess liquidity?
This is political, Biden is adroitly dealing with a huge international crisis and growing employment. Along with that comes inflation. You may notice the first two things missing from the article. The Republicans only care about deficits when they’re not in power.

Again, inflation is just one way of measuring what is going on. All things considered, Biden is doing great.

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