The Biden Administration has unleashed a torrent of inflationary pressures on an unsuspecting American public.
Rising prices are putting increasing pressure on President Biden and the Federal Reserve to prevent inflation from derailing the recovery from the coronavirus recession…
All of those factors combined to push the consumer price index (CPI) up 0.8 percent in April and 4.2 percent over the past 12 months, the fastest annual rate since 2008, the Labor Department reported this past week. When stripping out the more volatile prices for food and energy, the index registered the biggest monthly increase since 1982.
This week’s data release should worry the Administration and its defenders. Core inflation — inflation minus volatile components from food and energy — increased at 3% year-over-year. This is the largest increase since the early 1990s. The White House claims that this increase consists of just “base effects” driven by anomalously low inflation levels from a year ago. This argument doesn’t hold salt. If one looks at the inflation rate over the last three months, it is at its highest rate since 1990. Events last year, in the depths of the pandemic crisis, are irrelevant, when one looks at the last three months alone.
We can expect more inflation as reopening continues apace…
The Trump Administration launched trade wars in an attempt to check globalization. Between tariff risk and the shocks of the pandemic, companies decided that long supply chains spread across many countries are a risk. They began to move production home and build in redundancies.
On domestic drivers of inflation, too, policymakers are fighting the last war. In the 1960s and ‘70s, the Democratic party believed that government could endlessly spend, and the central bank would always be able to finance that spending. The result was the hyperinflation which peaked during the Carter Administration, only to be reined in by Paul Volcker and the Reagan presidency. Read more…
