Inflation, A 40-Year High


Just a few short years ago, when one went to a gas station, one could see the happy or at least content faces of people at the pump filling up their tanks. The Trump presidency, for all its drama and guffaws, oversaw steady gas prices that usually stayed between $2.25 and $3.00. During the worst days of the pandemic, gas prices occasionally dropped down to a buck-fifty; when people are not allowed to go anywhere, they won’t be needing much gasoline. Then the faces became a half-smile: the total was cheap, though whatever you saved would have to be carefully rationed, as meals and mortgages were no longer a sure thing.

Today, in the middle of 2022, the faces are not sad; they’re angry. Not only must people go to work, they must also pay nearly double for the gasoline needed to get them there. And it’s not just gasoline, either. “Inflation Hits Four Decades High,” the headlines read as we angrily crumple up the grocery receipt. The Washington Postfact checks” the latest bad news out of the Labor Department. By their estimate, the Consumer Price Index (measuring prices) had risen to 8.5 percent, “the fastest 12-month pace since 1981.” High food prices are felt nearer to the stomach, but it’s the eyes that catch those digitalized numbers right above the pump.

“It’s criminal!” you can sometimes hear from the other side of the station. Make the first grunt that it’s “Biden’s fault!” and see what happens. And below those digitalized numbers, one can sometimes find a sticker – placed there by some guerilla activist – which features President Biden pointing dumbly: “I did that.” Indeed, I might’ve posted one or two of these stickers myself.

But is that true? Is Biden and his administration to blame for this inflation? For these gas prices? Plenty of people – including those in the administration – have had their turn at spreading the blame. If they can confuse and obfuscate, it’s all the better. Likely, we’re just seeing corrupt, dishonest, war-thirsty politicians doing what they do.

On June 10th, Biden addressed these issues. As if at the hip, the President blamed Russia. Biden has even tried to hashtag the “Putin Price Hike” into the language. He then congratulated himself for reducing the deficit. Then more blaming, now with the supply chain; but he can fix it, just need to make it easier to move things along. Next on his list of scapegoats was some nine shipping companies (“foreign-owned,” Biden said, summoning his predecessor) that have recently raised prices one-thousand percent, in the process making 190 billion in profit.

Putin-controlled Russia is the easiest to blame. Putin is state enemy number one, a much-hated warmonger, and so a little extra hatred won’t be noticed. Or will it? Rick Newman at Yahoo News argues that the “Putin Price hike is real – and huge.” But whatever argument Newman tries to make backfires the second he puts the blame, not on policies enacted by Russia, but on policies enacted by the U.S. To “punish Russia for its barbarity,” Biden made sanctions, which “have cut into Russian sales, leaving a supply shortfall.” Russia is also a major food exporter, but “while nobody sanctioning food directly, financial sanctions are making it harder for Russia to export nearly everything.” The headline alone would suggest that Putin is the one putting these sanctions on Russia.

Previously, Biden had placed partial blame on “the pandemic,” which must necessarily follow after using the word “virus.” While viruses can infect the human body and replicate therein, viruses cannot operate the levers of government. Were the effects of COVID so lethal that it slowed down the supply chain by killing off those who ensure it runs smoothly? Or was it U.S. government policies that acted as the Red, White and Blue monkey wrench? The first seems unlikely.

Even Janet Yellen thinks the problem can be traced back to the second. In early June, the former Fed chair and current Treasury Secretary feigned ignorance (which is standard practice for Federal Reserve Chairmen) while taking her turn at blaming the Bear. Then, a couple weeks later, Business Insider reported that Yellen privately believed that the price hikes could be the result of “unexpected ‘self-sanctioning.’” That is, companies that voluntarily stopped doing business with Russia, this out of fear that they might eventually run afoul of the sanctions. According to the same article, some in the Biden administration share this view, worrying that the sanctions are resulting not so much as a help to the Ukrainian resistance as they do a harm to the U.S. consumer.

And Russia does seem to be doing well. Gerald Dippao at the Center for Strategic & International Studies informs that Russia is still raking in some billion dollars a day from oil and gas exports, half of the proceeds going directly to Moscow. It’s also said that what Russia isn’t exporting to us is instead going to their other big trading partner: China.

One thing that Biden did not mention is the amount of new paper that’s been pumped into the economy. The president continues to deny the disastrous role played by the printing presses. Such an admission wouldn’t be good for the reelection campaign.

Biden’s “America Rescue Plan,” the “pandemic relief bill,” totaled $1.9 trillion. Bill Clinton’s Treasury Secretary, Lawrence Summers, a man who for his entire career has argued in favor of hyperactive printers, had nevertheless forecasted the incoming inflation as early as February 2021, with the primary “source in the massive fiscal stimulus of the COVID recession,” so writes John Cochrane.

But that can’t all be put on Biden. Number 45 did some stimulating too, as did a lot of other Republican politicians. That first “pandemic relief,” signed in December of 2020, cost $2.3 trillion. Here, the blame can justifiably be attributed to both parties – “both aisleism,” if you will – which also came together to give many more billions in U.S. tax dollars to the Ukrainian resistance. It seems the U.S. treasury is nothing more than a piggybank; the U.S. taxpayer, as the hammer used to break it open.

One thing that Biden did get right is pointing out that other countries are also getting a “big bite” (his words) out of this inflation crisis. In other words, we’re not the only one’s suffering. “An analysis of inflation across 111 countries from Deutsche Bank puts the U.S. near the middle of the pack,” writes Dave Lawyer at Axios. That made me curious.

On June 14th, I participated in a webinar featuring representatives Thomas Massie and Chip Roy. Massie, a vocal opponent of out-of-control spending, tried to force the Congress to give a recorded vote for the first stimulus. For that, he was properly chastised. I was allowed to ask a number of questions, only one of which reached the ears of the representatives. It was about the above, global inflation. While Massie retorted by saying that he gets asked this a lot by “Leftists on Twitter,” he tacitly acknowledged the fact, admonishing us “not to point to other countries who did it worse,” and warning that “printing money is going to cause pain and suffering.”

Certainly! And as we’ve seen, my query was not meant to suggest that Biden is blameless. All countries have a central bank capable of conjuring up an endless supply of cash. Those mechanisms have been used for their own “pandemic relief.” However, as far as the other contributor to inflation, it’s the politicians in the U.S who have spearheaded the sanctions against Russia. Or, perhaps Putin’s invasion did disrupt Ukraine’s supply chain, as that country is also a major grain exporter. Why Putin felt the need to invade their neighbor and historical ally? That’s a matter for another time.

Humbly admitting our own ignorance, we’re just like the heads of the Fed, or even Paul Krugman: “We had no idea inflation was going to get this bad…it came out of nowhere…we’re so sorry, but we’ll get it right next time.”

Others will see the outline of a larger project. After all, during his presidential campaign, Biden promised to “end fossil fuel.” That might be a good thing or it might be a bad thing, but it can’t be anything without some sort of viable alternative in place before it happens.

Most damning was Biden’s response when asked for how long we drivers, here and abroad, should expect to pay these exorbitant gas prices. The president: “As long as it takes…Russia cannot defeat Ukraine and move past Ukraine.” It’s good to know that the President of the United States has the backs of the Ukrainians – even if it breaks everyone else’s back. If there’s anyone to blame, voters will know who that is come election cycle.

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KM Patten

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