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Inflation's Back!

Inflation's Back!
Businessman rests on an "inflated" 100 dollar bill. (

Ralph Benko By Tuesday, 16 November 2021 11:44 AM EST Current | Bio | Archive

Hey la, President Biden?

Remember "The Angels"?

Inflation’s back and you’re gonna be in trouble.

Hey la, hey la, inflation’s back!

Uh oh.

While your administration denied resurging inflation Newsmax was ahead of it. Relying on the work of Prof. Steve Hanke, over six months ago I asked: Will Inflation Be the Sweet Meteor of Political Death for the Biden Administration?

Hanke’s a distinguished monetary economist. Plus: bipartisan!

Former Clinton Treasury Secretary and Director of Obama’s National Economic Policy Council Dr. Larry Summers also sounded the alarm last February, in The Washington Post:

“First… there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”

The Biden White House did not just ignore Summers. It attacked him.

Ryan Lizza, Garrett Ross and Eli Okun recently asked in Newsmax’s scrappy rival, Politico, Does the WH owe Larry Summers an apology?

The reaction from the White House was fierce. Top advisers rushed to the cameras to push back. … Privately, White House officials were withering in their attacks on Summers. The White House continued to downplay inflation throughout the spring and summer. … They were wrong.”

An apology? Larry Summers once appeared on the cover of TIME with Alan Greenspan and Bob Rubin as “The Committee to Save the World.”

Summers can take care of himself. Rather, President Biden owes it to himself to consider appointing an inflation hawk like Summers Fed Chair. Or, say, Prof. Hanke.

Now the Great Mentioner is mentioning only two candidates, both monetary doves: Jerome Powell and Lael Brainard. Both are honorable, smart and capable.

But doves.

Political handicappers are calling a near lock for Powell. Mr. President?

This is no time for inflation doves.

Biden may confront the fate of presidents injured, even politically crippled, by inflation. Consider the political careers of Johnson, Nixon, Ford and Carter, all presiding over inflation, all seeing their presidencies terminated with extreme prejudice.

Coincidence? Not really.

As the first celebrity economist, John Maynard Keynes, wrote in The Economic Consequences of the Peace:

“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.

“Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in a million is able to diagnose.”

Inflation—felt as rising prices yet really a sinking dollar—is politically lethal. Most politicians mishandle it. It’s that insidious.

President Biden? You are a self-proclaimed champion of capitalism and equity. So, now, pivot to good monetary policy to preempt “all the hidden forces of economic law” from settling “on the side of destruction.”

Do not end up like the hapless Jimmy Carter. As I wrote here in Will President Biden Keep Inflation from Destroying Capitalism:

Carter, in a national address, on October 24, 1978: “Inflation is obviously a serious problem. What is the solution? I do not have all the answers. Nobody does. Perhaps there is no complete and adequate answer.”

Balderdash. Top economists like Friedman and Mundell knew precisely what causes inflation. We then knew and still know the solution.

The charter document for Supply Side economics was the Mundell-Laffer Hypothesis. By far most of it was about monetary policy (noting the advantages of the gold standard for quelling inflation and creating equitable prosperity). The “Laffer Curve” was, literally, a footnote.

Reagan, campaigning on Jack Kemp’s Supply Side platform, beat Carter. Then Reagan embraced a stable dollar, giving Fed Chairman Paul Volcker the support he needed to end inflation.

Thereafter the economy soared, propelling Reagan to a historic 49-state landslide. The Supply Side formula propelled the Dow from 814 to, over time, 36,000+ while doubling America’s real per capita GDP.

To swipe a phrase from Vice President Joe Biden: BFD!

President Biden? To regain the esteem of the American people, ignore the well-intentioned experts who led you astray.

Select an inflation hawk to chair the Federal Reserve. Say… Larry Summers.

Or maybe even a Mundell acolyte: Steve Hanke. Onward to a golden age?

Hey la, hey la, inflation’s back!

Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of "The Capitalist League," is the founder of The Prosperity Caucus and is an original Kemp-era member of the Supply-Side revolution that propelled the Dow from 814 to its current heights and world GDP from $11T to $88T. Read Ralph Benko's reports — More Here.

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Hey la, hey la, inflation’s back!
inflation, biden, democrats
Tuesday, 16 November 2021 11:44 AM
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