Incoming: 2024. How about Donald Trump vs. Jimmy Carter, a match between the two living one-termers?
Why? Because both pursued policies of dollar weakness.
Jimmy Carter, on the heels of inflationistas Johnson, Nixon and Ford delivered double-digit inflation. He coupled it with high unemployment yielding a towering Misery Index.
President Trump kept talking down the dollar, as pointedly covered by The New York Times in August 2019 amid many other sources. "On Thursday, the president again publicly expressed displeasure at the relative strength of the dollar, describing it as a drag on American industrial exports and the result of Federal Reserve monetary policy."
As Milton Friedman determined, buttressed by much further evidence since 1961, there’s a characteristic lag, roughly two years, give or take, between (at the president’s behest) the Fed's flooding the zone with dollars and rising prices. Looks to me like the Trump inflation chickens are coming home to roost right on schedule.
Equally worrisome are the chickens that Biden, in reappointing inflation dove Jerome Powell as Fed chair, is releasing. Powell recently signaled that he will slowly end the monetary ease that has been the hallmark of his chairmanship.
Let’s hope so. Will he be hawkish enough?
As reported by Politico in a recent reappraisal of the anti-inflationary stance of former regional Fed bank president Thomas Hoenig, “Between 2008 and 2014, the Federal Reserve printed more than $3.5 trillion in new bills. To put that in perspective, it’s roughly triple the amount of money that the Fed created in its first 95 years of existence. … Hoenig … warned that it would suck the Fed into a money-printing quagmire that the central bank would not be able to escape without destabilizing the entire financial system.”
Will Powell do the right thing? And will he do the thing right?
Meanwhile, President Biden is being Carteresque in sheer inflation cluelessness. The editorial board of the Wall Street Journal recently (and fairly) lambasted the president in Carving Up Biden’s Inflation Beef for scapegoating Big Business for causing inflation: “Inflation keeps rising, and maybe the place where Americans have noticed it most is the grocery store. Prices have climbed 16% at the meat counter in the last year, and so President Biden is rounding up the usual scapegoats: Big meat producers.”
Nonsense. As Milton Friedman said it first and best and a mountain of evidence supports, inflation is always and everywhere a monetary phenomenon.
And it is most unhelpful that Republican economic policy folk, including some who served under Reagan and, thus, should know better, are misattributing inflation to the bipartisan infrastructure spending.
I’m a deficit hawk but spending isn’t the cause of inflation. That’s Neo-Keynesian dogma. Even Keynes would shudder at such blather.
Misattributing the cause of inflation ingratiates its proponents with (the once and perhaps future president) Donald Trump, absolving his reckless calls to weaken the dollar. And it pins the tail on the Donkey.
But in the words of Wolfgang Pauli, “Not only is it not right, it’s not even wrong!" Bad policy.
We haven’t seen such public cluelessness on the cause of, and cure for, inflation since Jimmy Carter was president. Carter, in an unctuous national address, on October 24, 1978, said:
“Good evening. … 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. … I've spent many hours in the last few months reviewing with my own advisers and with a number of outside experts every proposal, every suggestion, every possibility in eliminating inflation. If there's one thing I have learned beyond any doubt, it is that there is no single solution for inflation.”
Nonsense! The cause of inflation was, and is, excessive money printing by the Fed. Fed Chairman Paul Volcker, once Reagan had his back, put that knowledge into practice and ended inflation for almost 40 years.
The single solution for inflation lies in stopping excess money creation. Both the Donks and the Pachyderms have forgotten.
The true cause of inflation still resides in popular consciousness. An April 2020 meme showing Fed Chairman Jerome Powell “money printer goes brrr” with a white banner, “inflation,” went viral.
Click here for a rueful chuckle. That said, the joke’s on us.
The Democrats scapegoat supposedly greedy business. The Republicans scapegoat supposedly reckless federal spending. Both are “not even wrong.”
Karl Marx was right about exactly one thing. In The 18th Brumaire of Louis Bonaparte Marx noted dryly, “Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce.”
As to inflation? Here comes the farce.
If America craves inflation … why not the best?
Trump vs. Carter, 2024!
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 $94T. Read Ralph Benko's reports — More Here.
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