Finance – How to Cause Inflation

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Money Matters

April 11, 2022 by Scott Crosby

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Finance – How to Cause Inflation

When Donald Trump was President, he reduced taxes and reduced regulations.  He increased the level of economic freedom in America.  The extent of his successes was limited by an uncooperative Congress, but in every way possible (with the exception of tariffs, which predictably had negative consequences), Trump made it easier to do business, by reducing business costs due to government interference.  

The Presidency of Joe Biden has been very different.

S308-1.jpgInflation has only one single cause:  an increase in the amount of money in circulation, without a corresponding increase of goods and services.  Only one organization has the power to do that: the Federal government – the President and Congress.

Normally, the amount of money in circulation only increases proportionately with the growth of goods and services.  For the United States, that amount is about $24 trillion.  

But when President Biden’s “American Rescue Plan” passed in March of 2021, the result was an increase in the money supply of about eight percent.

It took only a few months for that increased amount of money to begin having its inflationary impact, but by October, an inflation rate of greater than six percent was being reported.  

That number is no coincidence.

Advisers to President Obama, himself an avowed Socialist, had warned of just that kind of consequence.  Fox News reported that “Steven Rattner, who served as counselor to the Treasury Secretary in the Obama administration, issued a scathing op-ed […] saying Biden’s $1.9 trillion American Rescue Plan, passed in March [2021], was the "original sin" that contributed materially to today’s inflation, which hit the highest annual rate since November 1990.”

"How could an administration loaded with savvy political and economic hands have gotten this critical issue so wrong?"  Did they get the issue so wrong, or do they just not care?

Thanks, President Biden, for reducing the wealth of every American by six percent.  Thanks Senate Pro Temp Schumer; thanks, Speaker Nancy Pelosi.  Thanks, Democrats in both houses of Congress.  You stole more than six percent of what each of us calls his own.  

Your “American Rescue Plan” is drowning us, each and every one.  

The culprits were quick to blame anybody but themselves.  

Businesses, it seems, had the audacity to raise prices.  The “American Rescue Plan” had caused an increase in their costs and expenses, which they could not afford to ignore.  Businesses owners – stock holders, which includes every one of us with 401ks and IRAs – make investments with the goal of having money to live on.  Making a profit is a necessary part of life – far more necessary than the misnamed “American Rescue Plan”.

Russia’s attack on Ukraine in February of 2022 (almost a year after the passage of the “American Rescue Plan”) was blamed, due to its disruption of world trade.

Blame, it seems, goes to everyone who did not keep acting like there was no change in the money supply.  “How dare they do what is in their own best interest, instead of what we want them to do.”

American voters get it.  “The latest Rasmussen Reports finds that 64% of likely U.S. voters believe the policies of Biden’s administration have increased inflation.”

America’s government was designed, authorized, and created with the express responsibility to protect the well-being of America’s citizens.  Americans’ own best interests are precisely what the President and Congress are supposed to be working to protect.  Any other goals are in the wrong direction.  ■


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