by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Along with President Joe Biden and Congress, the Federal Reserve has a responsibility to manage inflation, a job it was established to do. And just like Biden and Congress, the Fed has failed at its job.
At the Fed’s own website, it states clearly what its primary job is, by law: “Conducting the nation’s monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices.”
Well, today, we have neither “full employment” nor “stable prices.” On Tuesday, the government reported that wholesale prices, that is prices just a step before retail, surged 10% in February.
As bad as that number was, it didn’t include the huge jump in energy prices following Russia’s invasion of Ukraine. Consumer prices rose “only” 7.9% in February. So expect them to go even higher next month.
This inflation came thanks mostly to absurd policies – paying people to stay home while spending trillions of dollars of “stimulus” on federal programs not related to COVID – pursued by the Democrats who control both Congress and the White House.
Even some Biden political supporters say it’s the Democrats’ fault, not “Putin’s price hikes” or “COVID,” or “corporate greed.”
Indeed, former Obama administration economists Larry Summers and Steven Ratner have both said that, contrary to all the finger-pointing, Biden and Congress are to blame for the current inflation.
“This is a consequence, fundamentally, of an overheated economy,” Summers said Friday, after more bad news on inflation.
Massive government spending, totaling $6 trillion at last count, plus another $1.5 trillion planned this year. Enormous debt, $30 trillion-plus. An avoidable supply-chain collapse. Cancellation of the Keystone XL pipeline and the re-regulation of the oil industry. Not to mention, reckless money printing.
These are all the causes of the inflation. They’re what is called in soccer an “own goal.” We did it to ourselves.