How It Really Happened?: Inflation

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Hill Harper used to host a show called, "How It Really Happened." It was a good show and finding reruns and watching them would be highly recommended. But of course, that really has nothing to do with this post. I want to talk about inflation and how IT happened, so that everyone is clear on this. Inflation is too low. Early into Biden's presidency, it was decided they needed to speed inflation up a bit. They thought inflation was too low. They wanted to boost GDP numbers and one way you could that was to make the cost of goods in the calculation higher. Biden suggested the desired rate should be 2.5% instead of the usual 2%. The Fed eased certain restrictions on money policy, and inflation soon started up. It quickly began to get out of control, and Janet Yellen came out and said, "We see this is as transitory, not permanent. Things will balance." It wasn't, and it didn't. Reversal of Trump's energy policies on day one. Biden reversed all of Trump's energy policies within hours of taking his oath of office, almost immediately sending gas prices upwards. Because oil is used in nearly every aspect of manufacturing from electricity to run the machines, diesel to transport raw materials and finished goods, the plastics used in packaging etc., it drove costs to consumers up. The American Rescue Plan At a time when the economy was in recovery and people were returning to work and businesses were reopened, Biden signed into law a trillion dollar rescue package that sent checks out to taxpayers in another round of stimulus and extended unemployment insurance benefits, which created a massive supply chain disruption and labor shortage. As businesses tried to get people to come back to work, they had to raise wages. Plus, because goods were sitting on docks and in warehouses with no one to move them, the cost of those goods also rose, and did so dramatically. The bottom line. When Joe Biden took office inflation was at 1.4%. By December of 2021, less than a year into his presidency, inflation topped 10%. There is no question or doubt that it was the policies of the Biden administration that had the biggest influence on the inflation that came after that is right now almost 30% since January 2021.