March 2, 2022
Permission to republish original opeds and cartoons granted.
Biden’s inflation is raging at 7.5 percent because we borrowed and printed more than $6 trillion fighting Covid, not because of the semiconductor shortage, which was also caused by Covid.
By Robert Romano
“With all the bright spots in our economy, record job growth, higher wages, too many families are struggling to keep up with their bills. Inflation is robbing them of the gains they thought otherwise they would be able to feel. I get it… One third of all the inflation was because of automobile sales. There were not enough semiconductors to make all the cars people wanted to buy. Prices of automobiles went way up.”
That was President Joe Biden in his first State of the Union Address on March 1, attempting at least to deflect some of the blame for inflation away from the federal government’s unprecedented peacetime spending, borrowing and printing avalanche of more than $6 trillion in response to the Covid pandemic.
That included the $2.2 trillion CARES Act and $900 billion phase four legislation under former President Donald Trump, and the $1.9 trillion stimulus and $550 billion of new infrastructure spending under President Biden.
As a result, the national debt has increased by $6.8 trillion to $30 trillion, of which the Fed monetized half, or $3.4 trillion, by increasing its share of U.S. treasuries to a record $5.7 trillion.
Overall, the M2 money supply has increased by $6.3 trillion to $21.6 trillion, a whopping 29 percent increase. Almost every new dollar of debt was paid for by printing it.
What more is needed to explain the current bout of inflation?
As for the semiconductor shortage, that appears to have also been caused by Covid. According to research by McKinsey & Company for the World Economic Forum, published Feb. 9, 2022: “automakers cut their chip orders in early 2020 as vehicle sales plummeted. When demand recovered faster than anticipated in the second half of 2020, the semiconductor industry had already shifted production lines to meet demand for other applications.” Since then, semiconductor producers have been struggling to catch up to demand as Biden touted Intel’s new semiconductor plant being built in Ohio.
Similar glut was caused in the petroleum supply chain in 2020, when prices collapsed to zero briefly — causing oil production to slow down significantly — only to rebound two years later to more than $100 per barrel as the global economy continues reopening from Covid. Now, war in Europe threatens to send the price even higher, but it’s already very high.
Even here, Biden only offered to release barrels from the strategic petroleum reserve. Let them eat cake, indeed. Nowhere did he call for unlocking America’s energy stores by increasing drilling for oil and gas with the same zeal as the semiconductor pitch.
Increased oil and gas production would not only help bring part of the inflation down, and it would help to shore up supplies in Europe, which is currently dominated by Russian energy dependence.
Yes, Covid locked down the global economy, causing supply disruptions of all kinds, and governments all over the world intervened financially — by far the most spending in history — so that there would be businesses left to return to when the worst was over.
Now, of the more than 25 million jobs that were lost to Covid by April 2020 in the U.S., 23.8 million have been recovered. More than 16 million of those were recovered in 2020, before President Biden had even been sworn into office. The economy was already rapidly recovering.
And now thanks to the trillions of dollars of spending, borrowing and printing, a year later, the economy is unsurprisingly overheating. It is literally Milton Friedman’s “too much money chasing too few goods”.
In just the past two months, nearly 1 million jobs have been created in the Bureau of Labor Statistics’ establishment survey in Dec. and Jan. 2022 combined — and at 4 percent unemployment, labor markets are at or near peak employment.
2021 came in at 5.7 percent Gross Domestic Product growth in 2021, and that was with adjusting for inflation. Without adjusting for inflation, nominally, it grew at a little more than 10 percent. That is the greatest adjustment for inflation in the GDP since 1982, which was one of the most massive recessions in modern American history.
Almost on cue, the Atlanta Federal Reserve’s GDPNow is currently projecting 0 percent economic growth in the first quarter of 2022. Elsewhere, the spread between 10-year treasuries and 2-year treasuries is nearly inverted, a key recession predictor. Suffice to say, the warning lights for the economy are flashing red.
Finally, speaking to Americans’ pocket books, as reported by the Bureau of Labor Statistics on Feb. 10, real average hourly earnings decreased 1.7 percent from Jan. 2021 to Jan. 2022.
But Biden doesn’t get it. Covid lockdowns caused the supply crisis by crushing demand and slowing production in 2020. Covid caused governments to respond with the torrent of spending, borrowing and money printing to offset the drop in output. Now, even after Covid, Biden still wants parts of his $3 trillion Build Back Better spending bill passed by Congress.
Biden’s State of the Union was an opportunity to level with the American people. If he had explained the situation honestly, and promised to slow down spending and increase American energy production, it could have been an historic pivot that might have saved his Congressional majorities in November.
Biden is right when says inflation is robbing the American people blind. And in 2022, they’re going to have something to say about it.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government Foundation.
Video: Interview with Congressman Biggs: Getting the Federal Workforce back in the Office
To view online: https://www.youtube.com/watch?v=ij633Wu8h0A
Atlanta Fed’s GDPNow projects 0 percent growth in first quarter of 2022
March 1, 2022, Fairfax, Va.—Americans for Limited Government President Rick Manning today issued the following statement reacting to the Atlanta Federal Reserve’s GDPNow projecting 0 percent growth annualized for the Gross Domestic Product in the first quarter of 2022:
“The warning lights of the U.S. economy are beginning to flash red, with 7.5 percent inflation, collapsing interest rate yield curves and the Atlanta Fed now projecting 0 percent economic growth in the first quarter of 2022. President Joe Biden’s war on energy and Congress’ massive spending surge have created an inflationary drag on the economy that predates the crisis in Europe by a year. Unfortunately, the chickens are now coming home to roost warning us that the economy is beginning to stumble badly. No amount of braggadocio about recovering jobs that had been submarined by state and federal lockdowns can hide the fact that American workers are making 1.7 percent less in real dollars than they were a year ago. In Biden’s America, wages have not kept up with prices, and the President doesn’t have a clue about what to do about it.”
To view online: https://getliberty.org/2022/03/atlanta-feds-gdpnow-projects-0-percent-growth-in-first-quarter-of-2022/
ALG Editor’s Note: In the following featured letter to Congress, on Feb. 15, 37 conservative organization leaders including Americans for Limited Government President Rick Manning urged House and Senate Veterans Affairs Committees to oppose S.2141 and to support the right to choose their consultation and representation, regardless of Accreditation status:
Coalition Letter by 37 Groups Supporting the Right of Veterans to Choose Their Consultation and Representation as They Navigate a Confusing System
Dear Chairmen Takano and Tester, and Ranking Members Bost and Moran:
In 2021, Frontiers of Freedom launched the Veterans Choice Initiative, a grassroots effort committed to supporting disabled veterans by protecting their right to choose how to best navigate the bureaucracy of the Veterans Administration and secure the disability benefits they rightly deserve.
Providing access to high quality disability benefits support is one of our most important obligations to the brave men and women who have served this country. Unfortunately, the current government-run and volunteer system is both confusing and under-resourced, leaving veterans at a disadvantage when seeking the benefits, they are ethically, medically, and legally entitled to.
As you look to set the Committee’s priorities for the New Year, we ask that you not repeat the mistakes of the past.
In 2021, Preventing Crimes Against Veterans Act (S. 2141) was introduced in the Senate which in effect criminalized “unaccredited actors,” that wish to help veterans with their claims. This includes private consultants that provide necessary and life-changing assistance to millions of veterans around the country.
These proposed changes will limit a veterans’ choice and leave the initiation phase of the claims solely on the backs of VSOs or veterans themselves. While VSOs are filled with well-meaning and sometimes qualified individuals and volunteers, most of the organizations do not have the manpower or expertise to handle the massive inflow that is expected over the next few years.
This latest attempt built upon a 2019 bill that aimed to amend title 38 of the United States Code, to provide criminal penalties for individuals acting as agents or attorneys for the preparation, presentation, or prosecution of a claim. Thankfully, the initial bill was rightfully defeated.
Our veterans have earned the right to choose their consultation and representation, regardless of Accreditation status, as they navigate a confusing system.
As you consider reforms to the veterans’ benefits system in 2022, we ask that any legislation around this issue in Congress will ensure a veteran’s right to choose is not jeopardized.
Thank you for your consideration.
| George Landrith, President | Mark Thomas, Founder
Phil Kerpen, President Martha Boneta, President |
Click here to view online: https://www.ff.org/choose-their-consultation-representation-as-they-navigate-confusing-system/