Timothy Birdnow

In a discussion about the role of the Federal Reserve vis-a-vis inflation, Bill Judge observes:

The Fed bears as much, or more, blame for inflation as Biden. They have been printing zero percent interest money since 2008. The only time they raised rates significantly was when Trump was president and that was to hurt him (causes the stock market to go down). The Fed, obviously, is stacked with liberals. They are complicit.
When they announce their first interest rate rise in March, you can bet it will be the bare minimum of a quarter of a percent when it should be at least a half percent with the warning that there will be more (like they did to Trump) if inflation is not brought under control.
However, they are now between a rock and a hard place. Because Biden has shut down industries in the US, like the pipelines and refineries, there has been a producer regression which will manifest as a recession. When they raise the rates, this recession will become much more visible. But they made the bed, they need to lie in it.
The Democrats trillion dollar extravagances certainly were instances of throwing gas on the fire of inflation so Biden does bear responsibility but he shares it with the Fed.
As far as supply chain, I really don't think Biden and Buttgieg have the slightest idea of the complexities. They are like 2nd graders. They just expect things to show up.

Oh. To tell you the truth, I don't keep up with that addled brain puppet. But you are right and he is right. You are right because goods, services and labor costs/prices are rising - raw goods, half-finished goods that are needed in assembly, services such as transport, storage, etc and labor are all rising. However, he is right (but he doesn't know it) because each of these things (millions of moving pieces) are all rising in cost at each step of the supply chain so the end product is more costly. The prices are rising in each of the millions of moving pieces because the Fed (and Biden) have flooded the zone with paper. Not sure if you know about the multiplier effect of injecting money into the system, but essentially a trillion dollars injected by the Fed or Biden, turns into 5 trillion so the base of money is outrageously out of whack, and inflation is spiraling upward, out of control. The Fed needs to take control or we will be a 3rd world country - that's a guarantee not a scary warning.

End

He's right,  and I add:

The Fed expanded the money supply over the last year to hide the destruction of the economy we've seen under Biden. It has gone up to record highs. https://tradingeconomics.com/united-states/money-supply-m2 As this site says: https://economics21.org/americas-ballooning-money-supply#:~:text=The%20money%20supply%20in%20the%20U.S.%20has%20spiked,its%20prior%20fastest%20rate%20in%20the%20modern%20era. "The money supply in the U.S. has spiked at an unprecedented rate. M2 rose 3.8 percent in March, 6.7 percent in April, and 5.0 percent in May, a stunning 83 percent annualized growth rate for three months. This lifted the year-over-year growth rate of M2 to 23 percent, almost double its prior fastest rate in the modern era. The money stock has also increased rapidly in other nations. Traditionally, rapid money growth would point to booming economic growth and soaring inflation. But it is not doing so this time, because extreme uncertainty and fear are causing people to hoard cash." End excerpt. Couple this with low interest rates which are stimulating the housing bubble, and we are creating the perfect storm for inflation and disaster. Hyperinflation comes on quickly and once engaged is hard to stop. I fear we are heading in that direction. The Great Depression was caused by this very thing; the Fed expanded the money supply through the roaring twenties then contracted it out of fear of inflation - which tanked the economy. We are making the same mistake again.

Posted by: Timothy Birdnow at 12:07 PM | Comments (11) | Add Comment
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