Inflation makes politicians say and do some very stupid things. That includes casting the blame for rising prices on various bogeymen in an effort to avoid criticism for policies that have fed, spread and embedded inflation in the economy.
Take it away, Madame Speaker:
“Price gouging needs to be stopped,” House Speaker Nancy Pelosi said…after announcing the bill. “This is a major exploitation of the consumer.”
To which former Clinton Treasury Secretary Larry Summers said:
“There is no material prospect that, in any enduring way, gouging legislation can have any substantial effect on inflationary pressure,” Summers told Bloomberg Television’s David Weinstein. “But it can cause and contrive all kinds of shortages”…
Summers’ bottom line: this is all “dangerous nonsense.”
But dangerous nonsense is a politician’s stock-in-trade. Who else would have foisted dangerous policies like wage and price controls, or utter nonsense like the “Whip Inflation Now” campaign on the nation if not our politicians?
The Pelosi anti-gouging bill, then, is but the latest episode in the long-running inflation story.
What, if anything, can politicians do to curb price hikes?
First, admit their spending addiction is one of the deepest roots of the problem. The late Milton Friedman said:
[Inflation] is always and everywhere, a monetary phenomenon. It’s always and everywhere, a result of too much money, of a more rapid increase in the quantity of money than an output. Moreover, in the modern era, the important next step is to recognize that today, governments control the quantity of money. So that as a result, inflation in the United States is made in Washington and nowhere else. [emphasis added]
“Made in Washington.” Not exactly a label that inspires hope. But Friedman added that despite the clear “Made in Washington” label, official Washington has never been willing to accept ownership of its creation:
If you listen to people in Washington and talk, they will tell you that inflation is produced by greedy businessmen or it’s produced by grasping unions or it’s produced by spendthrift consumers, or maybe, it’s those terrible Arab Sheikhs who are producing it. Now, of course, businessmen are greedy. Who of us isn’t? Trade unions are grasping. Who of us isn’t? And there’s no doubt that the consumer is a spendthrift. At least every man knows that about his wife.
But none of them produce inflation for the very simple reason that neither the businessman, nor the trade union, nor the housewife has a printing press in their basement on which they can turn out those green pieces of paper we call money.
And the printing presses ran full tilt during both the Trump and Biden administrations. According to a recent research note from Morgan Stanley, the crescendo of the COVID-19-related spending spree – the Biden administration’s $1.9 trillion American Rescue Plan – “turbocharged consumption and drove inflation to 40-year highs.”
Maybe, though, Washington can help ease the inflation it turbocharged. How? As John Miltimore writes, some of the biggest include ending Donald Trump’s ruinous trade war, increasing immigration, repealing the job- and commerce-destroying Jones Act and reducing government spending.
Good ideas, rooted in sound economics. Which means our major parties will do nothing of the sort.
Instead, the pols will continue to do what they have done for decades: point the finger of blame somewhere else. As H.L. Mencken once said:
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
Remember that the next time you hear a pol blame a price gouger, a greedy business owner, a union boss, etc. for a problem they made, and made proudly, in Washington.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.