Let’s Talk About 8.5%…Inflation
The Biden White House is desperately spinning the bad news as Putin’s fault, yet such talking points divert attention from the true driver — $2T in new federal government spending.
The latest rip from the Biden administration thus far is that inflation is purely caused by Putin’s renewed invasion of the Ukraine. Blame Putin is the new Blame Bush, so we told — and anyone who disagrees with the Volkspartei is instantly branded a Kremlin apologist or worse.
One small problem? The US Department of Labor has some sobering math for you:
YTY inflationary pressures over a 12-month span are showing inflation rates at 8.5%. Coupled with food shortages typically seen in Soviet-era supermarkets and rising energy costs that make so-called green alternatives plausible and one has to wonder whether we are truly facing market forces or something a touch more engineered.
If that sounds rather wild and conspiratorial, then look no further than the editorial pages of today’s WSJ:
Energy prices in the month contributed heavily to the increase, and some of that owes to the ructions in oil markets since the invasion. But so-called core prices, excluding food and energy, rose 6.5% over the last 12 months. Service prices excluding energy, which weren’t supposed to be affected by supply-chain disruptions, were up 0.6% for the month and 4.7% over 12 months.
As the WSJ editors rightly note, President Biden and the Democratic-controlled Congress poured $1,900 billion on pet projects back in March 2021 on top of a $900 billion COVID relief package signed by President Trump in December 2020. Drowning in dollars, the US economy now finds itself in the condition of too much money chasing too few goods.
Yet the trendlines for this did not start in March 2022 with the renewal of hostilities in Eastern Europe.
Yet as the headlines hint and the WSJ op-ed implies, the solution will be to restrict the supply of dollars — not by limiting state and federal spending, but by hurting American working class families:
Still, the overall price news is terrible for American workers and consumers. The March surge means that real wages fell 0.8%, or a decline of 2.7% in the last year. (See the nearby chart.) Real average weekly earnings fell a striking $4.26 in March alone, and they’ve fallen nearly $18 during the Biden Presidency. If you want to know why Americans are sour about the economy even as jobs are plentiful, this is it. Their real wages are falling while the prices of everyday goods and services are rising fast. The average worker Democrats invoke when they demand more federal spending is getting crushed by the inflationary consequences of too much federal spending.
The Federal Reserve’s solution?
Increase interest rates across the board, though only to 2% in order to stave off a recession. Yet even if interest rates go up to 6.5% in order to combat inflation, with jobs plentiful and American workers refusing to re-enter the workforce, the solution — and this is a fast track solution — would simply be to add more workers to the workforce. . .
Yet as the UK Economist notes, this solution in an environment where “bad jobs” are sloughing off in favor of better paying ones with quality employees may simply signal a shift from the old cubicle-dwelling model to hybrid work, where skilled jobs are paying more and more to attract skilled labor:
It is likely, therefore, that in America and elsewhere labour markets will have to be cooled the old-fashioned way: by central banks raising interest rates, making it a little more attractive to save than spend and choking off demand for labour. The Fed has already increased rates by 0.25 percentage points, and is expected to do so by a total of 2.5 points this year. America may prove an example of what happens when policymakers respond to a labour market that has become dangerously hot.
In short, state and federal spending is so hot that the economy isn’t able to catch up. The conflict in the Ukraine may be driving up both energy and food prices on the periphery, but the responsibility for 8.5% inflation — numbers not seen since the Jimmy Carter era — remains entirely with Joe Biden’s love affair with government spending.
Of course, for anyone with a 401(k) or pension? This means that your nest egg is now worth a solid 10% less than what it was two years ago — give or take whatever you are putting back in on your investments (and it has been a rocky year).
Which means that American corporations are looking to maintain those 8-10% quarterly earning reports for John and Jane Q. Investor — approximately half of the American population, though only about 5% of Americans own more than the $40,000 median of the other 45% who have invested anything at all; the top 10% of income earners owning 70% of the US stock market.
You can see where this goes when it comes to an investor class vs. the working class, or where the decision makers who are well padded simply cannot have a conversation much less envision what a 8.5% pay cut does to a family already working hard to make ends meet with zero cushion at all.
One item of note this morning. The inestimable Jim Bacon writes over at Bacon’s Rebellion about a perfectly normal meeting of the VMI Alumni Association getting railroaded by its own president over the objections and voices of its own alumni:
Despite the disagreements, a vote unfolded. The first round was a voice vote on the association-selected slate. It was overwhelmingly voted down. Then a hand count was called for, and the slate was voted down again. Once that was settled, a voice vote ensued to elect the new slate. The voice vote was overwhelmingly positive, says Morris. No nays were expressed.
In Morris’ telling, Stocks conferred with the association’s lawyer and then proclaimed that the previous motion was out of order and would not be recorded in the minutes.
Dissident alumni are not limited to the Virginia Military Institute in the wake of Critical Race Theory (CRT) being imposed from on high in the aftermath of the Northam administration’s apology tour. VMI, Washington & Lee (affectionately termed Ampersand University), and even the University of Virginia are all seeing donor uprisings — and rightly so.
As for myself, after reading this I promptly signed up with the UVA’s Jefferson Council with a donation of $100. Which I suppose makes me a bit biased, but at least more honest than your average Washington Post reporter.
Another item of good news:
? BREAKING! Virginia Attorney General @JasonMiyaresVA leads a coalition of 16 states inc Virginia filing an amicus brief in the US Supreme Court to support @coalitionforTJ! He denounces the “state-sanctioned bigotry” Asian Americans today face. He’s on fire + sadly so correct ? pic.twitter.com/EbF9FSDmRk
— Asra Q. Nomani ? (@AsraNomani) April 12, 2022
For those who haven’t followed Asra Nomani’s excellent crusade for common sense over at Fairfax’s Thomas Jefferson High School with regards to CRT imposed DEI requirement— long considered to be the marquee public high school in Virginia if not the nation — the anti-discrimination case is rapidly approaching the US Supreme Court.
Given the present makeup and bipartisan predilection against racial discrimination in public law, SCOTUS may very well gut the introduction of CRT just as fast as it gutted racial discrimination in Brown v. Board of Education. Whether or not the Democrats will engage in yet another campaign of Massive Resistance as the vast majority of Americans fight to de-racialize our schools is another matter.
They’re good at it, after all.
For those of you who still cling to the Jeffersonian spirit in Virginia, good news from Monticello this month as after years of attempts, a copy of John Baxter’s New and Impartial History of England after Mr. Jefferson’s unsuccessful attempts to do so in 1820, 1821 and finally in 1824.
More interesting to the rest of us is why Jefferson was so impatient to obtain a new copy after having sold his Monticello library — but not his Poplar Forest one — to the Library of Congress after the British burned Washington in 1814.
The reason might interest more than a few folks:
Why was Jefferson so enthusiastic about a work that seems to have attracted few sales and little subsequent interest? He explained that it was actually an adaptation of David Hume’s wildly popular and frequently reprinted History of England (1754–61). Jefferson despised Hume’s work for its overtly Tory slant and feared that it would convert American students to similarly conservative political principles. In a departure from his stated belief that truth would triumph in a free marketplace of ideas, Jefferson went so far as to mandate a reading list for UVA law students that pointedly excluded Hume. He observed in 1825 that Hume’s history was especially dangerous because it was so well written that, were it not for its biases, it would be “the finest piece of history which has ever been written by man.”
Hume of course was a notorious atheist — not that atheism is notorious, but that Hume held his atheism with a fundamentalist fanaticism typically reserved for the likes of a Torquemada — which is an interesting contrast to what Federalist critics often threw at Jefferson himself.
Yet Hume’s History was a profoundly Tory book in the face of Whiggish objections. Baxter — in an attempt to “republicanize” Hume — merely edited Hume’s history by removing all of the problematic portions out and simply republished the work.
Which might strike more astute readers as a violation of the honor code. Don’t worry, today only earns you a two-semester
vacation suspension rather than a dismissal from Mr. Jefferson’s University.
Of course, Jefferson never really submitted his thoughts on religion in public and only hesitatingly in private — his daughters all insisted that Jefferson was not only religious but would hum Episcopalian hymns while mulling about Monticello — yet one might consider that such fundamental questions of religion might supersede questions of political ideology.
Jefferson worked assiduously to bring Baxter’s revision of Hume’s History to the University of Virginia. Baxter’s work is today by and large ignored and unnoticed, but Jefferson’s reasons for making sure his students read “Hume, republicanized” rather than Hume himself remain fascinating indeed.