I’m more than happy to condemn Joe Biden for his bad policy proposals, such as higher tax rates, fake stimulus, red tape, and a bigger welfare state.
But as I discuss in this segment from a recent interview, he bears very little blame for today’s high inflation rate.
If you want to know who is responsible for 8.5 percent inflation, the highest in four decades, this chart tells you everything you need to know.
Simply stated, the Federal Reserve has created a lot more money by expanding its balance sheet (which happens, for example, when the central bank purchases government bonds using “open market operations”).
Notice, by the way, that the Fed dramatically expanded its balance sheet beginning in March 2020. That was almost one year before Biden was inaugurated.
At the risk of stating the obvious, Biden does not have the power of time travel. He can’t be at fault for a monetary policy mistake that happened when Trump was president.
That being said, I don’t want anyone to think that Biden believes in good monetary policy.
- Biden has never made any sort of statement favoring monetary restraint by the Fed.
- Neither the president not his senior advisors have urged the Fed to reverse its mistake.
- Biden renominated Jerome Powell to be Chairman of the Fed’s Board of Governors.
- None of Biden’s other nominees to the Federal Reserve have a track record of opposing easy money.
The bottom line is that the Fed almost surely would have made the same mistake in 2020 if Biden was in the White House.
But he wasn’t, so he gets a partial free pass.
P.S. Speaking of time travel, Paul Krugman blamed Estonia’s 2008 recession on spending cuts that took place in 2009.
P.P.S. Here’s my two cents on how people can protect themselves in an inflationary economy.
P.P.P.S. Only one president in my lifetime deserves praise for his approach to monetary policy.
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Image credit: Federal Reserve | United States government Work.
