Inflation is being caused by deliberate government policy

 

We've talked a lot about inflation over recent months, probably so much that some readers are sick of the subject.  Sadly, inflation is going to hit them hard whether they're sick of it or not.  It's getting worse by the day.

Sundance, writing at the Conservative Treehouse, has an excellent analysis of why US government policy has changed, leading to much higher inflation and overturning policies that might have kept it under control.  He points out that it's deliberate policy decisions, rather than purely economic factors, that have caused the sudden escalation in inflation.

It's a long, detailed article, but easy to read and understand, and I highly recommend that you do so in full.  To whet your appetite, here are some excerpts.

The massive inflation is a direct result of the multinational agenda of the Biden administration; it’s a feature not a flaw, and it has nothing whatsoever to do with COVID. Also keep in mind the first group to admit what is to come are banks, specifically Bank of America, because the monetary policy is the cause.

There’s no way around this.  Despite the pundit and financial class selling a counter-narrative, home prices will crash and unemployment will go up ... There’s no way for it not to happen, the big picture tells us why.

. . .

Trump’s massive, and in some instances targeted, import tariffs against China, SE Asia, Canada and the EU not only did not increase prices, the prices of the goods in the U.S. actually dropped.  Trump’s policies led the largest deflation in consumer prices in decades ... The net result was more disposable income for the middle class, more demand for stuff, and ultimately that’s why the U.S. economy was so strong.

To retain their position China and the EU responded to U.S. tariffs by devaluing their currency as an offset to higher prices.  It started with China because their economy is so dependent on exports to the U.S. ... When China (total communist control over their banking system) devalued their currency to avoid Tariff price increase, it had an unusual effect.  The cost of all Chinese imports dropped, not just on the tariff goods.  Imported stuff from China dropped in price at the same time the U.S. dollar was strong.  This meant it took less dollars to import the same amount of Chinese goods; and those goods were at a lower price.  As a result we were importing deflation ... the exact opposite of what the financial pundits claimed would happen.

In response to a lessening of overall economic activity, the EU then followed the same approach as China ... In the middle of this there was a downside for U.S. exporters.  With China and the EU devaluing their currency the value of the dollar increased.  This made purchases from the U.S. more expensive.

. . .

REVERSE THIS… and you now understand where we are with inflation.   The Joebama economic policies are exactly the reverse.  The monetary policy that pumps money into into the U.S. economy via COVID bailouts and federal spending drops the value of the dollar and makes the dependency state worse.

With the FED pumping money into the U.S. system the dollar value plummets.  At the same time JoeBama dropped tariff enforcement to please the Wall Street multinational corporations and banks that funded his campaign.  Now the value of the Chinese and EU currency increases.  This means it costs more to import products and that is the primary driver of price increases in consumer goods.

Simultaneously a lower dollar means cheaper exports for the multinationals (Big AG and raw materials).  China, SE Asia and even the EU purchase U.S. raw materials at a lower price.  That means less raw material in the U.S. which drives up prices for U.S. consumers.  It is a perfect storm…  Higher costs for imported goods and higher costs for domestic goods (food).  Combine this dynamic with massive increases in energy costs from ideological policy and that’s fuel on a fire of inflation.

There's more at the link.

The article is essential reading, IMHO, to understand why our economy is cratering right now, and who's to blame for it.  COVID-19 is just a convenient excuse, a fig-leaf, to hide the policy decisions that are really responsible for the mess we're in.  What's more, it's not just a Democrat or Biden administration problem.  Politicians on both sides of the aisle are in thrall to (and in the pockets of) Wall Street and Big Money, all of whom want to make more money at the expense of ordinary Americans like you and I.  Sundance's analysis makes that clear.

As Will Rogers reminded us:  "America has the best politicians money can buy."  Sure sounds like it, doesn't it?

Peter