So Joe Biden was out this morning in all his glory, talking about the May jobs report and many other things.
I don’t know if people remember the big moment of the 1980 presidential debate between Ronald Reagan and Jimmy Carter. Carter was like a little puppy biting his ankle. He continued to brush Reagan up with lies, whereupon The Gipper finally turned to him and said, “Here we go again.” The crowd screamed. The debate was won and the rest, as they say, was history. Good story, might I add.
Today we make a bad story. Today Joe Biden had this absolutely fantastic line talking about inflation and how we need to understand the root of the problem. Listen.
PRESIDENT BIDEN: It is important that we understand the root of the problem so that we can take steps to fix it. I was candid with the American people from the start that Putin’s decision to brutally and savagely invade a sovereign nation would come at a cost here at home.
What’s so wonderful about this is that Mr. Biden and his team are engaged in a full-scale campaign to hide the real cause of inflation. Or maybe they don’t understand it themselves, which is an even bigger problem. It’s Putin’s price hike, nothing to do with Biden’s fiscal policy.
Of course, now that the President is feeling our pain from inflation, he and his underlings apologize for being a year and a half too late. But, while they are apologizing, they are spreading their patently terrible falsehoods about the root cause of inflation. Once again, I draw your attention to my favorite excuse of all, which is the hostage video of Janet Yellen. See for yourself :
JANET YELLEN: Look, I think I was wrong then about the path inflation would take. As I mentioned, there have been unforeseen and significant shocks to the economy that have driven up energy and food prices and supply bottlenecks that have severely affected our economy. which I didn’t fully understand at the time.
If Putin is really the problem, then why is our inflation so much higher than the inflation rates of other major OECD economies?
A recent study by the San Francisco Fed entitled “Why is US inflation higher than in other countries?” shows that core CPI inflation in the US is around 5%, while the rest of the OECD is around 2%.
Of course, there’s never any mention of his $2 trillion emergency spending plan that provided the inflationary takeoff in the first place — such as stalling demand even further in Trump’s V-shaped recovery that was already strong and at the same time, the Bidens brought in the crackdown on the fossil fuel industry and other anti-business policies that restricted the supply of goods and services.
So, in ordinary terms, Biden’s woke economic policies have boosted demand and hampered supply.
The result: higher inflation. This happened a year before Vladimir Putin massed troops on the Ukrainian border and the year before Putin inflation took off, as did gasoline prices, food prices and virtually every other prices.
Biden won’t admit it. Neither did Yellen and for that matter, neither did Fed Chief Jay Powell, who backed the Biden spending package and financed the borrowing of the Biden spending package by buying all the bonds and increasing the money supply. Let’s not make this more difficult than necessary.
It’s just that Uncle Joe, who wants us to understand the root of the problem, absolutely doesn’t want anyone to understand the real root of the problem.
Now Joe is bragging about deficit reduction, and it’s true. Last year’s deficit is down, but that’s mainly because many of the emergency spending programs are coming to an end. Trump’s successful tax cuts boost revenue. ‘Build Back Better’ plan.
In fact, the word “paid” isn’t part of Biden’s vocabulary, but Uncle Joe can’t have it both ways. If you’re cutting spending, stop pushing for your spending plan. As recently as his WSJ op-ed a few days ago, he continued to push for his spending plan. So stop bragging about your deficit reduction. Anyway, too many dogs running after me. We saved America and killed Bill, and he’s going to stay killed.
No one expects the Bidens to ever tell the truth about the failure of Woke Progressive Economics and Modern Monetary Theory. So the rest of us need to catch up by telling the truth. If the president were successful with high taxes, massive welfare state social spending, a Green New Deal, a carbon-free power grid, it would lead to a permanent recession, accompanied by ever-higher inflation, which which leaves me with one last thought.
Another thing Uncle Joe didn’t tell us today: the employment report on the face of it looked okay. Numbers are numbers. Private sector payrolls rose by 333,000, but due to bidenflation wages for all employees rose 5.2% over the past 12 months, 3 percentage points below the last reading of the CPI by 8.3%.
Wages for production workers have increased by 6.5% over the past year. This is still 2 percentage points below the rate of inflation. So falling real wages – what my friend Rick Santelli called “the canaries in the coal mine” warned that the economy could turn sour. That’s what high inflation does.
My hero Elon Musk said today he had a ‘super bad feeling’ about the economy.
You know me, I don’t want to be too bearish about this whole thing, because I know one thing: the cavalry is coming.
This article is adapted from the opening commentary by Larry Kudlow on the June 3, 2022, edition of “Kudlow”.