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The economic forecast for the U.S. remains gloomy, and experts say the worst may be yet to come. Wall Street just endured its worst first-half performance since 1970 and the World Bank expects global economic growth to slow dramatically in 2022. As his poll numbers sink amid soaring gas prices, President Joe Biden has tried to pin the blame for America’s inflation problem on Vladimir Putin and Russia’s invasion of Ukraine. Straight Arrow News contributor Star Parker says the president is simply trying to duck responsibility for a problem his policies helped create.
The President is now trying to convince us that it is Moscow that controls our ports, our supply chain, all foreign shippers; and that high gas prices are the result of the Ukrainian war and of course, greedy American oil companies.
He said it. He said, “One thing I want to say about the oil companies. They have 9000 permits to drill. They’re not drilling! Why aren’t they drilling? Because they make more money not producing more oil. The price goes up.”
Can you believe this? Such is the result of 40 years in D.C. politics. Our president demonstrates that his understanding of economics is less than a college freshman.
Oil markets are global and competitive. No one company, even a huge company like Exxon Mobil, who he’s now blaming, no one company controls the market. Even the biggest company is just one participant in a competitive market.
Now unless our president wants to argue that American oil producers are a cartel — like OPEC, that controls about 40% of total world oil production — no one company causes the price to move.
Every oil company is a price taker, not a price maker.
Whatever the price is, oil companies will produce and sell as much as they can to maximize their current revenues. To suggest otherwise is dishonest or is just pure economic ignorance.
Unfortunately, the late, great Nobel prize winning economist, Milton Friedman, who explained the causes of inflation, has been washed away in today’s woke culture. Friedman’s famous observation was that “Inflation is always and everywhere a monetary phenomenon, in the sense that inflation is and can be produced only by a rapid increase in the quantity of money than in output.”
Meaning, the more money a government prints that outpaces production, prices will go up.
Friedman is unpopular with liberals because once it is understood that inflation is the result of the government printing excessive amounts of money, we understand that inflation can only be caused by government. Because only government can print money.
A couple of today’s economists, Steve Hanke and John Greenwood, they’re looking at the rate at which the Biden government was printing money. And they wrote in the Wall Street Journal in July 2021, “By the end of the year,” they said, “the year-over-year inflation will be at least 6%, and possibly as high as nine percent.” That was a year ago.
Clearly, they were right on target.
Responding to Biden’s recent explanations about inflation, Hanke and Greenwood point out, “China, Japan, and Switzerland also face elevated oil prices, supply-chain problems, and fallout from the war in Ukraine, but their annual inflation rates are 2.1%, 2.3%, and 2.5% respectively. They have avoided the ravages of inflation because their central banks have not produced excessive quantities of money.”
You know, one thing we Americans can be grateful for as we navigate and struggle through Biden’s (not Putin’s) inflation, is that Biden and the Democrats in Congress failed in their Build Back Better plan to layer another $5 trillion in new government expenditures into our economy.
And we can also be grateful that November will be here very soon and we can stop this madness.
