Almost a year ago, Larry Summers, a former treasury secretary, warned that pumping trillions of dollars into the U.S. economy could have terrible consequences. He told Democrats that they were taking “substantial risks” in passing the so-called American Rescue Plan (ARP), possibly creating “inflationary pressures of a kind we have not seen in a generation.”
Summers was patronized and mocked for supporting fiscal sanity by both President Biden’s senior economic adviser, Jared Bernstein, in the New Republic and Paul Krugman, the New York Times‘ resident prodigal, who actually once wrote that an alien invasion would benefit the economy. Summers was not a lone voice, however. Steven Rattner, an economic adviser to Barack Obama, wrote that the ARP “has contributed materially to today’s inflation levels.”
The Keynesian crowd then did what they always do: double-down on a bad idea, proving once more that intelligence, unlike printed paper, runs in short supply in the nation’s capital. The $1.9 trillion wasn’t enough, they concluded; clearly more is needed. For weeks now, the White House has been pushing its moronic Build Back Better (BBB) plan, which the Washington Times estimates will cost another $3.5 trillion.
When two Democratic senators, West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema, actually showed a little backbone and cried foul over the drunken orgy of spending and tax hikes found in BBB, leftists called them hate-filled racists. Bette Midler, a Hollywood crackpot, insulted the entire state of West Virginia, whose citizens are, she wrote on Twitter, “poor, illiterate and strung out.”
But if anyone is behaving like an ignorant junky, it’s profligate politicians and their sycophants. When the pain of inflation was first felt, it was ignored. Move along, we were told; nothing to see here. Then came the claim that inflation is actually good for the economy! Rising prices, said the bobble heads, would mean increased wages! Now that the consequences from inflation are undeniable, a new round of excuses can be expected from an elitist class completely insulated from the damage they inflict on millions of suffering people.
In her 1974 essay “Egalitarianism and Inflation,” Ayn Rand carefully explained the causes and effects of what has “really smart people” scratching their heads a half-century later. Increasing the number of dollars in circulation will lead inexorably to rising prices; it simply can’t be stopped. The result is a decrease in purchasing power, fewer goods and services available, and an overall reduction in living standards. “Justice does exist in the world,” Rand concluded. “The avenger is reality.” She was right – but the reality crashing down as a result of all this spending lands on the least deserving.
How bad is it? In a November 17 commentary for the Boston Globe, Jeff Jacoby wrote, “The United States is experiencing its biggest inflationary spike in 31 years, and it’s going to get worse for American households before it gets better.” Prices are going up and up, and not just on “bourgeois” frivolities. Meat, fish, eggs, gasoline, heating oil – the cost of all necessities are spiking, stretching paychecks to a breaking point. Those on a fixed income suffer the most, receiving little if any notice from munificent elites when the bill comes due. As Marie Antoinette callously said, “Let them eat cake.”
Clueless as ever, politicians rush to diagnose an ailment they don’t understand. Jen Psaki blames “corporate greed,” while Antonio Tajani, former president of the European Parliament, blames “China’s policy of hoarding food stocks.” President Biden thinks that a $1 billion aid package for small ranchers, farmers, and meat processors will fix things – despite such “aid” typically lining the pockets of the largest, most politically connected concerns. Republicans and Democrats, hand-in-hand, are now working tirelessly to make things worse, with a new $68 billion “stimulus package” in the works.
Inflation has been rightly called the “most pernicious” of taxes, taking money from those who have earned it – not in the direct sense we associate with taxes, but indirectly by devaluing earnings, wreaking havoc on savings (an indispensable ingredient for a healthy economy), and undermining production. Inflation is blamed on rising prices, but those are a reflection, not a cause, of the problem. Ludwig von Mises, the great Austrian economist, warned that “no one should expect that any logical argument or any experience could ever shake the almost religious fervor of those who believe in salvation through spending.” They lead us like sheep to economic slaughter.