Trump supporters blame Biden for inflation. Inflation is controlled principally by the Federal Reserve, as the Fed holds the levers on the price of money by adjusting lending rates.
During the COVID pandemic, rates were lowered to stimulate a stagnant economy. Once the pandemic abated, the cheap access to money led to an increase in investment and job growth. The result is that more people had money to spend, consumption increased and accordingly the price for goods and services increased.
Can the president single handedly control the price of milk, eggs and bacon? While he could create subsidies for certain staple goods, any such measure would be a short term patch, as the money would be coming out of taxpayers’ pockets to, in turn, help some portion of those taxpayers. This sort of “market manipulation,” to artificially lower the prices of a specific set of goods or services is generally frowned upon. Subsidies in America are concentrated on energy, agriculture and transportation, as these are foundational industries that have domino effects on the pricing of many other goods and services. Making bacon cheaper, for example, would upset the vegetarians.
That’s why the Fed’s rates matter. They move the entire market versus distorting it by industry with a redistribution of tax dollars. But it is not a perfect science. The Fed is tasked with reading market signals and trying to find the middle ground to sustainable economic growth and “full” employment, while avoiding market bubbles and recessions. The Fed’s job often resembles trying to predict how much rain to send to the forest so that it grows lusciously, all the while the loggers cut it down, the oilmen pollute it, lightning strikes set it ablaze all while global warming makes the weather more extreme.
If the increase in prices has made life too expensive, it might be more appropriate to blame the figurative tax man. He controls the money rivers, after all.
It is convenient to think that by killing the head of the snake with fire and fury, the gophers will leave the garden alone. Recent history in the Middle East has shown that scenario to not only be false, but instead, the gophers reemerge more emboldened and there are holes everywhere in the garden.
Trump supporters are pointing the finger at Biden, but he's not to blame for inflation.
