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Whose inflation is it?

Whose inflation is it?

Democrats and the left-leaning new media are promoting another false narrative.  It is about inflation. 

According to the narrative, the inflation was caused by President Trump … period.  Biden & Co. have gone so far down the path of deception that he names his most recent spending bill the “Inflation Reduction Act.”  In that spirit, President Roosevelt could have called his Declaration of War a peace treaty.

No doubt that some of the problems was the Covid relief money that was being pumped into the economy as a bipartisan measure in the depths of the Pandemic.  It would be fair to say that Washington overcompensated.  That was not sufficient to trigger the major inflation that hit us this year.

Trump’s final stimulus money in December 2020 was potentially inflationary.  I have written several commentaries expressing my opinion that it was a mistake.  But even that would not – in and of itself – have triggered the kind of inflation that hit the American people in the economic gut.

In hindsight, it is obvious that Federal Reserve Bank did not move quickly enough to raise interest rates – even as the economic Magna for a major inflationary eruption was forming.

As Biden took office, the warning signs of inflation were already being seen.  The only economically sound course of action was to limit federal spending.  Instead, Biden and the Democrats poured an unprecedented trillions of dollars into the already simmering economy.  They poured gasoline on the hot embers.

It was not as if they were not warned.  Even prominent Democrat economists – such as Larry Summers and Steven Rattner — sounded the alarms.  Major bankers were issuing warnings of a potential inflation.

Despite all that, Biden continued with his big spending programs – promising that there would be no inflation.  (Did anyone take note that in 2021, Biden was saying there would be no inflation, and now he says that the inflation that was never to be is all Trump’s fault?  Come on, man.)

Inflation was already surging when Russian President Putin invade Ukraine.  Regardless, Biden then said that the inflation was CAUSED by the war.  He repeated that over and over.  I guess he forgot that he had previously laid the blame on Trump.  The War was a contributor, but only a minor one.

When Biden finally conceded that there was an inflation going on, he assured us that it would be mild and short-lived – and that there would be no recession resulting from the unprecedented series of major interest rate increases by the Fed.  

However, the inflation rose to levels not seen in 40 years – and the country did temporarily dip into a recession as traditionally defined.  To that reality, Biden changed the definition – saying it was not a recession because of the low unemployment.  (Incidentally, that was something the Fed was trying to fix with those interest rate increases.  The Fed has been trying to increase the unemployment rate even as Biden was on a jobs growth policy path.)

Biden is now taking a victory lap over the fact that gas prices are dropping.  In fact, they have reached a pre-Ukraine War level.  But the War is still going on and so is inflation.  If it was caused by the War, why are gas prices dropping?  And remember, gas prices reaching the pre-War level is no great news.  The inflation was surging before the War — and largely because of Biden’s humongous spending from day one of his administration.

What Biden needed to do was to at least defer his grandiose spending proposals.  It likely would have mitigated the inflationary pressures – and made the initial rate increases by the Fed much more effective.

Trump should not have sent out those December 2020 stimulus checks.  The Fed should have acted sooner.  But those are minor contributors to the inflation compared to Biden’s spending.  As often as he was warned about the prospect of a major inflation, Biden doubled-downed … triple-downed … quadruple-downed … on spending.

We would not be experiencing a crushing inflation had Biden held back on the massive spending – putting trillions of dollars into an economy that needed fewer dollars in circulation.  Shove aside all the self-serving political rhetoric, and the one thing that is very clear. 

We are suffering under BIDEN’S INFLATION … period.

So, there ‘tis. 

About The Author

Larry Horist

So,there‘tis… The opinions, perspectives and analyses of Larry Horist Larry Horist is a businessman, conservative writer and political strategist with an extensive background in economics and public policy. Clients of his consulting firm have included such conservative icons as Steve Forbes and Milton Friedman. He has served as a consultant to the Nixon White House and travelled the country as a spokesman for President Reagan’s economic reforms. He has testified as an expert witness before numerous legislative bodies, including the U. S. Congress. Horist has lectured and taught courses at numerous colleges and universities, including Harvard, Northwestern, DePaul universities, Hope College and his alma mater, Knox College. He has been a guest on hundreds of public affairs talk shows, and hosted his own program, “Chicago In Sight,” on WIND radio. Horist was a one-time candidate for mayor of Chicago and served as Executive Director of the City Club of Chicago, where he led a successful two-year campaign to save the historic Chicago Theatre from the wrecking ball. An award-winning debater, his insightful and sometimes controversial commentaries appear frequently on the editorial pages of newspapers across the nation. He is praised by readers for his style, substance and sense of humor. According to one reader, Horist is the “new Charles Krauthammer.” He is actively semi-retired in Boca Raton, Florida where he devotes his time to writing. So, there ‘tis is Horist’s signature sign off.


  1. Tom

    I agree Larry. And I think we should give Janet Yellen some credit for being asleep at the wheel of the Fed. According to Yellen, none of this could have been forseen, yet you, me, and even Frank saw this coming. We must be geniuses!!!

  2. Tom

    Janet Yellen is on CBS 60 Minutes tonight, 12/11/2022. Lets see what she has to say this time! Lets recall, she has gone from not thinking there would be inflation, to minor transitory inflation, to it might be longer inflation but should not be bad, to sustained inflation through 2022 and “Oh my gosh, we did not see this, how could we, we never had inflation with a robust job market.” She has never appologized for being asleep at the wheel. I wonder what she will say tonight?

  3. frank stetson

    A bold claim: “According to the narrative, the inflation was caused by President Trump … period. Biden & Co. have gone so far down the path of deception that he names his most recent spending bill the “Inflation Reduction Act.” Its’ the “period” that sticks out as Horist hyperbole.

    As far as I can tell most are blaming inflation on increased demand, pandemic related wild demand swings and supply issues, and the Ukraine war/Middle East disruption of oil supply. I can’t find any economists who lay it all on Trump and probably pretty rare for pundits too. I do not agree with either it’s all Trump’s fault or Larry’s conclusion that it’s all Biden’s fault. I think it pretty hard in general to lay the blame on any single person, party, or action.

    Yet even as he admits Trump’s Christmas eve vote-for-me 2020 stimulus may have been the spark, he concludes: “We are suffering under BIDEN’S INFLATION … period.” Again, that damnable period….

    I mean if Larry’s right and it’s all Biden’s fault, how did Biden manage to extend it across the globe? Just does not pass the basic sniff test for logic. Larry is no economist. Period.

    I have said it’s too much money, specifically M1 and M2, liquid and almost liquid cash. That’s the simplest definition of inflation. Trump started it, Larry even alludes to the Trumpian free-money Biden-land-mine December 2020 stimulus giveaway as Trump’s parting shot after giving so much more money than Biden away whether stimulus or tax cut, doesn’t matter.

    But then, as I have said, Biden doubled down in the beginning of 2021 and as much as he reigned in Trump’s egregious overspending, he still added fuel to the fire. Ukrainian War fuel shortages, price increases, and we are off to the races. On Biden’s watch. Totally.

    However, our inflation rate is lower than the world’s as all the cold comfort that provides and I guess we can blame Biden for that too.

    There is no single cause of inflation, not the war, not supply chain issues, not the pandemic. The only singe cause is too much money and the main culprit, imo, is all the free money Biden/Trump giveaways to consumers who did not consume in 2020 and 2021 and later in 2021 began acting like drunken sailors with a year’s pay and first shore leave in two years. Myself included. Plus the pandemic which screwed with supply chains and made us stay inside where we held that money until we began to reemerge, smell the roses, and spend, spend, spend. Including more travel, more gas…..

    The point is, we had too much money, and so we are willing to pay these incredible price increases.

    Larry points to Biden’s spending programs as the issue and that’s a bogus red herring IMO. That’s Larry doing politics, not economics. First, the programs cover many years, the dollar value you see covers a decade. Biden’s current budget is smaller than his predecessor who racked up the highest deficits and debts in history —- the key focus being on deficit. Biden’s are lower.

    In 2021, which is still Trump’s budget, US spending hit an all time high of 7.2T. His previous was 6.6 and then 4.5. Biden’s first year estimate is 6.0 which is still too high, but is planned to be flat the next year and then begin to rise. This is wrong in my book, needs to be pulled in more, but still lower than Trump’s drunken spending track record. I remain hopeful that he trim more in future years; he does balance spending against GDP — but given the debt, I feel just trim the sails even if GDP is through the roof.

    Biden’s deficits are estimated to come in at 50% of Trumpian loans from the Chinese.

    Larry’s point that Biden infused trillions MORE via his programs (beyond stimulus) is incorrect; he is spending less.

    One issue is the complexity of economic monitoring and control. It’s like we manage the economy by steering a motorboat of monitoring and control tools. Think about it: if the problem is too much money, why can’t we accurately count M1. We really can’t. There’s the constant fluidity of the expansion factor, excess trillions in bank reserves, all sorts of things very difficult to track accurately that can change the M1 value almost overnight. Then, if you believe the issue is too much money, how does changing the interest rate directly affect that. It doesn’t. It affects the cost of capital which, in turn, affects the money supply. How long does it take us to know whether people are borrowing more or borrowing less? Then, to top if off, we need two quarters of negative gdp behind us, in the rearview, before we conclude it’s a recession….

    So we turn the boat right to lower the money supply via interest, oversteer, turn the boat left via t-bill sales to increase the money supply by taking loans, understeer, and so on and so on. We are not able to track the money supply so we take our best shot via controlling interest…..

    FYI: I know of no better manner of doing it, but that does not change the fact that this is so far from an exact science to be laughable. Larry even noted one time that even the definition of recession covers what happened over the past six months, not what is happening today. All the precision of steering a motor boat, in rough waters, in the dark, without lights…….

    Larry saying Biden’s spending programs, which have barely started spending anything, is the only cause is probably just not correct. It’s just not that simple.

  4. larry Horist

    Frank Stetson. I have repeatedly said that Trump’s last stimulus money was inflationary. But instead of Biden mitigating the nominal impact of the Trump money he doubled down, He threw a lot more gas on the fire. He also should have been jawboning the Fed to raise rates. That is what Presidents do. They cannot give orders ot the Fed, but they can apply pressure. It is the sane with Afghanistan. Trump was in error in proposing an exit play. But there was nothing to prevent Biden from setting it aside and develop a better plan. But instead, he imposed the worst possible plane. That is why I lay Afghanistan and inflation at Biden’ doorstep. Keep in mind by the time Biden was pushing his huge spending programs and stimulus money, economists were yelling from the rooftops — including those aligned to the Democratic party. But Biden insisted there would be no inflation and no recession. How does he blame Trump for an inflation Biden claimed would not happen. We are living with a Biden inflation just as we are living with the Biden disaster in Afghanistan … period.

  5. frank stetson

    A great economist once was asked what would cause the next recession? His response: “Sure, I can pinpoint with 100% accuracy what caused it as soon as it ends…..”

    Got some of that going on Larry. Yes, Biden’s double down was stupid, in hindsight, but it’s a cumulative effect and very hard to say exactly where the tipping point was. And if you look at an m2 money supply, savings, chart by month, you will see a HUGE uptick starting in 2020 which is only now beginning to be reduced. Use the St. Louis FRED page on the topic. People are fighting inflation with xmas shopping from savings…

    Yeah, managing the money supply is like using a motorboat to do pinpoint turns.

    Biden has spending programs, you are already building your 2024 case I see, but as I have said he is SPENDING less than his predecessor, he is lowering the deficit dramatically from that financial bum too.

    While I agree Biden’s stimulus, especially in hindsight, was pouring gas on a fire, and Yellen should have seen it sooner, they were playing the “let’s get back to normal, so I can claim victory” game too, like playing catch with knives. Biden, and Trump too, could have done the stimulus’ better if they had offered them with surgical precision where needed, and avoided giving them to people like me. I even gave a number away, it just did not seem right to get free money so I paid it forward to charity. And remember, Trump also had the massive tax cuts which, in effect, were a stimulus too releasing trillions into the hands of consumers. Too much money.

    The largest effect is in the deficit, and then debt, where Trump puts everyone to same. Go figure that the oft bankrupted business saved over and over by taxpayers did it again, just no one to save US this time. Obama was lowering his yearly deficits after The Great Recession, down to about 666 billion which Trump immediately began to rachet up to 780B his first year to 3.1T his third year and 3.7T his fourth. Biden is estimated to come in at 1.8T his first year, and should go down from there. So, tell me about his accelerated spending……

    More hopefully, his spending may actually pay off in GDP. He is building infrastructure, not walls.

    On one thing we really agree. You joke on his Inflation Reduction bill is spot on. What were they thinking. Words matter and these are really stupid ones.

    Afghanistan as building a Biden penchant for failure —- another topic Larry, not now, sorry.

    BOTTOM LINE: it really does not matter who caused it, both of these fine fellows put too much free money in the wrong hands and now it’s coming back to bite us. But remember, there’s other forces at play beyond free money. There’s the pandemic effect, and that’s multiple and major from supply and demand to supply chain. There’s the Ukrainian War and Saudi oil effects and that drives everything that uses oil. And it’s a global inflation where the US is actually doing better than most developed nations. Do you thank Biden for that? (don’t have too, we all realize he can affect but does not control the economy — even less so globally.)

    The real question of where we go from here will be answered this week as the Fed ups the rate again. What message will they send and how bad do they want a recession? We will know any day now. And, as I said, if we expect changing the cost of money to instantly affect the M1/M2 money supplies — look at that M2 chart and you can see, it ain’t coming down overnight and every dollar spent there is spent inflationary while diminishing the money supply by ten fold —- heading to recession. Like driving a motorboat, in choppy waters, in the dark. It’s that accurate.

    Hang onto your hats, the bigger question is how deep and how long. Might need that infrastructure stuff to provide a bright spot…..