Fancying himself as some kind of modern-day F.D.R., President Joe Biden has embarked on a series of massive spending initiatives since taking office, and while they may succeed in purchasing the loyalty of certain constituency groups, they also pose a serious risk of imminent economic turmoil.
Last week, former Treasury Secretary Larry Summers raised red flags over the current administration’s eye-watering expenditures on everything from COVID-19 relief to green energy plans, joining other experts in suggesting that current market indicators are now a “flashing red alarm” that serious inflation is on the horizon, as The Hill reported.
The left-leaning economic adviser told a Council on Foreign Relations forum that “all the signs are for inflation starting to break out,” emphasizing recent price increases for commodities, housing, and used cars. Labor shortages represent another concerning factor, according to Summers.
This is not the first time Summers has voiced concerns over Biden’s spending, suggesting in a February opinion piece in the Washington Post that the president’s COVID-19 relief package far outstripped what he referred to as the “output gap,” a metric of the distance between the economy’s current production and its potential. He posited at the time that excessive stimulus would cause price increases, something that would take a serious toll on those least able to weather the financial storm.
In late March, Summers said during an interview on Bloomberg TV that he remained worried about the sizable scale of spending in the pandemic and post-pandemic period, and while some economists have attempted to minimize concerns about hyperinflation such as that seen during the 1970s, he believes there are few differences between now and then, and those that do exist give even more reason for alarm, according to Business Insider.
David P. Goldman at PJ Media took the argument even further in an op-ed on Sunday, calling Biden’s spendthrift proclivities amount to “a Ponzi scheme, not an economic policy,” adding:
Throwing massive amounts of cash out the helicopter window while throttling investment (by raising corporate income tax and capital gains tax rates) gets exactly one result, and that is inflation.
Inflation robs the poor, who have nowhere to go but the checkout counter and favors the rich, who can buy inflation hedges. The Biden administration is playing Robin Hood, except its robbing the poor and the middle class. It goes without saying that the worst victims of inflation are minorities.
Pointing out that housing prices have risen 12% in just the past year, and used car wholesale costs have skyrocketed 41% during that same period, Goldman suggested that inflation could end up being the issue that causes the collapse of the Democratic Party.
He went on to urge Republicans to swiftly seize the opportunity to “cry ‘Thief!’ and hold President Joe Biden to account for the disaster that has already begun to befall America,” adding that the current level of spending and the hyper-partisan ways in which appropriated funds will be used amount to little more than “a giant act of embezzlement, whose goal is to pick the pockets of Americans.”
Whether leaders of the GOP have the political will to take that advice and call Biden to account before the runaway train of inflation does lasting economic damage, however, is something that remains to be seen.