On the Candidates’ Disastrous Price Policies—and Harris’s Moral Obscenity

I don’t think any economic fallacy has undergone more scrutiny, for so long, and been so universally condemned by non-partisan economists, as government price controls. Yet price controls keep resurfacing in political campaigns, especially in times of inflation. 

This presidential campaign of 2024 is no exception. Donald Trump is going crazy with tariff proposals, and recently proposed capping credit card interest rates at 10%.

Kamala Harris proposes Federal anti-price gouging laws against the food industry. I touched on the price gouging absurdity in a short post on Quora. She follows from her boss Joe Biden on this issue. 

The damaging economic effects of price controls are covered nicely in an article By Ryan Bourne and Sophia Bagley [published by CATO, titled  Economists’ Damning Verdict on Both Presidential Candidates’ Pricing Policies. So I won’t repeat them here. My focus is on the horrible moral aspects, which are not covered in the article. On the moral aspect, of the two candidates, I think Harris is the most dangerous and unjust.

Here is my Facebook post on this article:

The article rightly focuses on the economic arguments against price controls, which are well known. But of the 2 candidates, Harris is by far the worst because her policies are not just bad economics. They are MORALLY OBSCENE. And she is not original. She is just the latest in a long line of politicians who blame private enterprise for the inflation disasters that their own policies cause. In the 1970s inflation disaster, Nixon, Ford, and Carter all blamed, in their own way, private enterprise. Using useful idiot terms like “greedflation” and “shrinkflation,” (Biden’s favorite terms) and “price gouging” (Harris’s favorite), the Biden/Harris axis blames American business for inflation. This is the moral equivalent of blaming the rape victim rather than the rapist.

Inflation is a monetary phenomenon. It is the creation of excess money to finance excess government spending. This causes excess demand, which triggers GENERAL price rises (Prices can rise for other reasons, such as supply shocks. But that is NOT inflation). Since the Federal Government nationalized money over 100 years ago, ONLY THE GOVERNMENT can excessively inflate the money supply, which the Federal Reserve did in spades to fund the massive Trump and Biden “covid relief” spending. 

The recent “price spiral” was not caused by, and COULD NOT HAVE BEEN CAUSED by, American business, as Harris claims. It was caused by Trump/Biden spending (with the most blame going to Biden, in my view). All economic groups, business, workers, consumers et al, are trying to cope with the resulting cost pressures, as best they can, that 2 administrations set in motion. Harris’s campaign ploy of blaming “price gouging” by business for inflation should be rejected as the moral obscenity that it is. So much for HER character.

Related Reading:

How Anti-"Price-Gouging" Laws Really Work

‘Greedflation’: Biden’s Scandalous Blame Shifting

Joe Biden’s Despicable ,Unjust Blame Game

Memo to Jersey City Mayor Fulop: The Federal Reserve, Not Supermarkets, is to Blame for 'Hidden Food Inflation'

Economics in One Lesson—Henry Hazlitt

Did the New York Times Just Vindicate Reaganomics?

In NJ, the Crusade Against "Price-gouging" Could Be Hindering Recovery

New Jersey’s Political Attack on Takeout Food Delivery Service Providers

Memo to Harris: Corporations are not destroying America: The way the Harris campaign is marshaling economic data paints a misleading picture. By Eduardo Porter for The Washington Post

‘Greedflation’: Biden’s Scandalous Blame Shifting

In Progressives Urge Biden to Push Harder on ‘Greedflation’, the Washington Post reports that President Biden’s campaign advisers are urging him to peddle “greedflation,” the ridiculous moniker meant to blame big business for inflation. Biden and many Democrats have been using this grossly unjust smear on and off for a while. Now they want Biden to make it central to his campaign. 

Biden is just the latest in a long line of politicians who blame private enterprise for the disasters their own inflationary policies caused. (Janet Yellen also blamed consumers. But the main focus is on business, probably America’s most persecuted minority today.) 

Inflation, properly understood, is strictly a monetary phenomenon—an artificial, unwarranted expansion of the money supply, which acts as a tax, not on actual dollars, but on the purchasing power of the dollar. The resulting general rise in prices (as opposed to the isolated price spikes caused by supply chain disruptions, tariffs, and the like) is actually the manifestation of the falling value of the dollar. And everyone—business big and small, consumers, workers, and even state governments, everyone—is stuck dealing with it the best they can. There can only be one cause. The government. In the U.S. the government nationalized money over 100 years ago. So how can Biden and the misnamed “Progressives” blame business? Simple. He and they are desperate liars.

But as I said, Biden’s not the first blame-shifting scoundrel. In the 1970s, the last inflation disaster, three presidents blamed private enterprise; Nixon (wage/price controls), Ford (his WIN initiative), and Carter (Council on Wage and Price Stability). All engaged in dishonest victim-blaming. All were morally despicable. And so is Biden’s latest campaign scheme. Every American should be morally outraged. No one should be duped; I will not be. The current inflation is a result of Biden’s spending/monetary policies layered on top of Trump’s spending/monetary policies. And that’s it. 

Related Reading:

Joe Biden’s Despicable ,Unjust Blame Game

Memo to Jersey City Mayor Fulop: The Federal Reserve, Not Supermarkets, is to Blame for 'Hidden Food Inflation'

Economics in One Lesson—Henry Hazlitt

Did the New York Times Just Vindicate Reaganomics?

Blaming the Victims: The Government’s Theory of Inflation by Robert Higgs

Inflation occurs, by definition, when the economy’s aggregate volume of money expenditure grows faster than its aggregate real output. The excessive growth of money expenditures can have, again by definition, only two sources: either the velocity of monetary circulation grows excessively or the money stock itself grows excessively (or both). Our current inflation is attributable almost entirely to excessive growth of the money stock.

Because the excessive growth of the money stock and the inflation it causes do not happen simultaneously, some people always fail to perceive the relationship. Increases in the money stock take some time before their effect on the volume of expenditure becomes significant. But once the actual lag is recognized, the relationship is seen to be very close.

QUORA: ‘Could someone explain America’s debt system to an idiot? How can we be in debt with ourselves?’

QUORA: ‘Could someone explain America’s debt system to an idiot? How can we be in debt with ourselves?’

I posted this answer:

The term “America’s debt system” is vague. Let’s define the terms. By “America’s debt system” I’ll assume the question refers to government debt. 

Government debt is not being “in debt to ourselves”. The government is a distinct entity in and of itself. There is no “we” and no “ourselves”. When the government takes on debt, it borrows money from lenders who supply the cash in good faith that they will be paid back. The debt (bonds) is held by private pension funds, mutual funds, individuals, and sometimes other governmental entities. These lenders’ financial health depends on the soundness of the debt, known as the “full faith and credit of the United States government.” 

The issue is complicated at the federal level by the fact that the federal government has an institution that can print money, the Federal Reserve. The government can borrow from the Federal Reserve, which then holds the debt in its own account. This creates the illusion that the government owes money to itself. But it’s just that--an illusion--because the Federal Reserve ultimately sells the bonds to investors. So the lender is still a separate agent who expects to be paid back. 

When the government takes on debt, we are not in debt to ourselves. There is a debtor, and there are the creditors. Those who claim otherwise are rationalizing away the moral and legal obligation the government owes to its lenders to honor its promise to pay them back.

Related Reading:

Massive Inflation May Be Coming, Because the US Government Has Cornered Itself into a Fiscal End Game by Antony Davies James R. Harrigan for FEE

 

For years, we have warned that continued deficit spending would paint the Federal Reserve into a corner wherein monetary policy would become a slave to fiscal policy. To avoid government default, confiscatory taxes, government shutdown, or a combination of all three, the Federal Reserve has reached a point wherein it has little choice but to monetize federal deficits. Sooner or later, we will all pay the price in the form of massive inflation.

Bond giant Gundlach blasts ‘failed’ and ‘broken’ Federal Reserve by CHRIS SLOLEY

 

The Federal Reserve is presently acting in blatant non-compliance with the Federal Reserve Act of 1913. An institution violating the rules of its own charter is de facto admitting that said institution has failed and is fundamentally broken.

Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central by John Tamny