The latest data confirms that implementing the policies that wrecked the economy back in the 1970s will have the same result today, warns economic journalist Charlie Gasparino.
“Bidenomics isn’t working. It’s built on a lot of wishful thinking, and a lot of cash,” he wrote. “Post-COVID, the economy will grow on its own, so you have to ask whether all this spending is worth the inflationary risk.”
The 5% spike in the consumer price index announced Thursday is the highest level in 13 years, noted Gasparino, a correspodent for the Fox Business Network.
“And it’s not like we weren’t warned this was coming,” he said.
“If you grew up in the 1970s (as I did), you might recall long gas lines, consumer goods too expensive to afford, and something called Hamburger Helper — which people used to stretch ground beef because meat was so expensive,” he wrote.
Gasparino pointed out that inflation amounts to “a regressive tax that hits hardest at working-class and poor Americans.”
The two main factors causing inflation are at work today, “on steroids,” he said, the Federal Reserve keeping interest rates too low for too long and massive government expenditures.
Gasparino argues the Biden administration and the Fed “are throwing money at a problem that doesn’t exist,” extending unemployment benefits even though the COVID shutdowns are nearly over.
The benefits are keeping people out of the workforce even as companies are desperate to hire.
Gasparino said there’s a reason why Jimmy Carter was a one-term president. The Fed chairman at the time, Paul Volcker, induced a recession to cure massive inflation, which all but guaranteed Ronald Reagan’s victory and free-market revolution.
Yet, policy makers are “looking to repeat the sins of the past.”
At a press conference on May 12 when April’s figures were released, a reporter asked Biden, “Should Americans be worried about inflation, sir?”
Biden didn’t answer as he walked away from the microphone. But the Bureau of Labor Statistics data announced that day indicated Americans, indeed, should be concerned. Consumer prices in April spiked 4.2%, on a year-over-year basis, the biggest increase since November 2008.
On the same day, Fox Business host Maria Bartiromo opined in an interview with economist Stephen Moore that “bad policy equals bad outcomes.”
“I’m only surprised that Wall Street is surprised by this,” Moore said of the data. “And I’m surprised that the Fed has been surprised by this.”
Moore said it boils down to basic economics.
“Inflation is too many dollars chasing too few goods, right, and that’s precisely what we have right now,” he said.
On the CNBC program “Squawk Box,” Hungarian-American billionaire Thomas Peterffy said he had serious concerns about what economic indicators portend for the coming year.
“I hear numbers like this I look back to my childhood growing up in Hungary where I was playing with billion-dollar bank notes. … The value of money meant nothing,” said Peterffy, the founder, chairman, and the largest shareholder of Interactive Brokers.
“So, I’m very worried that this is an unstoppable situation, because the longer the Fed waits, the more they will have to raise the rates,” he said.
At 3.75%, the annual debt service is going to be $1 trillion, Peterffy noted, “so we basically are painting ourselves into a box, and I don’t see how we are going to get out of it.”
President Biden is proposing an additional $6 trillion in spending with the $1.9 trillion American Rescue Plan, the $2.3 trillion American Jobs Plan and the $1.8 trillion American Families Plan.
Sen. Rob Portman, R-Ohio, said the labor statistics are “exactly what you would have expected” as a result of Biden’s policies.
“The answer is, of course, not to raise taxes now, not to keep priming the pump, not to keep putting more money into circulation, but to allow this economy to grow in a steady way so we don’t have this spike in inflation, so we don’t have these higher interest rates, so we can get back to the kind of pre-COVID economy we had,” he said in an interview with Fox News’ Charles Payne.
The pre-COVID economy under President Trump, the senator said, was a “very inclusive economy where we had higher wages, particularly among lower and middle income workers.”
“We had the lowest poverty rate in the history of our country going back to the 1950s,” he noted.
“Things were going pretty well, people coming off the sidelines. Let’s get back to that.”
See Thomas Peterffy’s remarks:
“Whenever I hear numbers like this I look back to my childhood growing up in Hungary where I was playing with billion-dollar notes. The value of money meant nothing,” says Thomas Peterffy on inflation worries. “I’m very worried this is an unstoppable situation.” pic.twitter.com/TTVgUl6Kw4
— Squawk Box (@SquawkCNBC) May 12, 2021
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