Inflation is too much money chasing too few goods

Posted on: July 24, 2022 at 18:26:18 CT

Inflation is simply too much money chasing too few goods. The money supply is critical. The supply of goods is critical.

The current inflation in the American Economy has many fathers. Both Trump and Biden bear some responsibility, but there are others who in fact may have had a greater impact.

Over the summer and fall of 2020, Trump generally opted for economic policies that would stimulate growth over those that would dampen inflation. He was running for re-election and a booming economy, even one with some inflation would benefit him.

Following his election, Biden adopted some policies that directly feed the fires. Namely, the various Covid relief bills and programs. His administration also adopted a number of policies to "encourage" the country to move from fossile fuels to more environmentally friendly fuels. Build back better was inflationary.

Throughout the 2021 and into 2022, the Federal Reserve not only allowed by kept the money supply growing too rapidly. It bought 300 billion dollars a month in government and private bonds through out much of 2021 and into 2022. That jacked up the money supply.

Historicly, inflation has been brought under control by cooling the economy, usually by the Federal Reserve allowing interest rates to increase. For example interest rates charged by Missouri Banks to increase to 21.5% on business loans in the early 1980's. The interest rates on credit cards, riskier loans, etc. were higher.

So the bottom line is the current inflation has many fathers. One is named Trump, another is named Biden and the main culprit is the Federal Reserve Board.