President Biden’s Inflation Malarkey

June 21, 2023

President Biden took to the pages of the Wall Street Journal to defend his economic record. He claims that “as supply chains continue to unsnarl, company profit margins fall from historically high levels, and rents continue to moderate, inflation should decline further, creating more breathing room for working families.” There’s an implicit theory of inflation here—but not a good one.

The President believes in cost-push inflation: Rising prices resulting from transportation and shipping difficulties, as well as greedy corporations and landlords, cause the dollar to depreciate. He’s got it exactly backwards. Dollar depreciation is why prices are rising. The Fed’s monetary policy, aided and abetted by the President’s and Congress’s massive deficits, are the real cause. It’s old-fashioned, aggregate demand-driven inflation. By greenlighting excessive spending, which the Fed felt compelled to underwrite, the President is complicit in it.