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New York Post: Democrats are Playing with Fire on Spending and Inflation

New York Post: Democrats are Playing with Fire on Spending and Inflation

By: Christine von Liederbach
August 20, 2021
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Article by Dan McLaughlin in New York Post

For the first time since Jimmy Carter’s presidency, inflation is back in a big way: 5.4% from July 2020 to July 2021. From February 2020 to June 2021, food prices went up 5.4%; energy prices increased 8.9%. You’ve probably noticed it at the pump and the grocery store.

Inflation bites household budgets unevenly, landing harder on older people with savings and fixed incomes. It feeds a vicious cycle, as workers demand more pay and their employers raise prices to cover the costs. It makes it harder to plan ahead, and uncertainty is always bad for investment. Hyperinflation, when inflation just takes off and runs away, has long destabilized societies and toppled governments.

Two things cause inflation. One is having more money in circulation chasing the same amount of goods. If you gave everybody in Monopoly an extra $1,000, they’d bid more for Boardwalk.

The other is more demand: the readier people are to spend what they have, the more businesses can afford to raise prices. (Businesses also need to raise prices when wages are rising, but they can only sustain that without losing sales if the demand is there.)

There are two things the government shouldn’t do in that situation. One is spend a ton more money, expanding the amount in circulation. The other is to drive up wages and demand.

Joe Biden and the Democrats are doing both.

Businesses have to offer higher wages to compete with extended unemployment benefits. Senate Democrats passed a $3.5 trillion budget resolution Wednesday morning, a package stuffed with more benefits. This is on top of $1.9 trillion the Democrats spent in January. There’s also a bipartisan bill with $550 billion in new infrastructure spending.

This is the wildest peacetime spending spree in U.S. history. The $6 trillion price tag is over ……

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Although the information in this commentary has been obtained from sources believed to be reliable, The Gold IRA Company does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. The Gold IRA Company will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.

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