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February 16, 2022

On Sunday, Nancy Pelosi raised eyebrows (not her own, of course) by claiming that we have runaway inflation because the Biden economy is just so darn good. She said the Biden rescue plan put money in people’s pockets, and "The fact that people have jobs always contributes to an increase in inflation. And that's a good thing. But inflation is not good, you know, we have to contain it."

At this link, former Director of the National Economic Council Larry Kudlow offers her a helpful remedial lesson in what “inflation” is and what actually causes it.

In a nutshell: Inflation is caused by too many dollars chasing too few products, which drives up prices. It’s not caused by the current unemployment rate, which is artificially low because it only counts people who are actively looking for a job.

When people are working, they’re creating more products. But when the government is printing a lot of dollars that didn’t exist before and giving them to people to sit home and not work, there are fewer products. There are also fewer products when you have an Administration that allows a supply chain crisis to go on and on and never solve it, or that declares war on the domestic fossil fuel industry. You know, like we have now.

In short, it’s caused by Biden and the Democrats in Congress creating too many dollars and ensuring that they are chasing too few products. So if you want to bring down inflation, you either have to convince the Democrats to reverse all their cherished failed policies, or you have to kick them out of office. Guess which one would be easier?

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