For those of us who can recall the “olden days” of inflation out the gazoo, it sure looks like we will have an opportunity to relive those wonderful days. I recall getting a 12 percent mortgage and thought I was lucky. Inflation, the cruelest tax of all and we about to have it in spades. Last month we learned that headline CPI rose 4.2% for the year ending in April. but it is the May print that could be an “absolute shocker.”
Worse it seems that the Biden crew is embracing inflation and doing what it can to aid and abet. According to Yellin, Inflation is good for us. Take a look at lumber.
Amid surging lumber prices that are already adding an average of $36,000 to the construction cost of new homes, the Biden administration is moving forward with plans to double tariffs on lumber imported from Canada. The Commerce Department announced on Friday that it was taking the first step toward hiking so-called “anti-dumping tariffs” on Canadian lumber from an average rate of 8.99 percent in 2018 to 18.32 percent for 2019.
Yes, 2019. If approved through what is likely to be a lengthy review process, the tariffs would apply retroactively to purchases made for the past two years. That means American importers could be on the hook for millions of dollars in taxes they didn’t even know they would owe—taxes that will likely be passed down the supply chain in the form of higher prices.
And our gal Yellin?
So, scrambling to preempt the barrage of questions come Monday, on Sunday Janet Yellen said that even though inflation is now at the highest level since Paul Volcker hiked rates to 20% and the US is about to issue another $3 trillion or so in debt just to fund existing stimulus programs, Joe Biden should push forward with his $4 trillion spending plans even if they trigger inflation that persists into next year and higher interest rates.
Why? Because soaring inflation is good for you.
“If we ended up with a slightly higher interest rate environment it would actually be a plus for society’s point of view and the Fed’s point of view,” Yellen said in an interview with Bloomberg. And yes, she really said that.
“We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade,” the former Federal Reserve chair said, adding that “we want them to go back to” a normal interest rate environment, “and if this helps a little bit to alleviate things then that’s not a bad thing — that’s a good thing.”
It wasn’t immediately clear why rising rates, hence inflation and a drop in one’s purchasing power is “a plus for society’s point of view” but needless to say, this is the kind of idiotic drivel that Rudy von Havenstein and his cronies said some time in 1921, just around the time Weimer hyperinflation kicked in.
The debate around inflation has intensified in recent months, between those who, like Yellen, argue that current price increases are being driven by transitory anomalies created by the pandemic — such as supply-chain bottlenecks and a surge in spending as economies reopen — and critics who say trillions in government aid will fuel a lasting spike in costs.
Yellen also made it clear that even though the world is now more indebted than at any time since World War II, it is about to take on even more debt, because you see, it’s contained: “There is a concern among some about fiscal sustainability and an evident desire to begin to withdraw accommodation when things are back on track,” Yellen said, eyeing her former democrat buddy Larry Summers who has emerged as one of the biggest critics of “Biden’s trillions.” Yellen dismissed his concerns simply by saying that “we think that most countries have fiscal space.”
“I will not give up on the next packages,” Yellen said. “They’re not meant as stimulus, they’re meant as investments to address long-standing needs of our economy.”
Yes, she really said that, and yes she better be right about the “transitory” inflation part because we are about to get a whole lot more of it. Biden’s packages would add up to roughly $400 billion in spending per year, Yellen said, contending that’s not enough to cause an inflation over-run. Any “spurt” in prices resulting from the rescue package will fade away next year. And, if she is wrong, well… it will be someone else’ problem to mop it up.
And that is the best the swamp has to offer today.