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I have many concerns about the Biden administration's management, policy initiatives and leadership, including their approach to the economy and working with the Federal Reserve (Fed).
Biden Democrats' combination of spending since early 2021 and their assault on American energy production ignited inflation. Since the spending and high gasoline, diesel, and home heating costs continue to be inflated, farming, building, manufacturing, and shipping costs have greatly increased. This has been a recipe for the highest level of continued inflation since 1981.
In response to Biden's economic crisis, the Fed has just recently cut back its quantitative easing or "increasing the money supply" via bond purchases and other means. This move is too little, too late. The Fed erroneously doubled down on Biden Democrats spending spree virtually ignoring the trillions being created through legislation and executive order. Instead, frankly inconceivably, the Feds own stimulus plans increased the money supply by 30%. The Feds reasoning is that they feared an economic slowdown post-Covid. The Fed miscalculated as the economy was growing early in 2021. The combination of Biden democrats spending, and Fed stimulus created inflation by having "far too many dollars chasing too few goods."
The other mistake made was not factoring in the Biden Democrats assault on fossil fuels. This caused a hyper increase in gasoline prices which once losing our energy independence any geopolitical event would have severe impacts on the price of energy. Enter Vladimir Putin. If we were energy independent, very simply our fuel costs would not have increased anywhere near the level they did. We would have been in control. Not OPEC and not Putin.
This is in the past, however. What concerns me currently is how we plan to move forward. Jerome Powell, the Fed chairman, seems to regularly look at the early 80's, under Paul Volcker, as the model for correcting today's inflation. Volcker's blunt inflationary weapon was interest rates. Such actions at the time sent our economy into two recessions but did eventually abate inflation albeit by beating down the economy. However, to counter that the pro-growth tax reductions initiated by President Reagan is what lead to the economic growth of the 80's. Reagan understood that incentivizing a competitive business climate, having supply meet demand rather than killing demand, would reduce inflation.
Dan Meuser is the Republican U.S. representative for the 9th district, which will include parts of Lycoming County in the next congressional term, and a former state secretary of revenue.