Inflation and Pandemic economics

[MaryMagdaline]

It suddenly dawned on me that people in the US have not seen high inflation for a long time. We lived through it in the 70s and we know that we can come out the other side. Ford probably lost the election because of inflation, and Jimmy Carter appointed Volker to the Fed.

When prices are jumping up and you’ve never seen that, it’s freaking scary.
I’ve heard dozens of poor people who work marginal jobs say that the economy was better under Trump. I believe they are crediting him with the 600/week checks that people were getting. People got the first taste of guaranteed income and they liked it.
Biden had to be the bad guy who ended that.
The fact that those checks came from Congress and not from Trump goes over the heads of our uneducated people.
I think the low approval ratings were because of inflation, forced lockdown, ending of subsidies. Coupled with the idea that the Dems are there to fix everything and when they can’t fix everything right away they get punished.
The fact that Biden had a massively progressive agenda just doesn’t sink in when people are looking for quick fixes.
Will they find out how bad trump’s policies are? Yes.
And they don’t care about civil rights - theirs or apparently anyone else’s. They want cheap gas and cheap food.

During the pandemic, I kept thinking that the population would become 100 per cent socialistic after getting the 600/week checks. After all, it was a confession by the elites that that was what people should be earning. Some people had never earned that much money before. Maybe some of that socialism stuck and people are expecting price controls from the government and very drastic government intervention that occurred during the pandemic.

[Silent Type]

1. It is true that Bipartisan stimulus, enhanced unemployment, PPP, kept a lot of people

out of poverty. I’m sure a lot of people FELT better off.

As election approached, we quit talking about all the people living “paycheck to paycheck,” etc., because we were claiming economy was great. I do think Biden’s economy was better than trump’s for the country, enough people just didn’t feel it.

I know most GOPers use that as an excuse because they are racist, bigoted haters. But people who were really swing voters, appeared to believe things were better in 2019.

[MaryMagdaline]

4. Yes, there's some real cost of living pain out there

[Metaphorical]

2. I believe the same thing

I lived through the inflation of the 70s, which is why this particular bout of it was not all that surprising to me. Monetarist theory (Freidman) holds that inflation is due to overstimulus of the economy unconditionally, but I think Keynes was fundamentally correct in that inflation was almost invariably due to supply-chain disruptions, and usually then metasticizes when upstream producers absorb lower prices as profits (and often continue raising prices because they can). Volcker provided a fair amount of evidence suggesting the latter is the case because he raised interest rates and economic activity (hence prices) fell, something that wouldn't have happened if government stimulus was the only factor.

Not surprisingly, conservatives will not / cannot believe this. Their entire economic model is built on maximizing profits, which of course is exactly what happens when inflation takes place (up to a certain point). Eventually, of course, it transfers most of the money that padded the middle class to the wealthy, and their profits begin to decline. At this point, they start firing workers in order to goose their stock prices and dividends, but this of course only accelerates the process. If interest rates are low, these same companies can get by by using rolling lines of credit (never touching their dividend stream).

The GOP made a big mistake in 2002. They made inflation an issue. Biden reacted by raising interest rates, which had worked with Volcker, and ... lo and behold, inflation began dropping again. However, it also meant that a lot of businesses that ONLY stay afloat because they were borrowing that money at low interest rates from the government suddenly faced dramatically higher interest rates, and their business models collapsed. Then Biden did the unthinkable and tried to impose a windfall profit tax (again harking back to Carter) to claw back some of those unearned profits, while also prosecuting companies for price gouging.

The Barons struck back overthrowing the existing King and putting one of their own in place. I don't think that person is Trump, FWIW. Trump will be eliminated the moment that he has a falling out with them, and I think that's pretty much inevitable. They likely feel that they don't need him now that he's delivered the keys to the castle.

However, I also think that the Barons are also going to discover that they need the support of the people, especially when the economy, after improving due to what Biden has done, starts to go south again as Trump undoes as much of this as he can. The economy is fragile, due largely to the ravages of the Barons - Biden's taken a sick patient out of the ICU, but it's still in seriously bad condition, and another couple of destructive hurricane seasons, a world war, climate change, and general mismanagement will send it right back into critical shape.

[MaryMagdaline]

3. Thank you for detailed explanation