After last week’s sizzling hot CPI data, inflation talk continues to dominate the news. The government and central bank have been insisting inflation is transitory. Now they’ve turned to a new spin tactic – recycling 1970s inflation propaganda.
Treasury Secretary and former Federal Reserve chair Janet Yellen appeared on Face the Nation and spent the interview lying about inflation. Peter Schiff unraveled her lies in his podcast.
According to Yellen, the current bout of inflation has nothing to do with the Biden administration or the Federal Reserve. She claims it’s the pandemic’s fault, saying, “The pandemic has been calling the shots for the economy and for inflation.”
In Yellen’s narrative, inflation is simply a byproduct of high demand. She said there was a dramatic increase in demand during and after the pandemic, and that is why prices are going up. Since people were at home, they had lots of time to shop. “They shifted their spending on to goods that led to a surge in the demand for products,” Yellen said.
So, we really don’t have anything to worry about because this isn’t really inflation. It’s just demand-driven price hikes.
Peter called this laughable.
Remember, this is the former chairman of the Federal Reserve. This is how little this woman knows about inflation. Now, of course, maybe she’s just lying. In fact, let’s give her the benefit of the doubt. Maybe she’s not quite as stupid as she appears on the show. So, let’s just say that she’s lying and it’s just the crew on Face the Nation that’s complete morons. Because they don’t understand that she’s lying. They just assume she’s telling the truth because they know nothing about economics or inflation.”
If we take Yellen’s explanation at face value and assume price increases are merely a function of strong demand, it still leaves a question unanswered. Where is all of this demand coming from? Where did consumers get the money to buy all this stuff?
From the government. Thanks to stimulus and other government programs, millions of Americans were sitting at home getting government checks.
If the government didn’t get involved in showering the consumer with cash and telling the consumers they didn’t need to spend that cash on their rent, or making interest payments or even principal payments on their student loans — the government stuffed everybody’s pockets with wads of cash — that’s where the demand came from. So, if you’re going to say inflation was because of a big increase in aggregate demand, well duh. That’s because the government gave everybody money.”
And where did the government get the money?
From the Federal Reserve — the agency that Janet Yellen used to head. Because had the Federal Reserve not printed up all this money, the government couldn’t have passed it out, because in case you didn’t know, the government’s broke.”
In fiscal 2021, the US government ran the second-largest annual budget deficit in history.
The government didn’t have any money to send to consumers who can then use that money to buy all this stuff. So, the government got the money from the Fed, and the government distributed that money to the public. And of course, some of the money went directly to the public through loans because the Fed kept interest rates artificially low making it easier for consumers to take out loans and buy more stuff. So, it’s not that we have all this demand. It’s that the demand is from inflation. Inflation created the demand and that’s why consumers were buying all this stuff.”
On the other side of the equation, Americans aren’t making very much stuff. Most of the things they’re buying are imported from other countries. That’s evident from the record trade deficits.
Yellen ignores all of this in an attempt to minimize the obvious inflation problem. In fact, she’s trying to convince you that inflation is a good thing. Prices are going up because people are buying stuff and that’s a sign of a strong economy. And by the way, we can credit Joe Biden for this economic strength. This is all spin.
If we really had a strong economy, that strong economy would be producing all sorts of stuff. Lots of goods and services would be generated by the strong economy, and so we wouldn’t have all these supply bottlenecks. Prices wouldn’t be going up because the supply of goods would be going up, and consumers could buy all the goods that we were making. The reason that the price of goods is going up is because we’re not making the goods. We’re just printing the money and doling it out to people.”
But Yellen dismisses any role that the Biden administration or the Fed has in this process.
This raises another question: if the government is oblivious to what’s causing this inflation fire, how is it going to put it out?
Peter said as far as he’s concerned, they’ve got to be lying. But nobody is willing to call them out on it.
This is nothing new. The government blamed the public for inflation in the 1970s.
In this podcast, Peter talks more about 1970s inflation propaganda, the mythical 2% inflation target, retail investors moving from bubble to bubble, and bitcoin.