• Moderators, please send me a PM if you are unable to access mod permissions. Thanks, Habsy.

OT: American Politics

From The Bulwark. I laughed.

1. Moronic Inflation
​

Economists make distinctions between kinds of inflation. There’s demand-pull and cost-push inflation. There’s walking and galloping inflation. There’s transitory inflation. Today we have what I’m going to call “moronic inflation.”

We can explain moronic inflation with a single chart:



This chart shows two of those flavors of inflation, separated by that vertical red line I added.

On the left side we see the demand-pull inflation resulting from COVID. The pandemic shocked global supply chains, which combined with the influx of stimulus dollars designed to keep households afloat. This resulted in a spike in prices as too much money chased too few goods. You will note that this inflation peaked around September 2022, after which it quickly abated.

Why did the inflation recede? Smart monetary policy from central bankers and smart fiscal policy from the Biden administration were part of it. But the biggest driver was the reset of global supply chains. As they reorganized, inflation decreased. By the spring of 2024, the growth rate of consumer goods prices was a bit better than back to par.

Then we have our red line. This line marks—surprise!—the second election of Donald Trump.

Trump campaigned on the promise of imposing sweeping tariffs to fight inflation and lower prices. This was moronic on several levels.

  1. Inflation had already abated and real wages were already positive.
  2. Tariffs increase costs and raise inflationary pressure.
  3. Deflation—the across-the-board reduction in prices—is not a good outcome. Deflation is always accompanied by economic calamity. No one with an IQ over 80 would ever want deflation.
But morons American voters heard Donald Trump’s pitch and thought, What the hell do all those pointy-headed “experts” know? They wanted tariffs and lower prices and the guy who fucked up the pandemic response and attempted a coup.

And they got what they wanted, which is the inflation on the right side of the graph. Handed a healthy economy, Trump imposed his tariffs and they did exactly what the so-called “experts” said they’d do: Dampened economic activity while increasing prices.

This is inflation caused not by either a supply shock or a demand shock, not by war, or pestilence, or collapse. It was caused by choice. A political candidate promised to do things that would create inflation; voters chose his program against the warnings of “experts”; inflation resumed.

Moronic inflation.

American voters were incapable of:

  • Seeing the cause of the 2022 inflation.
  • Perceiving the reality that the inflation of 2022 was beaten by 2024.
  • Judging between the promises of a former game show host and convicted felon and the warnings of economists.
  • Understanding the most basic economic effects of tariffs.
The only explanations I can think of for these failings are (a) a pure deficiency of cognitive ability; (b) a pathological drive for self-mutilation; or (c) a pervasive decadence/nihilism in which American society either believed itself immune from consequences or was uninterested in them.

Someday econ textbooks will include a chapter on the inflation of 2025/26 examining this exciting new phenomenon
 
You must log in or register to reply here.
Back
Top