In the first year of the Biden administration, inflation hit a 40-year high and has continued to climb steadily since then. However, he blames the problem on “evil corporations,” not his own misguided economic policies.
“Too many corporations raise prices to pad their profits, charging more and more for less and less,” said President Biden in his most recent State of the Union Address. His administration has driven the deficit, expanded the debt to historic levels, printed money, increased the money supply, and given away trillions of dollars to people who do not work and to foreign countries, but he blames corporations for inflation. And to “protect” the public from the evil capitalist system where everyone is free to buy, sell, trade, and earn as they wish, he has vowed to crack down on “price gouging.” Ostensibly, the White House will decide what the “correct” prices should be and which prices are being gouged, and the government will use its vast power to force corporations to return those prices to a federally determined level.
The Federal Reserve Bank of Kansas City blames inflation on corporate profits. Some reports claim that corporate profits accounted for as much as 53% of inflation. The reality, however, is that inflation is a monetary phenomenon caused by the reckless fiscal and monetary policies of the Biden administration.
Inflation, by definition, is the expansion of credit and the money supply. This causes the buying power of the dollar to decrease, which means you need more dollars to buy things. Most consumers see and are alarmed by rising prices, but this is not inflation; it is only the result of inflation. The real culprit is massive debt creation, deficit spending, loan forgiveness, foreign aid, and transfer payments made by the Biden administration.
Evidence used by the White House and other liberal pundits regarding inflation reference the fact that corporate profits are up, identifying this as a cause of inflation. However, corporate profits are up in nominal terms because the dollar is worth less and prices are rising. Corporations took in more dollars, but those dollars buy fewer raw materials and pay for less labor than they did before Biden took office. The same administration that blames corporations for rising prices is also demanding that the minimum wage be doubled. Labor accounts for between 20% and 40% of cost for most retail and fast food businesses. Forcing a doubling of the minimum wage will drive prices up.
And finally, proof that the Biden administration is the culprit: An argument made by the Groundwork Collaborative think tank and others who blame “the corporations” is that corporate profits as a percentage of GDP have increased, and therefore corporate profits must have increased and are the cause of inflation. This logic ignores the fact that Biden’s lockdowns prevented people from working during the pandemic, and even now, not everyone is back at work. So, obviously, wages as a percentage of GDP will be lower if people are not working. Ironically, even the graphs created by Groundwork Collaborative clearly show that salaries as a percentage of GDP decreased during the lockdown.
As the nation rolls toward the 2024 elections, the White House is looking for anyone to blame for inflation while attempting to buy votes by continuing to give away free money, which is driving inflation.