The Beltway Inflation Spin

W eeks ago, former White House Council of Economic Advisers chairman Jason Furman tweeted that such economic issues as inflation and supply-chain disruptions were merely “high-class problems.” The contention was just as shocking then as it is now. Worse yet, though, the tweet was later shared by none other than White House chief of staff Ronald Klain.

A few days later, press secretary Jen Psaki shared a similar sentiment by mocking concerns over the increasingly chaotic supply chain as “the tragedy of the treadmill that’s delayed.” Transportation secretary Pete Buttigieg went even further, suggesting that the shortages are actually a demonstration of the success of the Biden administration’s economic plan.

Most recently, MSNBC tweeted — and then deleted — a post titled “Why the inflation we’re seeing now is actually a good thing.” Although the headline has since been changed, the article, by opinion columnist James Surowiecki, is still live on the site. Here, again, we find the notion that the inflation scare is being overblown. Surowiecki evidently conceives of inflation as being a consequence of the post-COVID economic recovery, reinforced by the fact that the COVID recession left most Americans in far better shape financially than is usually the case after a downturn:

As people shift[ed] their habits drastically in response to the pandemic, they spent much less and saved more. Even though millions of Americans lost their jobs, enhanced unemployment benefits and stimulus payments left many of them better off, not worse. And the stock market, after initially falling, boomed.

And so:

American consumers are, relatively speaking, flush, and it’s that strong demand for goods and services that is sending prices higher. But it’s taking manufacturers and food producers time to increase supply after cutting back production during the pandemic. When you have high demand, and relatively low supply, prices go up. The inflation we’re seeing is not, then, some mysterious affliction that’s descended on the economy. It’s the predictable product of the economy’s rapid recovery, and its costs have been offset, to a large degree, by robust wage growth and government policies.

While the thrust of that economic argument might be true, the fact remains that asking people not to be too concerned — “sort of concerned” will do, apparently — about rising prices, which is arguably the most palpable economic metric that people have to face in their day-to-day lives, is somewhat out of touch. Missed in conversations about “transitory inflation,” too, is that while inflation rates might be temporary, higher prices are permanent, and not everyone will earn the higher wages necessary to counter the rise.

Contra Furman and Klain, inflation is a problem that punishes the middle class and the poor the hardest, a phenomenon some have called “inflation inequality.” And the effects of inflation aren’t abstract terms in obscure white papers. They are real, human, and devastating — something that I’ve witnessed first-hand, as a native Venezuelan. Indeed, I’ve had a front-row seat to my country’s crash course in inflation and scarcity.

You probably have heard the numbers and the stories, hundreds of times — how Venezuela had an inflation rate of more than 6,000 percent in 2018; how the paper currency was worthless; how prices changed constantly; and how the few goods that were in the markets were incredibly expensive. All of that is true. For example, when my family bought our apartment back in 2015 the cost was about 5 million bolivares, a very large amount of money; however, the last time I went home, in 2018, one bottle of Pepsi was 2.5 million bolivares. Consider that: In three years’ time, 5 million bolivares went from buying a house to buying two bottles of Pepsi.

Thankfully, my family was able to weather the heaviest blows of inflation. But the vast majority of Venezuelans were not so lucky. Extreme poverty rose to unprecedented levels in my country.

To be sure, the United States is not Venezuela. Hyperinflation will not come to the states, and you will not see the value of your house fall to a couple of Pepsis. While the United States has been printing a copious amount of money — with the amount of money in circulation in the U.S. rising from $15,000 billion to $21,000 billion in barely a year — hyperinflation is a very specific and rare occurrence. It happens when faith in the currency collapses, and it is usually preceded by a severe economic crisis and grotesque economic mismanagement. The U.S. is facing a period of inflation, but one that’s substantively different from the conditions that preceded hyperinflation in countries such as Venezuela or Weimar Germany. In addition, it doesn’t hurt that the U.S dollar is still the global reserve currency.

Nevertheless, single-digit inflation still hurts and will hit working families the hardest. We are already seeing a rise in gas and food prices; the BLS reported a 6.1 percent inflation rate in October; energy prices have increased 30 percent from last year; and goods such as beef, chicken, and pork have increased more than 10 percent in a year, too.

Why, then, do Democrats want us to think that inflation isn’t that bad? It’s simple: They are still trying to get their trillion-dollar reconciliation bill passed through Congress. If inflation is no big deal, then the massive price tag on the “Build Back Better” bill will seem less scary.

Do not let the partisan spin in Washington, D.C., fool you: Inflation isn’t just a problem for the “high class.” It’s bad for all Americans.