Journo Tells Us Why Dems Screwed the Pooch on Inflation
It was the failed Obama stimulus
At The Atlantic James Surowieki want us to know "How Did They Get Inflation So Wrong." And I must say, the Dem-operative-with-a-byline really helped me understand why the Biden guys made such a staggering mistake with their various stimuli and BBBs and whatever in 2021.
The reason that the Dems overcharged their winter 2021 stimulus package is that they were still smarting from the failure of the Obama stimulus back in 2009.
After the steep economic downturn over those two years, the U.S. economy grew at a very slow clip... And this happened even though... Democrats had passed a $787 billion stimulus plan, which at the time was the biggest such package ever enacted.
So, the Dems were determined not to make the same mistake twice. No Sir!
The lesson that policy makers drew from that experience was that if you wanted to get the economy moving and keep it moving, you needed to err on the side of going big.
Ah yes: "policy makers." Going Big.
Hey Dems! Here's a word to the wise. "Policy makers" don't know from nothing! And you have learned the wrong lesson from 2009. Here is my analysis of what went wrong.
First, it may very well be that there was no way to have a quick recovery from the Great Recession of 2008. The 2008 crash was a once-in-a-generation (we hope) disruption of the credit system. Rather like 1929. My guess is that you don't recover from that with a quick $787 stimulus bill. It takes longer than that for the various economic actors to recover from the hit they took in the Crash.
Second, I remember reading, in the conservative media, that the Obama stimulus failed to stimulate the economy because it was mostly handouts to Democrat special interests, notably the teachers. In other words, it wasn't designed to restart the economy but rather to hand out loot to Dem supporters. For instance, in FY2010 federal education spending jumped $50 billion from $90 billion to $140 billion. You think that education spending "stimulates the economy?" I gotta bridge...
Third, don't forget the reason for the Crash of 2008. It was because of half a century of Dem-driven easy credit for home mortgages, principally by laundering mortgages through Fannie Mae and Freddie Mac and using the credit of the federal government to price mortgage interest rates. And then there were the Liar Loans, and low-down loans to blacks and Hispanics -- who got hammered by the Great Recession. The debt of Fannie Mae and Freddie Mac went from nothing in 1938 to about 50 percent of GDP at the peak in 2008. If you think of the regular federal debt at about 100 percent of GDP, this means that Fannie and Freddie represent another huge chunk of national debt. Only it's sorta off-the-books.
Fourth, the Crash was made into a real crash because Little Ben Bernanke, Chairman of the Federal Reserve Board, didn't do his job as "lender of last resort." He let Lehman Brothers go broke, whining that he didn't think he had the authority to bail them out. Ben, oh Ben.
My point is, Democratic office-holders, and aides and staffers, and "policy makers" and media scribes, you screwed up in 2021 because you failed to learn the real lessons of 2008. Not to mention the bigger lesson that you really don't want to be screwing around with the credit system because you don't understand it.
But that's OK. Chances are we'll have a Republican president and Congress in 2025 with a real mandate to fix things. Because you guys screwed up. Not because you are corrupt, although you certainly are that. But because you didn't go your homework.
And one of the ways a political person does their homework is by talking to the opposition. Funny thing about oppositions. They tend not to have a view of events that excuses the party in power from its mistakes and stupidites.