I captured these top headlines from Bloomberg.com yesterday because it’s an illustration of what’s wrong with financial media these days, conveying a message that inflation has something to do with too many jobs.
I’ve done several posts on this topic, pointing out in graphs why this thinking is wrong. Employment doesn’t cause inflation. Quite the contrary. Since inflation is caused by supply and demand, in aggregate, being out of balance, we want supply side expansion to soak up any excess demand.
The suggestion here that the ‘easy button’ gets pressed at the Fed to rip productive employment and income for the necessities of survival from millions of people at random to reduce demand to solve the inflation problem is rather draconian. When really, after the protracted recovery from the COVID pandemic that has been exacerbated by the war in Ukraine, the supply side needs lots of policy love and nurturing so that it can grow. Yet it remains sorely neglected.
These kinds of headlines are nothing more than a cover for bad public policy governance, the stuff that exacerbates all kinds of social and political problems. Does anyone really think we need don’t need our economic problems solved in a way that works for everyone or that we need more angry voters with a legitimate beef?
As Ben Bernanke once said, “If something is untenable, it will eventually stop.” Big government’s regulatory burden is untenable. It will stop. The question is, which way do we want it to stop?
I want the government that is full of all the wrong people to do the right thing for it to stop before we lose everything to a smarter Donald version 2.
These headlines do nothing toward that end.