(JustPatriots.com)- A former official who served in the Treasury Department during the Obama administration said that President Joe Biden is way off in his assessment of the current situation with inflation.
On Thursday, Steven Rattner, who was a counselor to the Secretary of the Treasury, wrote an op-ed in The New York Times that shot back at Biden’s claims for the reasons that are causing the U.S. to experience such extreme inflation.
Biden spoke with Lester Holt of NBC News last week, talking about the continuing increase in inflation. Holt began talking about how the president said inflation would only be temporary, which apparently set Biden off a bit. The president eventually called Holt a “wise guy.”
Then, he commented:
“The reason for the inflation is the supply chains were cut off, meaning that the products, for example, automobiles — the lack of computer chips to be able to build those automobiles so they could function; they need those computer chips. They were not available.”
But, Rattner disagrees completely. He said that line of thinking is “simplistic and misleading.” In his op-ed for The Times, he wrote:
“For starters, the supply chains have not been ‘cut off,’ just stretched. And supply issues are by no means the root cause of our inflation. Blaming inflation on supply lines is like complaining about your sweater keeping you too warm after you’ve added several logs to the fireplace.”
Instead, Rattner wrote that the current issues with the supply chain are because of an economy that has been overstimulated during Biden’s time in the White House.
As he wrote:
“Sure, there have been some Covid-related challenges, such as health-related worker shortages in factories and among transportation workers. But most of our supply problems have been homegrown: Americans have resumed spending freely, and along the way, they have been creating shortages akin to those in a shopping mall on Black Friday.”
And, one of the main reasons why Americans have been spending at such high amounts — despite still lagging employment numbers and low salary increases — are “vast amounts of government rescue aid,” Rattner wrote. In addition, the fact that many households pulled back on spending significantly during the early parts of the pandemic meant they had more money in their pockets than normal.
Another contributing factor to rising inflation is the fact that many Americans are voluntarily leaving their jobs. This has led to a huge shortage of labor in the United States, which has in turn led to a significant increase in the cost of providing basic services.
As Rattner wrote:
“The real solution is more complicated. Some shortages will ebb naturally on their own, as consumers, having sated their thirst for adding that extra room on their house, return to more normal spending patterns. Other shortages will take longer to moderate and will require robust action, particularly by the Federal Reserve.”
The Fed is already planning some of those actions, including pulling back on their bond buyback program and increasing interest rates, reportedly at least three times in 2022.