J.D. FOSTER: After Failing To Spin His Inflation Problem, Biden Pulls Out An Old Dem Favorite — Blaming Corporations

President Joe Biden has an inflation problem, or really two or three. The most obvious is that inflation continues to run too hot, the latest read showing a stubborn 2.7% annualized rate, well above the target of the Federal Reserve.

Cumulatively, prices have risen 16% under Biden, three times faster than under President Donald Trump at this point in his administration. So, it’s not surprising Biden’s polling on inflation — at -26% disapproval — far exceeds his depressed overall disapproval rating.

In turn, this jump in prices has produced a painful drop in family purchasing power. Adjusted for inflation, median weekly earnings are unchanged from just before the pandemic–five years ago. No matter how much Biden talks about a strong economy, families aren’t buying it, and this is partly why.

All of which means Biden needs a fall guy, somebody to blame to get the high inflation monkey off his back, but the two usual explanations just point the finger back at Biden. The Keynesian explanation — now seemingly if sadly adopted even by most Republicans — is that Biden’s surge in deficit spending pushed demand well past available supply resulting in rapid price increases. If one accepts this Keynesian explanation, then Biden’s spending sits squarely in the high-inflation blame bulls-eye.

The alternative credible explanation for high inflation is that the Federal Reserve ran a too-loose monetary policy for too long. A quick glance at the money supply (M2) adjusted for inflation shows it soaring 29% from the start of the pandemic through late 2021. That’s enough to make any good monetarist raise a phalanx of red flags.