How to Fix Inflation

Back when he was in the White House, Bill Clinton famously advised Monica Lewinsky that there was no evidence, so she should “deny, deny, deny ” that anything happened between them. Actually, there was evidence. Taking a page out of the Clinton playbook, Joe Biden’s strategy has been to “deny, deny, deny” that there is any link between his policies and inflation, even going so far as to assert that the notion of a link is “bizarre.” Actually, there is evidence. To point out one study, economists at the San Francisco Fed concluded that core inflation would still be around 2 percent if the U.S. had not provided so much “fiscal support.”

It is no surprise that studies are documenting such findings. There are many ways to describe the economic relationship, but here is the simplest. Suppose that everybody in the economy has 10 percent more money to spend on things this year than they did last year. If suppliers can produce 10 percent more supply than they did last year, then prices can stay the same. If suppliers can’t produce any more than they did last year, then prices will go up 10 percent. Where you end up between those two points depends on how much supply can keep up with demand. If you have friends in the White House, you might email them this paragraph.