Blaming rising inflation on anything other than the federal government’s fiscal wastefulness and reckless monetary policies is misguided.
Blaming rising inflation on anything other than the federal government’s fiscal wastefulness and reckless monetary policies is misguided.
G lobal warming is to blame for inflation running hot — or so claims an article in the Washington Post.
Hilariously, the article’s foremost piece of evidence for this, the first thing cited, is a comment on the online forum Reddit complaining about how olive oil is too expensive.
It’s undeniable that inflation is hurting Americans’ pocketbooks. But left-wing journalists seem intent on overlooking the obvious causes in their attempt to shield the Biden administration from criticism.
The Post article places the blame for rising inflation not on the federal government’s fiscal wastefulness and reckless monetary policies, but on . . . global warming.
“We can model the physiology of crops in changing climate regimes around the world,” Jerry Nelson, an agricultural economist at the University of Illinois, told the Post. But “population, income, cultural preferences . . . there are all these demand changes also going on, which are really not in any of the models.”
That is: What the top expert beyond a random Reddit commenter told the article’s authors didn’t exactly prop up its narrative that global warming is behind soaring inflation.
The article goes on to cite a speculative study by the Potsdam Institute for Climate Impact Research that found that global warming could add an extremely minor 1.2 percentage points to inflation by . . . 2035. From this theoretical projection of a minor effect over a decade from now, the Post breathlessly concludes that “the effects are taking shape already: Drought in Europe is devastating olive harvests. Heavy rains and extreme heat in West Africa are causing cocoa plants to rot. Wildfires, floods and more frequent weather disasters are pushing insurance costs up, too.”
Meanwhile in the present, the cause of inflation is clear: out-of-control government spending and careless monetary policy. Of course, liberal journalists would prefer to pretend that’s not the case, since they don’t like the obvious solutions: prudent budgeting and restraint with the printing press.
In January 2020, before a surge in government spending from Covid and Joe Biden’s reckless big-government policies, there were almost $15 trillion dollars of U.S. currency in circulation, according to the St. Louis Federal Reserve. By April 2024, that had surged to almost $23.5 trillion, meaning that now an estimated 80 percent of all dollars in existence had been printed between the beginning of 2020 and the end of 2021.
The resulting inflation has eroded consumer spending power. If you bought $100 of goods in January 2020, the exact same goods would cost you $121.54 in April 2024, according to the Bureau of Labor Statistics official inflation calculator. That means prices are already up by 21.5 percent in just over four years, while the Post is worried about a hypothetical price increase of 1.2 percent over the next eleven years.
But government spending run amok isn’t the only reason for rising prices.
Joe Biden’s war on conventional energy drove gas prices to record highs and took inflation from 1.4 percent, when he was inaugurated in January 2021, to a 40-year high of 9.1 percent in June 2022 before it began cooling a bit. But another surge may be imminent. Energy prices have risen by 3.7 percent while electricity prices surged by 5.9 percent between 2023 and 2024. Core inflation “only” rose by 3.4 percent. Surging energy prices are obviously a key driver of inflation.
This surge is attributable to Biden’s regulatory and budgetary agenda of favoring so-called green energy over more effective and less expensive conventional sources. When it comes to energy prices heating up, the problem is not global warming but global-warming politics.
Rising energy costs, especially gasoline prices, are absolutely devastating for Americans. Demand for power is highly inelastic, meaning there are few potential substitutes for it and little possibility of reducing consumption when prices rise.
When the price of energy increases, the cost of transporting and producing goods and services that use energy as a component rises as well, meaning that energy prices affect the price of essentially everything else.
The Post article dwells on the rising costs of olive oil. But while there are numerous substitutes for olive oil, there are not many substitutes for the 136 billion gallons of gasoline Americans consumed in 2022 (according to the U.S. Energy Information Administration). Given that Americans paid an average of $3.95 per gallon of gas in 2022, the surging price of energy makes the rising price of olive oil look irrelevant to the average American family.
Granting all the article’s assumptions would mean the government should nonsensically prioritize minor price reductions in the 2022 $13.5 billion olive-oil market, for a good with many substitutes, over larger price increases in the 2022 $537.2 billion dollar gasoline market, which has no real substitutes.
This sort of policy most harms those Joe Biden claims he’s trying to help. Research clearly shows that high energy prices harm the poor and ethnic minorities far more than they harm the average household.
When average energy spending rose from 2.9 percent to 3.8 percent of annual income for the average household, for the average African-American household, annual spending rose from 4.5 percent to 5.8 percent of household income. Lower-income black communities bore an even larger burden and ended up spending 26 percent of their household income on energy.
Combating inflation will require a return to fiscal sanity. No amount of sophistry asserting that every problem under the sun is somehow actually about global warming can change that.