The column by Connor Kockler on inflation (Newsleader, Feb. 3) was desperately trying to hide the causes of our current inflation, not seen in over 40 years. Three main reasons are bad policy choices made by the Biden administration:
Firstly, by keeping his campaign promise to cripple U.S. energy production, Biden’s immediate actions are responsible for the price of crude oil rising from about $38 per barrel before the presidential election (fluctuating around $57 on average during the entire pre-pandemic 2019) to over $88 per barrel by end of January 2021. This large increase not only financed Putin’s invasion of Ukraine but substantially raised the cost of energy, housing and transportation affecting all consumer goods.
Secondly, ridiculous partisan government spending flooded the market with cash that generated huge demand against a U.S. economy in recovery mode with Gross Domestic Product growing at 6.5 percent and inflation at 1.4 percent in January 2021. Bare grocery shelves and a supply chain paralyzed by suffocating government regulations, not to mention the baby formula crisis and medication shortages, are all results of bad decisions by the current administration. Hesitation by the Federal Reserve Bank to raise interest rates sooner didn’t help either.
Thirdly, by paying people to stay home and not work, our government is destroying a fundamental American value: self-esteem enhancing work. Welfare without work requirements is responsible for low labor participation rate and productivity decline not seen in decades. Employers and small business owners cannot attract workers because living off of government handouts is not only feasible but rewarded while hard-working Americans see their real wages decline and retirees their pensions evaporate for almost two years. High inflation together with non-existent growth is a recipe for disaster despite reported low unemployment.
When a country like Switzerland is experiencing 2.8 percent inflation, caused essentially by higher energy costs, not by extravagant spending like our Rescue Act and falsely named Inflation Reduction Act, the war in Ukraine can only be blamed for a small portion of our raging inflation. Reining in out-of-control government spending and regulating is essential to get this inflation under control together with raising interest rates.