This article was originally published by Tom Mullin at The Mises Institute.
During election years, incumbent presidents are routinely blamed for every societal ill during the previous four years. And almost nothing is riper for the picking than a significant rise in consumer prices. According to the Bureau of Labor Statistics (BLS), prices are currently increasing at a rate of 3 percent year over year and peaked at 8 percent during President Biden’s term in 2022.
That is significantly higher “inflation,” as the BLS defines it, than American consumers have experienced in decades. But as economically harmful as many of President Biden’s policies may have been, no president can cause prices in general to rise. Neither can Congress or “greedy corporations.”
Incidentally, “inflation” as an economic term originally meant the creation of new money and credit, not rising prices. Those wishing to confuse the public on which is the cause and which the effect has gradually redefined inflation as rising prices. Check any hard copy Merriam-Webster dictionary printed in the 20th century and see for yourself.
Only the Federal Reserve can cause a general rise in prices and only when it creates new US dollars that didn’t previously exist (inflation).
To further deflect the blame for rising prices away from the culprit, the public is constantly given other reasons for this phenomenon. Each one of them can be eliminated using a priori reasoning.
For example, energy policy is often blamed. President Biden restricted drilling on federal land and canceled the permits for multiple oil pipelines, thus decreasing the supply of oil.
Decreasing the supply of oil and gasoline causes their prices to rise. But without the creation of new money, it must necessarily reduce demand for everything else.
Consider a simple model. There is a total of $100 in the entire economy;
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