Tom Cotton Pinpoints the True Cause of Inflation

Leah Barkoukis

Leah Barkoukis |  @LeahBarkoukis | Posted: Nov 12, 2021 8:00 AM – for Townhall.com

Tom Cotton Pinpoints the True Cause of Inflation
Source: AP Photo/Andrew Harnik, Pool

My cmnt: Inflation is initially entirely the fault of the government printing money without a corresponding increase in productivity in the private sector. In other words the government controls the money supply. This means that when the government borrows money and simply dumps it into consumers’ hands you will have more money chasing the same amount of goods thereby making the goods more scarce and hence more expensive to purchase.

My cmnt: But to borrow money someone has to lend it. There is no one besides the Chinese who have the massive amounts of cash to loan and the Chinese are in a slowing down economy themselves as most of there economy depends on U.S. consumers buying the goods they manufacture. And as the Chinese are spending heavily on building up their military they do not have the cash to spare.

My cmnt: Therefore the government borrows the money from itself in the form of Treasury bonds and bills which is how they “print” money out of thin air. These Treasury instruments are public IOU notes and must be paid back by the taxpayer over time. Borrowing for national disasters like war is one thing. Borrowing to pay the budget as a way of doing business is another.

My cmnt: So what typically (always really) happens is that the interest on the national debt just becomes another budget item (currently about 5%) and grows every year because we always spend more than we take in and we never, ever pay down the principle of the debt.

My cmnt: We tend to get away with this by having a growing economy. When the democrats shutdown the economy (especially for no good reason – as in 2020/2021 – you cause inflation for the scarce goods not being produced. The lifeblood of the economic engine is freedom, work, innovation and especially oil. When democrats shutdown oil production the cost of absolutely everything goes up. When they enact heavy, burdensome, unnecessary regulations this also drives up the cost of all of the goods we need to live and thrive on.

My cmnt: Democrats (stupidly) believe that they can “pay for” their constantly increasing spending by raising taxes “on the rich”. But the super rich (your Bezos, Buffet, Gates, etc.) pay very little of their wealth in taxes and can hide it anywhere they please if they have to. The upper middle class becomes the rich and they pay through the nose because they either have relatively big wages or are small business owner/operators. However they are paid more because the work they do is more valuable to us and is always harder to perform or else everyone would do it.

My cmnt: When you raise taxes high enough on these people they simply stop working as the work is too hard and no longer worth it. When they stop working the economy contracts and a vicious cycle begins.

My cmnt: The other cause of inflation is fear. People start buying scarcer and scarcer goods and services NOW before the price goes up rather than normally when they actually really need those goods or services. This means more buyers chasing fewer goods and services which then adds to the inflation caused by the government. This also starts a vicious cycle.

My cmnt: I personally lived through the Carter years of inflation and malaise. With democrats or other communists in charge of a country inflation always rears its ugly head. And like Smaug the dragon it is very hard to kill. So how do democrats stop inflation? By causing the Obama Great Recession or the FDR Great Depression – in other words create Cuba. When everybody except the ruling elite are dirt poor pricies naturally drop because no one can buy anything. The answer: never, ever, ever vote democrat.

Sen. Tom Cotton (R-AR) explained what’s causing inflation in the U.S. and why the White House is attacking him for pointing it out. 

The blame, he said, is entirely on President Biden over the policy decisions he’s made since taking office.

“President Biden’s first action was to block the Keystone pipeline. Next, he ended oil & gas leases on federal land. Then, he appointed anti-energy progressives to his cabinet. These actions reduced our supply and drove up the cost of energy,” Cotton tweeted.

“In March, Biden spent $1.9 trillion that we didn’t have. It included paying people more money to stay home than to work. We warned him, but he didn’t listen. Fewer workers but more cash further increased inflation,” he continued.

Meanwhile, the administration “denied inflation was happening.” They attacked anyone who warned them, even liberal economist Larry Summers.

“Now, Biden wants to spend another $1.75 trillion that we don’t have. A huge portion of the Build Back Worse plan is welfare without work requirements, which means more money chasing fewer goods,” Cotton said.

Instead of taking actions that would reverse the course of inflation, the Biden administration appears to be doubling down.

“Joe Biden needs to wake up, realize he’s been wrong, and change direction,” Cotton argued.

As Katie reported this week, inflation is at its highest level in three decades. 

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