Apparently Macro Economics hasn’t reached the farm in Big Sandy yet. Senator Tester, in his best Marxist (Karl not Groucho) tone, recently blamed the runaway inflation of the failed Harris/Biden administration policies on greedy corporations gouging the public.
According to Harvard Business review, inflation happens when there is more demand than supply, supply shocks such as the price of oil, and the money supply in use.
It could be that demand is exceeding supply because people (outside the beltway) are doing so well they are increasing their spending, or more likely the supply chain has not recovered from the handling of the COVID crisis. This is the same amount of dollars chasing fewer goods.
It would be hard to argue that the price of oil hasn’t been a supply shock. According to Macrotrends.com, the average closing price of oil per barrel in 2020 was $39.68, and so far in 2024 $78.66, or for practical purposes doubled. Some uninformed argue the government doesn’t set the price of oil, but in fact they have great control on it. First, policies that hamper domestic production force reliance on foreign oil. Secondly, the Administration’s negotiating skills with OPEC members establishes production quotas and therefore price. “So, you want parts for those planes we sold you? Then let’s talk oil.” “You want how much in foreign aid? Well then let’s talk oil.”
Finally, the money supply. According to Trading Economics, in 2020 there was $2,041B currency in circulation. Today there is approximately $2,352B, or about 15% more. This growth is based on holding more secured assets in the Federal Reserve (which is neither Federal, nor a reserve). What are those assets? IOUs from the US Government. According to Investopedia, the National debt in 2020 was $27T. Today it is $35T, an increase of about 30% and growing.
Based on this Senator Tester, maybe we should be looking at your voting record rather than greedy corporate boardrooms. Since you returned to DC four years ago, what have you done to rebuild the supply chain and manufacturing infrastructure? What have you done to decrease oil prices through domestic production or negotiating with OPEC? What have you done to reduce the Federal debt, one of the leading causes of an increased money supply.
Perhaps it is time for you to return to the farm and feel the pinch of inflation like the rest of Montana.
