Joe Biden is very misleading when he said “if we pass the other two things I’m trying to get done, we will in fact reduce inflation, reduce inflation, reduce inflation, because we’re going to be providing good opportunities and jobs for people, who in fact are going to be reinvesting that money back in all the things we’re talking about, driving down prices, not raising prices.” The two things Democrats are talking about are nearly $600 billion in physical infrastructure, and are proposing $3.5 trillion in new spending. Democrats are pledging to pay for it all, reportedly by increasing taxes on corporations and wealthy Americans. The 3.5 trillion would add the child tax credit expansion, Universal child care, Medicare to include vision, dental and hearing coverage, a pathway to citizenship for undocumented immigrants. Civilian Climate Corps and Clean Electricity Standard (2)

Note the report issued by Moody’s Analytics did not claim passing the so-called bipartisan $600 billion infrastructure plan and the $3.5 trillion Democrat-only plan would reduce inflation. 

The U.S. inflation rate as of June 2021 was 5.4%, the rate is this high because Oct. 1, 2019 through Sept. 30, 2020 revenue was $3.42 trillion less than the $6.55 trillion in spending, creating a record $3.13 trillion deficit. The CARES Act and three other stimulus measures were responsible for most of this increase COVID-19 pandemic affected the federal government’s plans. Since we monetize the spending our money supply expanded resulting in inflation.  As Milton Friedman said “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” He also pointed out that there is roughly a year between the increase in the money supply and the inflation rate. Reference Money Mischief by Milton Friedman

Quite frankly I believe Democrats over estimate revenue and under estimated additional spending. I would suggest we halt all additional spending until our output catches up to our money supply and inflation is under control. 

I’m afraid of a period like the 70’s with interest rate maximum of 20%, with unemployment of up to 10% at times and inflation rate exceed 11% for two years. 

If we have major inflation remember as Milton Freidman said Inflation is taxation without legislation. Also Kevin McCarthy said ‘Inflation Is a Tax on Americans’ Caused by Democrats’ Reckless Policies’” 


Terry Guanella


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