The Biden administration announced there will be “several more months of rapid inflation” as inflation levels have repeatedly broken long-held records.
“We will have several more months of rapid inflation,” Treasury Secretary Janet Yellen said. “So I’m not saying that this is a one-month phenomenon. But I think over the medium term, we’ll see inflation decline back toward normal levels. But, of course, we have to keep a careful eye on it.”
However, many economists are predicting the high levels of inflation will persist for multiple years.
“Americans should brace themselves for several years of higher inflation than they’ve seen in decades, according to economists who expect the robust post-pandemic economic recovery to fuel brisk price increases for a while,” The Wall Street Journal reported. “The respondents on average now expect a widely followed measure of inflation, which excludes volatile food and energy components, to be up 3.2% in the fourth quarter of 2021 from a year before. They forecast the annual rise to recede to slightly less than 2.3% a year in 2022 and 2023. That would mean an average annual increase of 2.58% from 2021 through 2023, putting inflation at levels last seen in 1993.”
The cause of the increasing inflation is clear as President Biden continues to push “stimulus” legislation that increases the money supply and pays people to stay unemployed.
Top Democrat economist Larry Summers explained on PBS’s “Firing Line with Margaret Hoover” last month how the “stimulus” bills have driven the inflation.
“If you looked at how the economy was coming into this year, we had total wages and salaries coming to people were 20 or 30 billion dollars a month lower because many of them had to be home because of COVID and the economy was slowed,” Summers said. “But we put in a stimulus that was putting into the economy more than 200 billion dollars a month. And so when you take a hole and you overfill it, you’re likely to have problems.”
“And I think we know that inflation’s like a lot of other things, it’s a lot easier to prevent than it is to cure,” Summers continued. “And I think the credibility of policymakers, including those at the Fed, is much easier to preserve than it is to restore.”
He later added, “The main risk is that our economy’s going to overheat. And then once it overheats, it’s going to be hard to put out the fire without doing a lot of damage and causing a lot of problems. And so I’d like to see us shift towards a policy concern.”