Fed influence, shaky forecasts, delayed decisions: How the Biden administration misread the inflation threat

  • The Biden administration misread the rising threat of inflation for a variety of reasons, according to several economists and current and former government officials.
  • Those reasons include Fed influence across the administration, the folly of traditional economic forecasting, political pressure to spend big and a lack of urgency in deciding who would run the Federal Reserve, they said.
  • “It’s always going to be an issue in any White House, how the policy and politics interact,” said a former Fed official. “I just think they miscalculated.”

When President Joe Biden nominated former Fed Chair Janet Yellen to run the Treasury Department, his rationale was simple: “No one is better prepared to deal with this crisis.”

The crisis to which he referred was a “K-shaped” economic recovery that had exacerbated inequality in the wake of a once-in-a-generation pandemic. The administration had a simple plan, and Yellen would help carry it out.

He makes nations great, and destroys them;
He enlarges nations, and guides them” Job 12:23

Once hundreds of millions of Americans were vaccinated against Covid-19, and trillions of dollars in new government spending flowed into the economy, the world would return to normal under a supercharged recovery.

One year later, a different problem — inflation — is dampening the recovery, sucking the oxygen out of strategy sessions, angering voters and threatening Democrats’ razor-thin governing margins. This is happening despite warnings from economists and months of vows from the Federal Reserve and the White House it would be short-lived.

Read More @ CNBC HERE