Friedman’s ideas explain current inflation woes

By RAY ADLER

Ask Adler

Lions and tigers and bears, oh my! Fuel prices, food prices, home prices, oh my!

In February of 2022, actual inflation rates reached 7.9 percent, the highest in over 40 years. During his campaign, in a rare appearance outside of his basement in April of 2020, then presidential candidate Joseph Biden declared, “Milton Friedman isn’t running the show anymore.”

To those who are unfamiliar, Milton Friedman was a 20^th century economist who had the audacity to claim that loose government monetary policy and stimulus causes inflation, which inevitably lead to souring prices, shortages, and less wealth. Friedman’s economic philosophy was a staple of the United States economic policy throughout the ‘80s, ‘90s, and early 2000s, but eroded during the Obama years and appears dead in the Biden administration. Friedman, however, seems to have been vindicated in recent months, once stating, “When we create too much money, we get inflation.”

First denying its existence, then diminishing its significance, then blaming Vladimir Putin, President Biden has a “huge” inflation problem. So much so that former Clinton and Obama officials are predicting that our economy is likely to slide into a recession.

What is the Biden administration’s solution to the inflation problem? Printing more money and providing new rounds of stimulus payments.

Milton Friedman explained, “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.”

Too much money chasing too few goods. Who produces the money to create the phenomenon? Government, of course.

The only way a government can raise money is to tax, borrow, or print. Our government is doing all three. It should be no surprise that the president who kicked Milton Friedman to the proverbial curb has overseen the largest inflationary spiral in decades. The Biden economic dumpster fire has demonstrated that Friedmanian economics is as relevant today as it was 40 years ago.

As we confront the possibility of a coming economic recession, heed the words of the illustrious Mel Brooks, “Hope for the best. Expect the worst. Life is a play. We’re unrehearsed.”

Educational material and not legal advice, written by the team at Adler attorneys. Email andrea@noblesvilleattorney.com with questions or comments.