Menu Close

The Inflation Syndrome: Economy, Politics and China

By Shivaji Sengupta
We are living in Inflation America. Everything is inflated – the economy, Trumpian politics, China.
Mid-August in America means six weeks from the mid-term elections. While this column today is not about mid-term predictions, it is about the impact several political events, internally and abroad in July and August that could impact the elections. This piece is about those events.
First and foremost in people’s minds is on the current 8.5% inflation rate we are experiencing. Driving up food prices, and though gas prices have reduced somewhat, it is still costing American drivers close to or even more than $4 a gallon. Together, food and gas, is costing Americans more than they ever did in forty years. Yes, unemployment has fallen, and the job market is increasing, but whatever Americans are making, they are losing more.
Personally, I don’t blame Joe Biden for all of the inflation. The steep rise in gas prices is not his doing. Russia must, and does, get most of the blame. Some believe that the president should have released the U.S.’s gas-reserve much before the president did, and much more of it. But these are 𝑟𝑒𝑠𝑒𝑟𝑣𝑒𝑠, and as such it is the Commander in Chief’s responsibility to protect them in case, heaven forbid, of any massive national calamity, natural or human engineered. In my opinion, Biden’s prudence was called for.
Not so, his prudence during the Covid crisis. Here, both Trump and Biden overplayed their hands sending more than a trillion dollars to the American people in Covid relief. We received close to $4,000 each through three relief funds.
What does this type of massive influx of money do to a nation’s economy. As I have explained during the American Relief bills, it forces the government to print more money, but people 𝑠𝑝𝑒𝑛𝑑𝑖𝑛𝑔 that money cannot be taken for granted. Some do, others put it into a savings account for rainy days. Consequently, money doesn’t circulate as expected. More money in the market buys less. Inflation. Inflation means we pay for a product more than we did before.
I had foreseen this, and wrote as much in these columns. Then why did the presidents not see inflation coming?
They did. But politics has a way for choosing convenience before constructiveness. Faced with the decision of bringing financial relief to the people, and guarding against an inflation that would hit the country in two years, presidents chose the “here and now.” Let inflation be damned.
Here, I would say Donald Trump was more justified because the Covid breakout was immediate and massive. Although I thought Trump’s putting his imprimatur, “Donald Trump” on the checks he released for the people was gauche – it was not his money he gave away, but the government’s – I would still say that we, the American people, needed the money.
But Joe Biden’s 𝑡𝑤𝑜 such relief checks went a bit over the top. His 𝑎𝑛𝑦 𝑡𝒉𝑖𝑛𝑔 𝑦𝑜𝑢 𝑐𝑎𝑛 𝑑𝑜, 𝐼 𝑐𝑎𝑛 𝑑𝑜 𝑏𝑒𝑡𝑡𝑒𝑟 attitude toward his predecessor certainly exacerbated the chances of inflation.
So now Congress has passed a new Bill, signed by Joe Biden into law, the Inflation Reduction Bill, 2022. This bill may reduce inflation only indirectly. The bill will create more jobs in the environmental protection field, reduce the price of some prescription drugs, noted among them insulin for Medicare patients. Together with expectations that gas prices will decline further, Washington hopes that inflation will be further reduced by a couple of points. In other words, 6.5% rate of inflation will hurt people’s pockets considerably less.
But will it come at least a couple of weeks before the early November elections?
I think it is the wrong question to ask. The right one should 𝒉𝑜𝑤 𝑑𝑜𝑒𝑠 𝑡𝒉𝑒 𝑔𝑜𝑣𝑒𝑟𝑛𝑚𝑒𝑛𝑡 𝑝𝑙𝑎𝑛 𝑡𝑜 𝑐𝑜𝑛𝑡𝑖𝑛𝑢𝑒 𝑟𝑒𝑑𝑢𝑐𝑒 𝑖𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 𝑤𝑒𝑙𝑙 𝑎𝑛𝑑 𝑏𝑒𝑦𝑜𝑛𝑑 𝑁𝑜𝑣𝑒𝑚𝑏𝑒𝑟 2022?
Congress, whichever party is majority, must think of 𝑢𝑠 the American people rather than trying to curry votes to stay in power with stopgap inflation measures.
I am not against the Bill. It contains some historically unprecented provisions, especially for Environmental Protection, and for provisions of electrical vehicles. Reducing cost of prescription drugs for the elderly is another laudible item in it.
But to call it the Inflation Reduction Bill is putting a hoax on voters because a) it might not reduce inflation by that much, and b) it might not fool the people. In the end, people will vote for their pockets, not on much else.
Certainly not against Donald Trump who continues to tower among the Republicans as their favorite candidate for president in 2022: 69% of conservative Republicans want him, despite all his shenanigans, or perhaps 𝑏𝑒𝑐𝑎𝑢𝑠𝑒 of them!
Democrats are hoping that latest gaffe committed by Trump in hoarding top secret classified governmental material to his residence, 𝑀𝑎𝑟-𝑎-𝐿𝑎𝑔𝑜, may have hurt the president so seriously that, if found guilty, he may not be allowed to run for public office.
Whether or not that will happen is not clear. What is clear is if that happens, and well before the midterm, it is likely to change the entire complexion of this year’s November elections. Trump is the massive metaphysical conceit for elections this November. He is not running, but others are hanging by his coat tales. His being convicted of breaking national security laws by hoarding top secret classified papers can seriously dent people’s confidence in Trump’s party.
This is why Donald Trump himself led the chorus (as he always does) that the F.B.I. and the Department of Justice colluded to disgrace him to disqualify him from office. Radical right wing Republicans ferociously complained on cue, urging voters to contribute, contribute and contribute to the party so that they can build a tremendous war chest to fight back the D.O.J. the F.B.I. and the Democrats. But the last inventory of what was confiscated from Trump’s home 𝒉𝑎𝑠 sobered some of the shrillest critics of the F.B.I and the D.O.J.
Unfortunately, the government’s bark may worse than its bite. First, there has to be a case built against Trump that he 𝑖𝑛𝑡𝑒𝑛𝑡𝑖𝑜𝑛𝑎𝑙𝑙𝑦 deceived the government by secretly holding top secret documents. Not easy! They have already proved that the material was carried away to his Florida home. But intention? There is only one way of proving it. The government will have show beyond a reasonable doubt that Trump and members of his administration 𝑑𝑒𝑙𝑖𝑏𝑒𝑟𝑎𝑡𝑒𝑙𝑦 𝑙𝑖𝑒𝑑 when they had said earlier that they had returned every single classified documents. Caught red-handed, the Trumps could plead oversight. It would not absolve them of crime, but might get them off the hook on intention. Then, again, Trump may not even be himself convicted. As it happens so often, his lieutenants may fall. Donald Trump, the shameless man he is, will run for office again.
And, in the worst case scenario for him and the Republicans, there is still practically no chance for all this to be resolved in four weeks or less, for the Democrats to make real hay. Legal procedures are elephantine. They take a long, long time. In the name of justice to be served, the Republicans can keep such an unprecedented case for a in court literally forever, well past the presidential elections of 2024. Till then, Donald Trump will be free to run, calling this procedure, like the two impeachments, a witch-hunt, stating that he is exonerated. His followers will believe him.
In the end, it boils down to this: 𝑗𝑢𝑠𝑡 𝑜𝑤 𝑚𝑢𝑐𝒉 𝑑𝑜 𝑡𝒉𝑒 𝐴𝑚𝑒𝑟𝑖𝑐𝑎𝑛 𝑝𝑒𝑜𝑝𝑙𝑒 𝑐𝑎𝑟𝑒 𝑎𝑏𝑜𝑢𝑡 𝑇𝑟𝑢𝑚𝑝 𝑏𝑟𝑒𝑎𝑘𝑖𝑛𝑔 𝑎 𝑙𝑎𝑤? Yes, the Democrats will try to use it to their advantage, but purely for political purposes. The Republicans? In reply to my own question, I smile.
Most Americans probably care a lot more about Sino-American deteriorating relationship, bad ever since Trump was president, but much worse now.
Nancy Pelosi fired the first shot. As the head of Congress, and third in line for president, she decided to test the Chinese waters by declaring her intent to visit Taiwan, the first head of Congress to visit that country in 25 years. The last one was Newt Gingrich at a time when America’s military might was far superior to China’s.
Now, it is different. The senior American representative, Nancy Pelosi, should have been more prudent.
Pelosi was within her rights not to seek presidential approval because according to the Constitution, the Speaker is an entity not beholden to the president. But when President Biden informed Pelosi that the American military establishment did not think that this was the best time, Pelosi should have listened.
She didn’t. Her advisors knew very well that the U.S. and China are rivaling each other for control of the Asia Pacific. Further, Russia’s invasion of Ukraine has brought up the obvious comparison with China and Taiwan. The Chinese 𝑐𝑎𝑛 argue that if Russia can invade the European nation that had been separated out of Russia since Stalin, then why cannot China forcibly seek to unify Taiwan which, until not too long ago, acknowledged itself to be a part of China. It is the communist government that Taiwan was against. The Americans, on their part, supported Taiwan’s anticommunist stance and pledged to support it for its resistance to communism.
Support, yes, but actively militarily defend! Ah, that’s mired in controversy and confusion! I will not go into the vague and contradictory details of agreement between the U.S and Taiwan. Suffice it to say, that while America does not want Taiwan to cease being a democracy American style, neither do they want the island country of 24 million to declare independence from China.
Speaker Pelosi’s unilateral decision to visit that country provoked China no end. Its president and chairman Xi Jinping is seeking an unprecented and extra constitutional decree to become a third term head of state. To knuckle under now, in face of the visit by the third most powerful person in the U.S. government, will make him seem weak in front of his own people. All the more so, when Xi has been upping the rhetoric about forcibly reunifying China. Like Russia, the Chinese are now conducting vastly, and dangerously increased military exercises right on Taiwan’s doorstep. Russia’s ended in invasion. Will China’s?
Americans are asking this question. While the likelihood of a Chinese invasion is still remote – especially before the midterms, 𝑖𝑓 China does invade!
That would surely turn our midterm elections on its head! I would say, Biden’s aggressive rhetoric, if it is allowed to extend to the elections, may not be empty rhetoric anymore. He is bound to take some military action, even a limited one, but one that risks a dangerous war. If he does, the majority of Americans will support him and the Democrats.
It shouldn’t come to this. Another war will be devastating to both countries. Winning an election on its basis will be holllow.
If Biden and the Democrats want to prevail, it must be on the basis of improving our economy, not worsening it which the war will result in – even a limited one.
Let’s call for reducing inflation, and the triumph of justice. Not war.

– Advertisement –