Biden is undermining the Federal Reserve's efforts to curb inflation - Insurance News | InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Washington Wire
Topics
    • Advisor News
    • Annuity Index
    • Annuity News
    • Companies
    • Earnings
    • Fiduciary
    • From the Field: Expert Insights
    • Health/Employee Benefits
    • Insurance & Financial Fraud
    • INN Magazine
    • Insiders Only
    • Life Insurance News
    • Newswires
    • Property and Casualty
    • Regulation News
    • Sponsored Articles
    • Washington Wire
    • Videos
    • ———
    • About
    • Advertise
    • Contact
    • Editorial Staff
    • Newsletters
  • Exclusives
  • NewsWires
  • Magazine
  • Newsletters
Sign in or register to be an INNsider.
  • AdvisorNews
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Exclusives
  • INN Magazine
  • Insurtech
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Video
  • Washington Wire
  • Life Insurance
  • Annuities
  • Advisor
  • Health/Benefits
  • Property & Casualty
  • Insurtech
  • About
  • Advertise
  • Contact
  • Editorial Staff

Get Social

  • Facebook
  • X
  • LinkedIn
Newswires
Washington Wire RSS Get our newsletter
Order Prints
October 12, 2022 Washington Wire
Share
Share
Post
Email

Biden is undermining the Federal Reserve's efforts to curb inflation

Washington Times, The (DC)

Federal Reserve Chairman Jerome Powell has gone to considerable effort to convince observers that he will raise interest rates as much and as long as necessary and risk a recession to bring inflation under control. With varying measures of resolve, central bankers in other Western industrialized countries, save Japan, are joining him in tightening monetary policy.

Almost like a morality play, however, the excesses of politicians and fiscal policy are conspiring to limit the potency of higher interest rates and stoke inflation.

In a nutshell, monetary and fiscal policy are pulling most advanced economies in opposite directions, and badly conceived climate change and wartime economic policies make it all worse.

The European Union is distributing and member states are spending about $800 billion in pandemic recovery funds. These are intended for investments in green energy, modernization and national competitiveness — not to shore up national budgets.

This program was conceived before the invasion of Ukraine, sanctions and termination of Russian natural gas, which may be shuttering permanently much energy-intensive manufacturing in Germany and elsewhere.

EU and other continental governments are seeking to cushion the blow of higher energy prices on households, industry and small businesses with more than $300 billion in new relief spending — those bear considerable resemblance to pandemic relief efforts in 2020 and 2021.

The U.K. will likely be spending and cutting personal and corporate taxes to the tune of about $250 billion to get through the energy crisis and boost incentives to boost growth.

Deficit spending or even spending partially funded by tax increases to catch the windfall profits of energy companies is hardly what national governments should be doing when the aggregate demand for goods and services already exceeds the supply, and central banks are raising interest rates to curb consumer spending and private investment.

Putting it bluntly, the European Central Bank and Bank of England are hitting the brakes while European political leaders are jamming the accelerator to the floor.

The Europeans — at the behest and with the support of Americans —h ave chosen economic war and materiel aid to Ukraine, without taking the political measures that should accompany wars in parliamentary systems.

These include the designation of wartime prime ministers, unity cabinets and rationing of life’s essentials — fuel, food and so forth — and price and wage controls to curb inflationary pressures that have fundamentally political, not economic, origins.

Popular discontent with the effects of higher energy and food prices on overall living standards are turning into extremism and rather non-Euclidean economic reasoning. How else could you explain a debt-burdened and isolated Britain turning to tax cuts at a time like this, Italy electing a right-wing government with fascist roots and demonstrations in Eastern Europe implicitly supporting Vladimir Putin’s rationalizations for his atrocities in Ukraine?

For more than a decade, escaping deflation — boosting inflation by whatever measures may be necessary — has been the policy to revive growth, but Japan’s problems are not rooted in shortages of demand.

Rather, it has a virtually stagnant labor force — the product of too few births and very limited immigration. More importantly, what the Japanese economy does best — run large, complex industrial operations — unfortunately inspires poor innovation and growth.

For the last several decades, economic dynamism in America has been driven by startups that quickly grow to challenge established companies — Apple, Microsoft, Intel, AMD, Tesla and the like.

America’s top universities turn out entrepreneurs in sufficient quantities to lead risk-taking, whereas Japan’s educational system mints company men — the Asian analog to IBM’s 1980s executive in the bland gray suit and tan raincoat.

The Bank of Japan is locked into a false paradigm by keeping interest rates low.

All that is taking the exchange rate for the dollar up against the euro and the yen and making inflation worse in Europe, sustaining Japan’s export-driven economy more difficult and tanking the dollar value of the overseas earnings of American corporations. The latter is of no small consequence for U.S. stock prices and the financing of U.S. R&D and new investments.

The Fed faces domestic structural problems too — a mismatch between the skills of available workers, costs of transitioning to a greener economy, federal energy policies that curtail oil and gas production before electric vehicles are in adequate supply, and the impact of droughts that are gripping food markets.

But President Biden is dumping huge amounts of borrowed money on the U.S. economy through his infrastructure program, the CHIPS Act and most importantly student loan forgiveness. The latter could cost $1 trillion before it’s all done and virtually give university presidents the power to issue Treasury debt.

If Mr. Powell has signed on for the duration of the war on inflation, he better start angling for a third term. The battle can’t be won without more responsible leadership at the White House.

• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

Older

Study supports Fed's timing of earliest interest rate hikes

Newer

Consumer survey reveals inflation to ease next year, spending to slow

Advisor News

  • SEC in ‘active and detailed’ settlement talks with accused scammer Tai Lopez
  • Sketching out the golden years: new book tries to make retirement planning fun
  • Most women say they are their household’s CFO, Allianz Life survey finds
  • MassMutual reports strong 2025 results
  • The silent retirement savings killer: Bridging the Medicare gap
More Advisor News

Annuity News

  • Annexus and Americo Announce Strategic Partnership with Launch of Americo Benchmark Flex Fixed Indexed Annuity Suite
  • Rethinking whether annuities are too late for older retirees
  • Advising clients wanting to retire early: how annuities can bridge the gap
  • F&G joins Voya’s annuity platform
  • Regulators ponder how to tamp down annuity illustrations as high as 27%
More Annuity News

Health/Employee Benefits News

  • Wellpoint taps Rachel Chinetti as president
  • Proposed changes to MA and Part D would harm seniors’ coverage in 2027
  • Pan-American Life Insurance Group Reports Record 2025 Results; Premiums Reached $1.86 Billion and Net Income Totaled $110 Million as Company Enters Its 115th Year
  • LightSpun and Smile America Partners Announce Partnership to Accelerate Dental Provider Enrollment to Expand Treatment for 500K Underserved Kids
  • Lawmakers try again to change ‘reflection in the mirror’ for cancer patients
More Health/Employee Benefits News

Life Insurance News

  • Annexus and Americo Announce Strategic Partnership with Launch of Americo Benchmark Flex Fixed Indexed Annuity Suite
  • LIMRA: Individual life insurance new premium sets 2025 sales record
  • How AI can drive and bridge the insurance skills gap
  • Symetra Partners With Empathy to Offer Bereavement Support to Group Life Insurance Beneficiaries
  • National Life Group Ranked Second by The Wall Street Journal in Best Whole Life Insurance Companies of 2026
More Life Insurance News

- Presented By -

Top Read Stories

More Top Read Stories >

NEWS INSIDE

  • Companies
  • Earnings
  • Economic News
  • INN Magazine
  • Insurtech News
  • Newswires Feed
  • Regulation News
  • Washington Wire
  • Videos

FEATURED OFFERS

Elevate Your Practice with Pacific Life
Taking your business to the next level is easier when you have experienced support.

Your Cap. Your Term. Locked.
Oceanview CapLock™. One locked cap. No annual re-declarations. Clear expectations from day one.

Ready to make your client presentations more engaging?
EnsightTM marketing stories, available with select Allianz Life Insurance Company of North America FIAs.

Press Releases

  • RFP #T25521
  • ICMG Announces 2026 Don Kampe Lifetime Achievement Award Recipient
  • RFP #T22521
  • Hexure Launches First Fully Digital NIGO Resubmission Workflow to Accelerate Time to Issue
  • RFP #T25221
More Press Releases > Add Your Press Release >

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Advisor News
  • Annuity Index
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • From the Field: Expert Insights
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Magazine
  • Insiders Only
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Washington Wire
  • Videos
  • ———
  • About
  • Advertise
  • Contact
  • Editorial Staff
  • Newsletters

Top Sections

  • AdvisorNews
  • Annuity News
  • Health/Employee Benefits News
  • InsuranceNewsNet Magazine
  • Life Insurance News
  • Property and Casualty News
  • Washington Wire

Our Company

  • About
  • Advertise
  • Contact
  • Meet our Editorial Staff
  • Magazine Subscription
  • Write for INN

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2026 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • InsuranceNewsNet Magazine

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.
Insurance News | InsuranceNewsNet