Brandon = Mr. Yesterday's Mistakes

It's like the Jimmy Carter era all over again, and many of us saw it coming. I'm not sure if City Journal is new to the party on the inevitability of the current inflationary spiral, but many of the things they mention in the recent article are correct.  This is a repeat of the Jimmy Carter mistakes of the 1970's. Since Brandon has no playbook of his own, why not use the some of the worst ideas EVER?

...most economists agree that fighting inflation in this case should take a back seat to lessening the shock’s effects on employment. The textbook prescription is stimulating demand via expansionary fiscal and monetary policy—but not too much, and not for too long, or the price effects go from uncomfortable to painful.

To see what can go wrong, we need only recall the 1970s, when two major shocks to the energy sector—the oil embargo of 1973–74 and the 1978–79 oil crisis associated with the Iranian Revolution—plus some lesser disruptions and bumbling policy responses, produced not just a Great Inflation but slow growth and high unemployment. Inflation averaged 7.4 percent and unemployment 6.4 percent for the period 1970–79; by 1980, the sum of those indicators—the “misery index”—hit 19.7 percent. That unhealthy combination required economists to devise a new word, “stagflation,” and to go back to the drawing board and figure out how it all happened.

The best thinking about stagflation highlights three key factors: policymakers were guided by some bad theories; their strategies based on some good theories were badly executed; and circumstances were unique and, therefore, conducive to error.

I was young, but lived through the era of stagflation, the malaise days.  They were bad.  And when Reagan became president and they had to change the monetary policy to deal with it, the cure was almost as bad as the disease. It worked but it was far more painful because they had tried to forestall any pain by doing more of what was causing the problem.  Printing money and deficit spending are not solutions.  It's a lengthy explanation as to why, but I studied economics for years and basically it's truth.

Brandon is falling for the same solution proposals as did Carter.  Spend and print, but now on steroids. Mr. Yesterday's Mistakes.

I disagree with the last paragraph above from City Journal.  Yes policymakers were guided by bad theories.  But their strategies were not based on good theories that were badly executed, they were based on very flawed theories.  Spending your way out of a recession not only isn't advisable if the government doesn't have a massive cash surplus to cover the cost (which is not the case), it's doomed to failure if you have to print money to execute it.

I also disagree with the whole "unique circumstances" notion.  While the specifics of each crisis may be different, the economic portion of the situation does not change. Job losses, inflation, interest rates are drive by fundamental economic laws like the elasticity of supply and demand. These while hard to measure, are immutable.  It doesn't matter if the impetus is a tsunami, a pandemic, an oil crisis or a zombie plague, how the government and the Federal Reserve tackle the problem is what makes a difference as far as jobs, inflation and interest rates.  If you respond stupidly, or by putting politics ahead of the national interest, disaster will follow.  That is what we are seeing now, and it is going to get worse before it improves.