New York Times Believes that Rising Costs of Living are Driving Up Inflation- What?

 

The New York Times released the most nonsensical article on inflation in history. Its thesis is that the rising costs of living are causing inflation.  huh?

The New York Times released an article on inflation that makes no sense.  Here is how it begins [emphasis added]:

Political and economic crises typically have multiple causes. But many right now are driven by one main factor: the rising cost of living.

In Britain, Prime Minister Liz Truss is facing calls to resign after just six weeks in office over a now-abandoned tax cut plan that experts warned would worsen inflation, if not wreak economic havoc. Europe is bracing for skyrocketing energy costs this winter. In the U.S., the Federal Reserve is considering more aggressive steps to bring down price increases, but its moves could also cause a recession, as The Times reported yesterday. 

This chart by my colleague Ashley Wu shows how quickly prices have risen across many of the world’s advanced democracies. Officials generally aim to keep the rate of inflation around 2 percent — enough to keep the economy growing yet preserve stability in prices. Many of the countries are at least four times above that pace:

Chart shows annual change in total Consumer Price Index each month through August 2022. | Source: O.E.C.D.

The article then goes on to itemize COVID responses, energy costs and jobs.

Certainly the response to COVID of shutting down the economy impacted the economy and the massive government spending in response.   But the economy was back in place by the date that Joe Biden was sworn in.  So it must be something more.

The NYT then notes that energy costs are a factor.  This makes sense.  But rather than note that in the US oil and gas industries were strangled to the point that the US is no longer an oil producer this is ignored.

The NYT says:

Europe’s challenge now is finding alternative energy sources. Building up the infrastructure, after dedicating pipelines and terminals to Russian oil and gas, will take time.

Even countries with bigger buffers from the supply shock are taking steps to address energy prices. The Department of Energy is planning to release 15 million more barrels of oil from strategic reserves.

No worries Europe, you’ll figure it out, in time, says the NYT.  As for the US, what does Biden do when the strategic reserves increased by President Trump are gone?

The article then goes on to mention the war.

Someone will have to tell the NYT that cost of living increases don’t cause inflation, Joe Biden’s policies are.