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    Shameless hypocrites: Conservatives cry wolf over deficit spending -- after being wrong again and again

    Bruce Bartlett, DC Report @ Raw Story
    March 16, 2021

    Thanks for your support!

    This article was paid for by reader donations to Raw Story Investigates.

    Senate Majority Leader Mitch McConnell (R-KY)
    Senate Majority Leader Mitch McConnell. (AFP/File / NICHOLAS KAMM)

    This article was paid for by Raw Story subscribers. Not a subscriber? Try us and go ad-free for $1. Prefer to give a one-time tip? Click here.

    Bruce Bartlett, DC Report @ Raw Story

    Predictably, conservatives are once again warning about inflation. This happens every time a Democrat takes office—even if he merely continues the identical policies of his Republican predecessor.

    Unfortunately, these concerns, which always receive wide media attention, are costly both politically and economically.

    Bill Clinton was forced to adopt a deficit reduction plan in 1993 that led to the defeat of many Democrats in 1994 and the installation of Newt Gingrich as speaker of the House.

    Barack Obama was forced to scale back his stimulus plan in 2009 and was browbeaten into deficit reduction in 2011. That kept the economy running in slow gear throughout Obama's presidency paving the way for Donald Trump.

    We have paid a heavy price for believing the conservatives who cried wolf about inflation year after year without any evidence supporting their predictions.

    Now that Joe Biden has gotten his stimulus, the inflation-mongers are just getting started again.

    Criticism of COVID-19 Relief

    Sen. Rob Portman (R-Ohio), citing economist Larry Summers, offered a representative reaction in the wake of the American Rescue Plan Act's passage:

    "America's economy is improving, and the nonpartisan Congressional Budget Office said recently that the economy will recover to pre-pandemic levels by mid-year without any additional stimulus.

    "This makes it even more troubling that Democrats have passed this partisan and expensive bill that one prominent Democratic economist says could overheat an already recovering economy and lead to higher inflation, hurting middle-class families and threatening long-term growth."

    It's been an article of faith among conservatives since the beginning of the financial crisis in 2008 that inflation is right around the corner.

    This conviction follows from a core conservative belief that inflation invariably results from increases in the money supply. As Milton Friedman, the Nobel Prize-winning economist put it a half-century ago in an oft-quoted line: "Inflation is always and everywhere a monetary phenomenon."

    Thus, when the Federal Reserve vastly expanded the money supply in late 2008, conservatives anticipated a sharp rise in inflation. It didn't happen.

    Fixing the Financial Crisis

    In 2009, many prominent conservative economists confidently predicted an imminent rise in inflation. Here's a representative sample:

      • John Taylor, Stanford: "There is no question that this enormous increase from $8 billion to $3,365 billion [increase in the money supply] will lead to higher inflation unless it is reversed."
      • Martin Feldstein, Harvard: "The unprecedented explosion of the US fiscal deficit raises the specter of higher future inflation."
      • Arthur Laffer, economic consultant: "To date what's happened is potentially far more inflationary than were the monetary policies of the 1970s."
      • Alan Greenspan, former Federal Reserve Board chairman: "Statistical analysis suggests the emergence of inflation by 2012."

    Indeed, many Republicans predicted not just inflation, but hyperinflation.

      • Rep. Dan Burton of Indiana said: "We are heading toward hyperinflation again."
      • Sen. John McCain of Arizona said: "My great worry is that if we do not account for this debt in some way, if we continue trillions of dollars of unnecessary and wasteful spending, then obviously we will find ourselves back in the situation we were in the 1970s when we had hyperinflation and had to debase the currency."
      • Rep. Paul Broun of Georgia warned: "I think we're fixing to head for hyperinflation."

    Yet, year after year, there was no inflation. In 2009 we saw prices fall slightly, the opposite of these predictions and warnings. The Federal Reserve couldn't even hit its own target of 2% inflation. The average inflation rate for 2009 through 2020 was less than 1.3% annually.

    That did nothing to dislodge right-wing orthodoxy, however. Conservatives continue to say that inflation was right around the corner. No amount of empirical data could shake their deeply held belief.

    A Decade Ago

    On Nov. 15, 2010, a group of conservatives—including reputable economists such as Michael Boskin, Ronald McKinnon and John Taylor, all of Stanford, as well as various Wall Street analysts and journalists—published an open letter to Fed Chairman Ben Bernanke, a Republican originally appointed by George W. Bush. The letter said:

    We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment.

    We subscribe to your statement in The Washington Post on November 4 that 'the Federal Reserve cannot solve all the economy's problems on its own.' In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

    We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

    The Fed's purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.

    Nevertheless, the concerns of conservatives were not absurd—up to a point. It was possible that the time lag between rises in the money supply and inflation had been lengthened by the recession. Unless the fundamental relationship between the money supply and inflation that every conservative had taken to heart in the 1970s was completely wrong, higher inflation was still in the pipeline.

    The real problem was that none of the traditional indicators suggested anything like a serious inflation threat was on the horizon.

    Years after the beginning of quantitative easing there were still no signs of inflation in any commonly used index and interest rates remain low. Even the price of gold, which many conservatives view as the most accurate measure of future inflation, has fallen sharply from its peak of close to $2,000 per ounce in late 2011 to about $1,200 per ounce in 2014 and about $1,700 today.

    And Now

    At this point, a reasonable person would be forced to admit that predictions of high inflation were based on faulty theory. Yet, few of those who signed the letter to Bernanke owned up to any doubts when queried by Bloomberg News in October 2014. It is worth quoting them at length.

    —Jim Grant, publisher of Grant's Interest Rate Observer, in a phone interview:

    "People say, you guys are all wrong because you predicted inflation and it hasn't happened. I think there's plenty of inflation—not at the checkout counter, necessarily, but on Wall Street.

    "The S&P 500 might be covering its fixed charges better, it might be earning more Ebitda [earnings before interest, taxes, depreciation and amortization], but that's at the expense of other things, including the people who saved all their lives and are now earning nothing on their savings."

    "That to me is the principal distortion, is the distortion of the credit markets. The central bankers have in deeds, if not exactly in words — although I think there have been some words as well — have prodded people into riskier assets than they would have had to purchase in the absence of these great gusts of credit creation from the central banks. It's the question of suitability."

    —John Taylor, professor of economics at Stanford University, in a phone interview:

    "The letter mentioned several things – the risk of inflation, employment, it would destroy financial markets, complicate the Fed's effort to normalize monetary police – and all have happened."

    "This is the slowest recovery we've ever had. Working-age employment is lower now than at the end of the recession."

    "Where is the evidence that it worked? It's just not there."

    —Douglas Holtz-Eakin, a former director of the Congressional Budget Office, in a phone interview:

    "The clever thing forecasters do is never give a number and a date. They are going to generate an uptick in core inflation. They are going to go above 2%. I don't know when, but they will."

    —Niall Ferguson, Harvard University historian and author of The Ascent of Money: A Financial History of the World, referred Bloomberg News to a blog post he wrote in December 2013, saying his thoughts haven't changed:

    "Though generally regarded by a cause for celebration (even by those commentators who otherwise lament increasing inequality), this bull market has been accompanied by significant financial market distortions, just as we foresaw."

    "Note that word 'risk.' And note the absence of a date. There is in fact still a risk of currency debasement and inflation."

    —David Malpass, former deputy assistant Treasury secretary [now president of the World Bank], in a phone interview:

    "The letter was correct as stated."

    "I've observed that credit is flowing heavily to well-established borrowers. This has worsened income inequality and asset inequality going on in the economy. You're looking at the companies that got credit. The problem is the new businesses that didn't get credit. The facts are that private sector credit growth has been slow. It is a zero-sum process where each corporate bond issue was money that otherwise might have gone to a new business or a small business."

    —Amity Shlaes, chairman of the Calvin Coolidge Memorial Foundation, wrote in an e-mail:

    "Inflation could come, and many of us are concerned that the nation is not prepared."

    "The rule with inflation is 'first do no harm.' So you always want to be careful."

    —Peter Wallison, senior fellow at the American Enterprise Institute, in a phone interview:

    "All of us, I think, who signed the letter have never seen anything like what's happened here."

    "This recovery we've had since the end of 2009 has been by far the slowest we've had in the last 50 years."

    —Geoffrey Wood, a professor emeritus at City University London's Cass School of Business, in a phone interview:

    "I think everything has panned out. We should probably be more cautious about the timing. Economists should always be cautious about the timing. Timing is close to totally unpredictable."

    "The economy is growing. If the Fed doesn't ease money growth into it, inflation could arrive."

    —Richard Bove, an analyst at Rafferty Capital Markets LLC, in a phone interview:

    "If interest rates are low, it means a large portion of the population was made poor because passive income declined."

    "If you take a look at the economy, I think that the economy has grown in line with the growth in population and the growth in income. I would argue that the bulk of this QE money never reached the economy."

    "Someone's got to prove to me that inflation did not increase in the areas where the Fed put the money. We know where they put the money. And we know where they put the money prices went up dramatically. And we also know the consumer price index does not pick up either of those price increases. Housing prices are not in the CPI and fixed income prices are not in the CPI. So how do you know that QE benefited the economy?"

    It's now 2021 and none of these dire inflation predictions from 2010 or 2014 has come to pass.

    I don't know if there has been a permanent change in the relationship between the money supply and inflation, as some advocates of Modern Monetary Theory (MMT) claim.

    But I do know that we have paid a heavy price for believing the conservatives who cried wolf about inflation year after year without any evidence supporting their predictions.

    At the very least, we should treat their current concerns with deep skepticism. And they should admit they were wrong in 2010 and 2014 and offer some explanation for why. I've never heard one.

    This article was paid for by Raw Story subscribers. Not a subscriber? Try us and go ad-free for $1. Prefer to give a one-time tip? Click here.

    Enjoy good journalism?

    … then let us make a small request. The COVID crisis has slashed advertising rates, and we need your help. Like you, we here at Raw Story believe in the power of progressive journalism. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and legal efforts to harm workers exploited by abusive bosses. And unlike other news outlets, we’ve decided to make our original content free. But we need your support to do what we do.

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    … then let us make a small request. The COVID crisis has slashed advertising rates, and we need your help. Like you, we believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and efforts to harm workers exploited by abusive bosses. We need your support to do what we do.

    Raw Story is independent. You won’t find mainstream media bias here. Every reader contribution, whatever the amount, makes a tremendous difference. Invest with us in the future. Make a one-time contribution to Raw Story Investigates, or click here to become a subscriber. Thank you.

    Report typos and corrections to: corrections@rawstory.com.
    READ COMMENTS - JOIN THE DISCUSSION

    Should Trump be allowed back on social media?

    ‘Scumbag’: Right-wing radio host faces furious backlash after sharing racist image in response to Chauvin verdict

    Matthew Chapman
    April 21, 2021

    On Wednesday, the Lincoln Journal-Star reported that Chris Baker, a right-wing talk radio host for KFAB in Nebraska, posted a racist image in response to the murder and manslaughter conviction of former Minneapolis cop Derek Chauvin for the death of George Floyd.

    "The tweet was posted within about an hour of the Derek Chauvin verdict and was headlined: Guilty!" reported Nancy Gaardner. "Beneath the headline was a GIF (file image) of four dancing older Black native men in loincloths, with body paint and possibly spears." According to the article, KFAB's parent company iHeartMedia is investigating to incident.

    Commenters on social media exploded with outrage, many of them calling for Baker to lose his job.

    Hi Chris Baker - Deleting the tweet and closing your account won't make this disappear. Good luck with damage contr… https://t.co/Ipb4Vhw5ZI
    — bob clendenin 🇺🇸 (@bob clendenin 🇺🇸)1618976683.0


    @SenMcCollister @CBakerShow @kfabnews This is an easy decision to make, @kfabnews. Immediate dismissal without severance or notice.
    — HIGH AS TOM KITE (@HIGH AS TOM KITE)1619009666.0


    @CBakerShow You know what is funny? You being unemployed.
    — anton-lavash (@anton-lavash)1619008397.0


    @CBakerShow No, it's not funny. And you're a racist. I don't know how the good people of Nebrasla elected a m… https://t.co/tLfE4gLB1m
    — whitenoise 🇺🇸🌊 (@whitenoise 🇺🇸🌊)1619008049.0


    @CBakerShow When you prematurely go bald, so you decide you might as well be a Skinhead... 👍 https://t.co/uSNrSRaNQ4
    — Gregory Pecker 👍 (@Gregory Pecker 👍)1619005979.0


    @CBakerShow Thanks for letting the world know you're a disgusting racist Chris. Let's hope @iHeartRadio decides th… https://t.co/NBcsrOYdEe
    — Paul Fuji (@Paul Fuji)1619005412.0


    @CBakerShow Dear @kfabnews do you real want racist scumbags working for you? A horrific racist tweet as the rest of… https://t.co/2dlqK7Uq7X
    — A Common Good For All (@A Common Good For All)1619000194.0

    Enraged woman caught on video slapping Asian woman for speaking Mandarin: 'I don't want you talking!'

    Sky Palma
    April 21, 2021

    A Brooklyn woman captured on surveillance video slapping another woman in the face has been charged with a hate crime, Fox5 reports.

    Cheyenne Taylor, 29, can be seen on the video approaching the victim who was sitting with a friend outside an ice cream shop on April 7 when she began to yell.


    "I don't want you talking! Shut the f--- up!" Taylor reportedly yelled. "Go back to where you came from! Go back to your country!"

    Taylor then walked away before she turned around and slapped the victim.

    She has been charged with aggravated harassment as a hate crime.

    Watch Fox5's report on the story below:


    Vaccine-hesitant Republicans undermining race to herd immunity: 'It's really ingrained in partisan identity'

    Travis Gettys
    April 21, 2021

    More than half of U.S. adults have received at least one dose of the coronavirus vaccines, but public health officials worry that supply will outstrip demand before the nation reaches herd immunity.

    A recent focus group found many Republicans would rather have a fake vaccination card than a real dose of the vaccines, and elected officials, business leaders and public health experts are trying to find ways to persuade skeptics and hesitant Americans to get the shots before COVID-19 variants find ways around those protections, reported the New York Times.

    "If you think of this as a war," said Michael Carney, the senior vice president for emerging issues at the U.S. Chamber of Commerce Foundation. "We're about to enter the hand-to-hand combat phase of the war."

    Within the next two to four weeks, the U.S. will probably run out of adults who would enthusiastically get vaccinated, according to a new study.

    "It appears we are quite close to the tipping point where demand for rather than supply of vaccines is our primary challenge," wrote the authors of the KFF study. "Federal, state, and local officials, and the private sector, will face the challenge of having to figure out how to increase willingness to get vaccinated among those still on the fence, and ideally among the one-fifth of adults who have consistently said they would not get vaccinated or would do so only if required."

    President Joe Biden has met his goal of making the vaccines available to all adults, and private businesses and doctors are now being tasked with convincing skeptics and hesitants -- who tend to be mistrustful of politicians and the media -- that the shots are safe and effective.

    "The further we go into the vaccination process, the more passionate the hesitancy is," said GOP pollster Frank Luntz, who has been conducting focus groups on vaccine messaging. "If you've refused to take the vaccine this long, it's going to be hard to switch you."

    His most recent group, which included 17 participants, found they were unmoved by pro-vaccine pitches from four doctors -- which included three GOP politicians and former Obama CDC director Tom Frieden -- assuring them the doses carried no long-term effects and certainly would not change their DNA.

    "I was zero [on] the vaccine," said one participant, Tammy from Virginia. "I'm still a zero."

    About 130 million adults have gotten at least one dose as of this week, and about a third of all adults -- 84 million -- are fully vaccinated, and most of the states with the highest rates historically have voted for Democrats in presidential elections, while GOP-leaning states are reporting the lowest rates of vaccination -- with some exceptions in each case.

    "We're trying to really meet people where they're at — and that may be [a] physical location, it may be just making sure their questions are answered," said Anne Zink, chief medical officer for Alaska, a Republican-leaning state that leads the nation in the percentage of vaccinated adults.

    However, more than 40 percent of Republicans say they don't want to get the vaccines, and although hesitancy seems to be on the decline -- many remain stubbornly committed to avoiding the shots.

    "Much of this reluctance is really ingrained in partisan identity," said Patrick Murray, director of the independent Monmouth University Polling Institute.

    Officials in Alabama, where just 19 percent of adults have been fully vaccinated, have been pleasantly surprised how open Black skeptics have been to messages from trusted local voices, but they did not anticipate such strong resistance from rural whites.

    "There are states where they feel they have hit the wall," said Mike Fraser, executive director of the Association of State and Territorial Health Officials. "The folks that wanted it have found it. The folks that don't want it are not bothering to find it."

    But the Biden administration and officials across the country are hopeful they can overcome that resistance to get the 70 percent to 90 percent needed -- including children, who aren't approved yet for the shots -- to reach herd immunity.

    "When we do polling and we do focus groups, what we do not hear that frequently is people that are adamantly opposed to ever getting vaccinated," said Joseph Kanter, Louisiana's health officer. "What's much more common for us to hear is people that aren't sure, they have questions, they're on the fence, they want to wait and see, they want to talk to people."

     
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