Among the many silly, mind-numbing, agenda-pushing exchanges that take place on Twitter at any given moment, the one between the president of the United States and the second richest person in the world stands out as much for its stupidity as for its deliberate simplification.
If you’ve been away from Twitter lately, first of all: Good for you. Here’s a quick recap of the dispute between Jeff Bezos and President Joe Biden.
On Friday, Biden tweeted that the way to reduce inflation is to “make sure the richest corporations pay their fair share.”
Bezos, founder of Amazon, an absurdly wealthy corporation, disagreed with this. He fired off a response, saying tying corporate taxes to inflation is “just a misdirection.”
The White House backed off, then Bezos backed off again. In short, Bezos believes that federal stimulus payments caused inflation. Biden says corporate greed is to blame. Both are right. And both are wildly exaggerating their positions.
The truth is that inflation does not have a single cause. Has the nearly $2 trillion in stimulus for households and individuals spurred demand for goods and contributed to the 40-year high inflation we are living in? Yes.
The Consumer Price Index was below 2% in Biden’s first full month in office. Stimulus checks started trickling into bank accounts in March 2021, when the annual inflation rate rose to 2.6%. In April, it reached 4.2%. It was 5% in May, 6% in October, and it’s up to 8% now.
That’s a point for the Bezos team. (Although it is worth noting that unemployment has risen from 6.2% when Biden took office to 3.6% today — which signals a recovering economy.)
But did corporations like Amazon make record profits last year and still raise prices for consumers to protect their margins? Absolutely.
What neither Biden nor Bezos mention in their tweets is the myriad other factors that are to blame for stubbornly high global inflation. Factors such as supply chain bottlenecks and shortages that are still being resolved due to the unprecedented global shutdown of the world economy two years ago.
Another force that doesn’t even seem keen to mention: the unprecedented intervention of the Federal Reserve (the US central bank) in financial markets that began in the spring of 2020. When the pandemic hit the United States, the Fed unleashed a flurry of easy money collapse. economic.
The policy, enacted under the Trump administration by Trump-appointed Fed Chair Jerome Powell, has kept stock markets bullish through 2021, as Bezos certainly knows — Amazon was arguably the biggest beneficiary of the pandemic economy, though its stock has been hammered along with other tech stocks in recent months.
Oh, there’s also a land war in Eastern Europe bringing down global markets, sending food and energy prices through the roof. Millions of people are under strict lockdowns in China, hurting consumer demand and disrupting manufacturing in the world’s second-largest economy.
And just to add: There remains an unresolved psychologically complex imbalance in the labor market that is forcing companies to shell out more in wages and other benefits.
Despite Biden and Bezos’ implication that inflation can be resolved if corporations just stop being greedy or the federal government stops spending so much money, there is no easy cure.
Source: CNN Brasil