Econ 101

It is apparent that Joe Biden and his economic advisors need to go back to freshman year college and study Econ 101. Almost every issue we are dealing with in today’s economy can be improved with a better understanding of the basic economic principle of supply and demand. When supply is greater than demand prices go down. When demand is greater than supply, prices go up. That is why the disruption in the supply chain created shortages and price increases. When supply decreases, and demand remains constant, prices increase. It’s a law of economics. Because the Biden administration does not believe in free market capitalism or a market system, and they do not understand how markets work, they rarely consider the basic economic concepts when making decisions, and that’s why most of their economic decisions turn out to be disasters.

We saw their lack of understanding of supply and demand in the baby formula crisis. When the FDA shut down Abbott’s baby formula manufacturing plant in Michigan in February due to contamination, the administration should have anticipated that there would be a shortage. When you shut down a plant that produces 40% of the baby formula for the country, you are drastically decreasing the supply of baby formula, which drives up prices, and create shortages. The administration should have known that if they did not work to increase the supply, there would be a crisis. But they failed to act because they fail to understand how the supply of goods affects the market.

Our biggest economic issue has been inflation, and that has been driven by government policies. The annual inflation rate for the 12-months ending in April 2022 was 8.5% which is the highest it has been in 41 years. Since the start of the pandemic, we have spent over $5.7 trillion on 5 separate bills dealing with the Covid. And on top of that spending, Joe Biden signed a $1.2 trillion infrastructure bill. In March 2020, the money supply was $16 trillion, it’s now $21.8 trillion. When you print $5.8 trillion out of thin air and inject it into the economy, you dramatically increase the money supply which decreases the value of every dollar which inevitably increases the price of all consumer goods. And Joe Biden continued to show his lack of understanding of economic principles by pushing his $4 trillion ‘Build Back Better’ spending bill that, thankfully, didn’t pass the senate.