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OPINION | EDITORIAL: Inflated language

Another danger in printing money May 6, 2021 at 3:04 a.m.

At some point during the Civil War, a president named Lincoln needed to spend money his government didn't have. He simply told treasury secretary Salmon P. Chase: "Give your paper mill another turn."

Most presidents since, especially modern presidents, have used a similar line. But there is a matter of degree to these things. As Bret Stephens points out elsewhere on this page, the current president wants his paper mill to turn enough to eclipse what this country spent in four years to win World War II -- in inflation-adjusted dollars.

That's culture-changing spending.

Speaking of inflation, President Joe Biden's economic team came out this past week to assure their fellow Americans that inflation wasn't on the horizon. They assured without being assuring.

There are many causes of inflation, as those who study the dismal science tell us. A rise in the price of raw materials can cause prices to rise for end products. A war could clog the pipeline. An increase in gasoline prices can drive up the cost of everything. A surge in demand. A hurricane. There are any number of reasons.

Here's another: The law of supply and demand. Which is a law because it works every time. And if dollars flooding the world today continue to do so, they will become worth less on the global market. And businesses will want more of them for the same amount of product.

But our betters say don't worry about any of that, or history, because they're on it.

Treasury Secretary Janet Yellen was in the papers early in the week, saying inflation was unlikely to occur just because government spending will increase demand. (If she said anything about supply, as in the number of dollars, we missed it.)

She said the president's various economic plans, and he has more than one, will be spread out over a decade, so it shouldn't pressure prices to rise: "I don't believe that inflation will be an issue. But if it becomes an issue, we have tools to address it."

And, she mentioned on "Meet the Press," the government can spend this kind of money because interest rates are so low. But over the long haul the budget deficit needs to be "contained."

(One wonders why. If budget deficits don't matter any longer, why do they need to be contained?)

The chair of the White House Council of Economic Advisers had a similar message for the Sunday programs. So the message is being coordinated: Don't worry about inflation. The government is on it. And it's close enough for government work.

But what about those outside the government?

You might have heard the name Warren Buffett. He's the CEO of a little company called Berkshire Hathaway. The same week the Biden administration took to the airwaves to assure, Mr. Buffett had warnings.

"We are seeing substantial inflation," he said to shareholders, as quoted by Yahoo Finance. "We are raising prices. People are raising prices to us, and it's being accepted."

He called the economy red-hot: "People have money in their pocket, and they pay higher prices . . . . It's almost a buying frenzy."

Late last month, Procter & Gamble announced it will begin to raise prices on its products. Whirlpool's CFO said last week: "We took price increases in every region of the world, and range from 5% to 12%." Food giants such as Campbell Soup, Conagra, General Mills, Hostess, Kellogg, Kraft Heinz and Hershey have warned of increased prices ahead for their products.

And you can see what's happening at the gas pump.

"Costs are going up everywhere," Ted Doheny, chief of packaging maker Sealed Air, told the Financial Times. "It's Defcon 4 [for] us right now. It's a big deal."

Well, perhaps it's a big deal for those of us in the real world. For those who work in government, they have it all under control. And if it gets out of control, they can change things. Like repealing the law of supply and demand.

Somehow, we aren't as assured.


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