June 5, 2022
By Steve Cortes on SubStack
Treasury Secretary Janet Yellen just issued a public ‘oopsies,’ admitting she totally missed the biggest explosion in inflation in over a generation. On CNN she conceded:
“I was wrong then about the path that inflation would take. As I mentioned, there have been unanticipated and large shocks to the economy…that I, at the time, didn't fully understand.”
Armed with her doctorate in economics from Yale, the former Chair of the Federal Reserve now serves as successor to Alexander Hamilton as Treasury Department chief, managing all economic policy for the United States. Yet…she totally whiffed on the biggest economic story since the housing/credit crisis of 2008.
Now, Yellen would deserve some small modicum of credit for abandoning her ridiculous narrative, uttered ad nauseum, about inflation being “transitory” – IF, she followed up her admission with a resignation. Of course, she did not, further eroding the already tattered credibility of formerly august institutions in America, including the Fed, the US Treasury, and the mainstream business media.
The leadership of all those organizations either could not see the impending inflationary hurricane that was plain as day to ordinary Americans or, even worse, they did ascertain the looming conflagration and decided to prioritize partisan narrative over economic reality.
Unlike Yellen’s days as a professor in the ivory tower of Harvard, her ideas and statements now have immediate, real-world fallout for hundreds of millions of citizens who currently struggle mightily to cope with the runaway inflation she played a critical role in unleashing.
With inflation at 40 year record highs, and interest rates rising apace to near decade highs, the typical US consumer falls into a deep funk, as evidenced by plunging consumer sentiment as revealed by the University of Michigan survey shown here:
This chart begins with Biden’s tenure in office, which began with relative optimism. The American people, confident by nature, gave the new occupant of the Oval Office the benefit of the doubt for several months. But by last Spring of 2021, it became abundantly evident that the truly exorbitant borrowing and spending of Biden, Pelosi, and Mitch McConnell sent inflation soaring and real wages - meaning adjusted for inflation - crashing lower.
At first, Americans dealt with this massive chasm between real wages and real world prices through an explosion in credit card debt, which likely hit an all-time high in the just completed Second Quarter of 2022 (final numbers are not yet released). But that band-aid fix only lasted so long, especially as spiking interest rates now transform the service costs on those debts into a heavy financial anchor on households.
Naturally, middle- and lower-income households are the hardest hit, bearing the full brunt of the inflationary madness. In addition to the fiscal profligacy of the Dems and Establishment Republicans on Capitol Hill, Biden also declared war on domestic US energy production and instituted onerous and unscientific vaccine mandates upon tens of millions of workers which still snarls supply lines and dissuades masses of citizens from returning to productive work.
Regarding Crude Oil, have a look at the price action since Biden prevailed in November of 2020.
Note on this chart that prices had already almost doubled by last Fall of 2021, well before Ukraine was an issue at all for energy supplies.
SOURCE: Steve Cortes on SubStack