Just What Exactly Do Conservatives Think Inflation Is?

The debate over inflation has taken an unexpected turn, with some critics seemingly forgetting the term’s definition. The Wall Street Journal’s editorial page has recently adopted a Keynesian tone, arguing that government spending drives inflation through “excess demand.”

This shift is puzzling, given the WSJ’s history as a champion of free market orthodoxy under Robert Bartley and George Melloan. They adhered to Say’s Law, which holds that consumption precedes production. Governments cannot stimulate demand through their spending because they can’t produce anything themselves.

The Journal’s new enthusiasm for Keynesian economics has led to creative interpretations of inflation. The editors argue that government spending causes prices to rise due to excess demand. This thinking is straight out of the Keynesian playbook, and it’s surprising to see it being touted as gospel by a page once skeptical of government intervention.

However, if government spending truly drives inflation, we should expect to see evidence of a decline in the dollar’s value. The WSJ’s own Dollar Index shows that the dollar has remained relatively stable over the past few years – despite claims that Joe Biden and Jerome Powell’s policies are responsible for inflation.

This disconnect between theory and reality raises fundamental questions about what conservatives think inflation actually is. Are they genuinely concerned with government spending’s effects on prices, or using inflation as a stick to beat their political opponents? The distinction may seem minor but speaks to a larger issue: the tendency for even well-intentioned arguments against inflation to devolve into ideological posturing.

Inflation is not just an abstract concept; it affects real people in tangible ways. To truly understand it, we must move beyond soundbites and engage with data. We need to ask ourselves what exactly inflation means for the average American and how it manifests itself in everyday life.

The answers are not always straightforward. Inflation can be complex and multifaceted, driven by factors such as supply chain disruptions and monetary policy decisions. However, one thing is clear: it’s not just about government spending or the dollar’s value.

Inflation is about the underlying dynamics of an increasingly globalized and interconnected economy. It’s about the interplay between production, consumption, and exchange – and how these forces shape prices for goods and services.

Let’s not get caught up in ideological noise surrounding inflation. Let’s focus on understanding its causes and working towards solutions that benefit everyone – not just a select few. Only then can we truly claim to be masters of our economic fate.