In recent days, I have seen much about the economy related to the presidential election, mostly Trump blaming inflation on the Biden administration and stating that the economy is the worst in history.  A favorite meme of the far-right extremists is to juxtapose signs with gas prices at their lowest (below $2 a gallon during Covid lockdown) with a price of nearly $6 a gallon during post-Covid.  I see how someone might come to such a conclusion when focused only on the last few years.  But let’s look at the history.

Inflation has reared its ugly head on several occasions during my lifetime and it was always driven by government spending and unrest in the Middle East.  The 1970s saw what became the highest rate of inflation following the drawdown of the Vietnam War and an Arab-Israeli conflict that created a gas shortage.  The latter drove gas prices from around 30 cents a gallon to nearly $1 a gallon.  Folks of my generation remember sitting in line for gas in the early seventies.  Another gas shortage in the late seventies pushed gas prices even higher, getting close to $2 a gallon.

President Carter was blamed for the inflation as well as the Iranian hostage crisis and lost the election to Reagan.  However, most of the inflation was due to the US government spending huge amounts of money on the war in Vietnam.  When government extends more cash than it takes in, inflation results.  Just printing more money may solve a short-term problem, but it always leads to long-term issues.

When terrorists struck on 9-11-2001, we declared a war on terror.  But how did we pay for it?  Raise taxes…no way.  The Republican Congress with the urging of the Bush administration CUT taxes.  Wars are expensive.  No one looked to the example of Vietnam. No one seemed to worry about how we were going to pay for the war on terror.

The same thing happened after the BIG Recession of 2008-09 when the financial sector began to melt down due to problems in the mortgage lending industry.  Put bluntly, the economy was circling the toilet bowl when Obama was elected president.  To solve the problem he took a page from FDR’s playbook and increased government spending to put people back to work.  They even revived a version of the CCC and funded numerous public works projects to put Americans back to work.  The private sector never acts on its own.  It did nothing in the early 1930s and it was doing nothing in the 2008-09 recession except sit on its ass and wait for government bailouts.  And those bailouts were plentiful.  More Money going out to save the banks and various businesses.

Obama’s plan appear to have worked, and he handed Trump a growing economy, which continued into positive territory until the pandemic hit in 2020.  Not good.  Mass shutdowns put vast numbers of Americans out of work.  With no paychecks coming in, people once again turned to the government, and Congress responded by passing stimulus legislation that put money in everyone’s pockets and issued loans to businesses large and small.  Once again the government was just printing more money (or creating it electronically).  Eventually, “We the People” have to pay the price and that price was widespread inflation that now has fortunately returned to a more reasonable level. (The latest figures show inflation below 3%.)

As to gas prices being low under Trump and high under Biden…the pandemic shut down the economy and shut down demand for gasoline.  No one was commuting to work or taking long trips.  The supply of gas continued to grow and resulted in a large surplus.  What happens when supplies increase and demand drops?  Prices fall.  We saw the price of a gallon of gas drop to below $2.  Trump had little or nothing to do with the drop.  Refineries reduced production and eventually, prices increased.  Like everything else after the shutdown, production was slow to return.  The non-availability of parts in the manufacturing sector resulted in limited production for a time.    Eventually, the shortages diminished and normal production returned.  This explanation does not take into account what many believe to be price gouging by corporations and other businesses.

The pandemic wreaked havoc on the entire economy and on life in general.  However, market forces cause shifts in the economy that are often out of the control of the government and particularly POTUS.  However, overall government spending impacts the general economy.  Pushing up the deficit only delays the inevitable.  At some point, the citizens of the US will need to pay the check.