To the editor:

Jim Muchlinski’s editorial in Saturday’s paper argued that the government had no role in today’s inflationary mess. Reality is quite the opposite.

When earning my degree in economics, one lesson was the definition of inflation: Too much money chasing too few goods and services. The Marshall editorial argues that the problem is lack of goods and services caused by pandemic disruptions and more. But here’s the telling point: The US economy is producing more goods and services today than pre-pandemic, and by a wide margin. GDP, with inflation removed, was 3% higher in the 4th quarter of 2021 than the 4th quarter of 2019. Hats off to American capitalism for surviving the shutdowns and producing real economic growth this quickly.

What evidence indicates excessive money-printing is causing this inflation?

From March 2020 to March 2022, the US government grew its deficit by $5.8 trillion. That was under both Trump and Biden. To put that into context, the previous spending trophy belonged to the Obama administration for its $8 trillion deficit increase, but that took eight long years.

Let’s reduce incomprehensible trillions to amounts we can relate to in New Ulm. In the spring of 2021, bank deposits (customer checking and savings accounts) in our five local banks grew by over $150 million. That’s a lot of liquidity looking to be spent, and it occurred in every community in this country. It came from government payouts of PPP “loans” to businesses and nonprofits, and stimulus checks to individuals. March of 2021 was just the start. It was followed by enhanced child credits (some paid to families with income exceeding $200,000), additional stimulus payments, and employer refundable tax credits (actually cash payments).

We’ve had deficit spending by many Congresses for decades, but generally in inefficient programs that take years to fund (think road construction, military contracts). But legislation in ’20 and ’21 did a masterful job of turning the IRS and SBA into giant cash spewing machines. In the early days of the pandemic that arguably was justified, given the shutdowns and uncertainty.

But spending over $1 trillion in March of ’21?

Prior legislation was still pushing out dollars, unemployment was down to 6% and many economists predicted inflation if enacted.

Congress and the two administrations didn’t get us into this record-setting inflation alone. They had a big boost from the Federal Reserve. That agency’s mission is to help control inflation by adjusting the money supply and interest rates. But when inflation began increasing in early 2021, they chose to accommodate rather than intervene, ignoring the problem for a year.

In summary, the data supports government being a primary instigator of this inflation.

Andy Biebl

New Ulm