Kamala Harris' Perspective on Inflation and the Questionable Silence of Economists

Inflation Outlook

Despite an improved outlook, inflation remains a hot topic. Prices are still more than 20 percent higher than they were four years ago. Many analysts agree that the slow, and sometimes negative, growth of the money supply, which has somewhat curbed inflation, cannot be maintained indefinitely. With the Federal Reserve's recent announcement of a 50-basis-point cut in the federal funds rate, the money supply is set to increase again. While the initial increase in the money supply growth required to achieve this reduction is modest, as the Federal Reserve continues to lower rates, the money supply growth rate will increase, raising the likelihood of future inflation. Given that the Federal Reserve has indicated more rate cuts are on the horizon, the views of presidential candidates on inflation are more relevant than ever.

Kamala Harris' Theory of Inflation

A few weeks ago, Kamala Harris presented her theory of inflation, which she attributed to corporate greed. In her view, high prices are a result of corporations' excessive greed. However, this theory doesn't garner much support, even among liberal economists who are typically in favor of Democratic policies. Most would refute this argument if asked. The question then arises: Does Harris genuinely believe in her theory or is she merely playing politics? Given her background in economics and her exposure to highly educated individuals throughout her career in government, it seems unlikely that she would genuinely believe in this theory. If she doesn't, then this could be seen as an act of political dishonesty. The worst-case scenario would be if her stance is a mix of both.

Economists' Reputation and Responsibility

Economists used to command great respect among the general public and elected officials. However, this respect has dwindled over time, as many economists have used their discipline to further their political agendas. Any competent economist with integrity could not possibly agree with Harris' theory of inflation. They understand that if greed simply means wanting things badly, then everyone is greedy by definition, rendering the term meaningless. In June 2020, inflation was at 0.6 percent. It then rose to a peak of 9.1 percent in June 2022, before falling steadily to 3 percent in June 2023, where it has remained since. According to Harris' theory, corporations became increasingly greedy from June 2020 to June 2022, then gradually less greedy. A more plausible explanation for the recent inflation fluctuations is changes in money supply. The Federal Reserve increased the money supply dramatically during the COVID-19 pandemic, leading to a rise in inflation. When the Federal Reserve then reduced money supply growth, inflation began to decrease.

Media and Economists' Role

If Harris' theory were correct, why didn't the federal government curtail corporate greed at the start of the Biden-Harris administration? Harris should be asked this question by the media. Regardless of whether this happens, economists should not wait to be asked. They should proactively debunk such theories. The Trump-Vance ticket is also playing a similar game with foreign trade policy. However, economists of all political persuasions have been vocal in their opposition to increasing tariffs for government-led industrial planning. Economists should not be selective in their criticisms based on political alignment. They should evaluate economic policies with intellectual neutrality.

Bottom Line

The discussion around inflation, corporate greed, and the role of economists is complex and multifaceted. It's crucial for economists to maintain their integrity and provide unbiased analysis of economic theories and policies, irrespective of their political leanings. What are your thoughts on this matter? Do you agree with Harris' theory of inflation, or do you believe there's more to the story? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.