President-elect Donald Trump campaigned for his next election campaign. Increase in customs duties It is on a long list of countries exporting to the United States. Opponents say these tariffs will reignite inflation. Hogwash. The people raising these arguments are usually the same people who have been consistently wrong about inflation since 2020.

At a time when inflation was rising rapidly, pandemicwe were all convinced that it was “temporary”. That’s not the case, and the “experts” performed a funny gymnastics of wiping the egg off their faces and reversing their predictions. (Related article: Morgan Murphy: President Trump dares to put America first and derail foreign policy)

Some self-proclaimed experts try to link budget deficits to inflation. I was wrong again.

of Personal consumption expenditure index It rose from 2% in Q1 2022 to 6.9% in Q2 2022. Over the same period, the budget is deficit decreased It will be reduced by about half from $2.7 trillion to $1.4 trillion. While the budget deficit was cut in half, inflation more than tripled.

inflation since then fell Up to about 2.5% within budget deficit increased In the past two years, it has increased to $1.7 trillion and then $1.9 trillion. While inflation fell, the deficit increased. Good luck squaring it with the recommended Keynesian model.

The Fed finally responded to the spike in inflation, and experts confidently predicted that a dramatic economic slowdown was certain to occur. Thankfully, I was wrong again.

This is key point #1. Most of these experts, many of whom have won Nobel Prizes in economics in fields unrelated to monetary policy, have no idea why inflation rises or falls. So why would anyone listen to their opinion on President Trump’s tariff proposals?

Inflation soared because the Federal Reserve, encouraged by President Joe Biden, made a huge blunder during the pandemic that caused the money supply to surge. Currently, the Fed’s policies are reducing inflation. has moved to Moderately restrictive policies and a rebalancing of the money supply relative to the real economy.

This is key point number two. Monetary policy established by the Fed controls fundamental trends in how quickly or slowly prices rise over time, not supply chain disruptions, budget deficits, or green people. Establish.

Now, let’s get to the heart of the matter. Key Point #3: What do you think about these tariff proposals? To answer your question with a question, let’s assume that a virus hits American chicken farms and kills most of the hens that lay eggs. Egg prices will rise. Will soaring egg prices lead to inflation? No. Every day, some prices rise, sometimes significantly, but usually temporarily, and some prices fall, compared to all other prices.

Suppose a war breaks out between the Arab Union and Iran. Oil prices will rise. Will it be inflationary? Rising oil prices will not lead to inflation unless the Fed panics and causes the money supply to skyrocket.

But for the sake of argument, let’s assume that the rise in oil prices is due to inflation. If oil prices fall again after the war, it will be deflation. This kind of thing has happened frequently over the past half-century, but no one is worried about a deflationary impulse due to falling oil prices (because it’s never been observed).

When the price of eggs and oil increases, the relative price, the price of eggs relative to everything else, increases.

Inflation is an increase in the overall price level reflecting all goods and services. Some relative prices will rise. Some fall. However, because financial conditions are accommodative relative to demand for funds, the price level only rises. It is against this monetary background that relative price movements occur.

So, key point 3: Some broad or narrow tariffs could probably go up. These are relative price movements, with the price of foreign products increasing relative to domestic products. It means they are on the path of inflation.

This is not to argue that the proposed tariffs are good or bad policy, but rather to argue that arguments against proposed tariffs based on the threat of inflation are more about reputable experts than about the tariffs. It just says more.

J.D. Foster is the former Chief Economist of the Office of Management and Budget and the former Chief Economist and Executive Vice Chairman of the U.S. Chamber of Commerce. He now lives relatively freely in the hills of Idaho.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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