Catch Me on The Mehdi Hasan Show Later Today

I just recorded a short interview with Mehdi Hasan, host of the Mehdi Hasan Show, which airs on MSNBC and NBC’s Peacock TV. As always, the conversation moved very quickly and the interview ended before I had a chance to make a number of important points.

So here I am.

I don’t always do this, but this morning I wrote down some talking points before my TV appearance. Since there wasn’t enough time to get to much, I thought I’d post it here.

To share

We need a unified and coordinated push to bring down the price of oil, which is the main driver of inflation, not just here in the US but in much of the world. Even food prices, which could go a lot higher due to the conflict between Russia and Ukraine, are closely related to energy costs. So we need to lower energy prices to reduce inflation.

There are some things we could do to increase the supply of oil; you hear people talking about guaranteeing fu pricesture production to encourage producers to bring more refining capacity online in the near term. There is talk of nationalizing refineries and limiting margins. You’ve heard about Keystone XL, which offers more permits to allow more domestic drilling and appeals to the Saudi government. Some of these are just silly talking points from the right that would have little or no impact on energy prices now or in the near term. (There may be merit in the first two.)

But the reality is that it’s probably impossible to lower prices in the short term if you just focus on increasing the supply of oil. And while I understand why Democrats are looking for ways to increase supply, given the midterms and what the outcome of this election may mean for our democracy, the exploration and fracking of our way to lower energy prices also runs counter to the Biden administration’s promise to address the problem. climate crisis Therefore, I think we have to be very careful with the emphasis we give on the supply side.

So what can we do?

If you look back, you’ll see that the last time we had inflation as hot as it is now, it was triggered by oil price shocks that arose out of a political conflict in the Middle East. It was our dependence on foreign oil that made us so vulnerable back then. We were basically stuck for years with no way out. Paul Volcker, who was chairman of the Fed at the time, tried to deal with the inflation problem by raising interest rates. But that only made things worse, including inflation! Rising rates make the cost-of-living crisis worse by making it more expensive to buy a house, a car, or put food and gas on your credit card. And they make it more expensive for companies to borrow and invest in new capacity. It increases their costs, which tends to mean higher prices for consumers as companies pass on those rising costs. Volcker’s rate hikes triggered a deep recession that devastated the poor and the working class.

What finally reduced inflation was the negotiated peace treaty in the Middle East and the development of alternative sources of energy, namely natural gas, which benefited from deregulation under President Carter.

We need to do something similar now. First, we need a negotiated resolution to the war in Ukraine. We also need to make investments (for a long time) in renewable energy to diversify our energy portfolio.but this time no to other forms of fossil fuel—with the ultimate goal of weaning ourselves off carbon-intensive energy sources entirely for the sake of civilization.

Increasing supply in the short term and staying tied to oil in the future will only leave us vulnerable to future oil price shocks, not to mention the devastating impacts of climate change.

Climate action is inflation action.

If the high cost of food, airfare, and housing has you reeling now, just think about what will happen with intensifying droughts, more frequent and stronger hurricanes, and fires and floods in the coming years.

The Federal Reserve cannot reduce inflation because it cannot lower the price of energy. I’ll stipulate that if Powell goes “full Volcker,” raising rates into the stratosphere, it may trigger a recession deep enough to crush oil demand as millions of affected Americans stop driving to work (because they are unemployed). , avoid turning up the thermostat (because they can’t afford to heat), and cancel their travel plans (because there’s no discretionary income for leisure).

It’s a terrible way to deal with the kind of inflation we face today.

Share The Lens

Instead of relying (overwhelmingly) on the central bank to fight inflation, President Biden should stand with the American people. The Federal Reserve will not fix inflation. Neither does the White House. But together, we can crush it.

Help the American people: Use the bully pulpit to urge conservation. Ask people to drive the speed limit, carpool with others and avoid unnecessary travel. Lots of little things add up when you have a class action in the tens of millions.
Business America Help: Use the bully pulpit to urge employers to do everything they can to accommodate work-from-home (WFH) and offer incentives to businesses that comply.
Help from mayors and governors: Use the bully pulpit to ask elected officials to make public transportation (trains, buses, subways, etc.) free for all users.
Help from our international allies: Work tirelessly to resolve the war in Ukraine and develop a concrete plan to prevent mass starvation and political upheaval from the impending food crisis that threatens much of the developing world.

And keep working to lower costs for families struggling with high food and energy costs. All of these (and more) are great ideas:

Lower the cost of prescription drugs (or better yet, switch to Medicare for All)
Universal childcare and preschool
Continue working on supply chains. Reduce delays at ports, trucks, railways
Dealing with known cases of price gouging
Build housing!
Eliminate non-strategic rates

These are just some of the things we could do to reduce costs to help struggling families. The White House is apparently considering a federal gas tax holiday, which I don’t like for a number of reasons. On the one hand, it encourages consumption (exactly the opposite of what we need) while doing little to ease the pain at the pump. It is bad economic policy i bad climate policy.