Londres (CNN Business) — Among the many silly, boring, agenda-driven exchanges going on on Twitter at any given time, the one taking place between the president of the United States and the world’s second-richest person stands out as much for its awkwardness as it is for its deliberate simplism.
If you’ve been away from Twitter lately, first of all: congratulations. This is a quick summary of the feud between Jeff Bezos and President Joe Biden.
On Friday, Biden tweeted that how to lower the inflation is “making sure the richest corporations pay their fair share.”
Bezos, founder of Amazon, an absurdly rich corporation, took issue with that. Shooting a response, saying that tying corporate taxes to inflation is “just misleading.”
The White House replied, and then Bezos replied again.
In short, Bezos believes that the federal stimulus payments caused the inflation. Biden says corporate greed is to blame.
They are both right. And both are exaggerating their positions.
The truth is that inflation does not have a single cause. Did the nearly $2 trillion in stimulus for families and individuals fuel demand for goods and contribute to the highest inflation in the last 40 years we’re living? Yes.
The consumer price index was below 2% in Biden’s first full month in office. Stimulus checks started arriving in bank accounts in March 2021, when the annual inflation rate rose to 2.6%. In April, it reached 4.2%. In May it exceeded 5%, in October 6% and now it exceeds 8%.
That’s a point for the Bezos team. (Though it’s worth noting that unemployment went from 6.2% when Biden took office to 3.6% today, indicating a recovering economy.)
But did companies like Amazon enjoy record profits last year and continue to raise prices for consumers to protect their margins? Of course.
What neither Biden nor Bezos mention in their tweets are the myriad factors behind persistent global inflation. Factors such as supply chain disruptions and shortages that are still being worked out due to the unprecedented global shutdown of the world economy two years ago.
Another force that no one seems to want to mention: the Federal Reserve’s unprecedented intervention in financial markets that began in the spring of 2020. When the pandemic hit the United States, the Fed unleashed an avalanche of easy money while cutting interest rates. down to almost zero to avoid an economic collapse. The policy, enacted under the Trump administration by Trump-appointed Fed Chairman Jerome Powell, kept stock markets frantic into 2021, as Bezos certainly knows: Amazon was arguably the biggest beneficiary of the pandemic economy, though its Stocks have been hit along with other tech stocks in recent months.
Oh, and there’s also a ground war in Eastern Europe that is disrupting world markets, driving up food and energy prices. In the clouds. In China, millions of people have been subjected to strict covid lockdowns, which has dented consumer demand and paralyzed manufacturing in the world’s second-largest economy. And if that wasn’t enough: there remains an unresolved and psychologically complex imbalance in the labor market that is forcing companies to spend more on wages and other benefits.
Despite Biden and Bezos hinting that inflation can be fixed if businesses stop being greedy or the federal government stops spending so much money, there is no easy cure.