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The Abundance Agenda
Jesse Richman, 1/14/2022

Derek Thompson has a nice piece out in the Atlantic today.  In it he outlines a set of key steps to move away from the current scarcity agenda and towards an abundance agenda.  It's in important idea, and the candidate who can run effectively on the right combination of abundance policies will be well positioned to win the next presidential election.  While not all of Thompson's ideas make complete sense, and he has neglected to diagnose some of the key drivers of the scarcity situation such as massive trade deficits and lack of domestic savings, he is moving in the right direction in terms of highlighting a crucial set of issues that need to be solved. 

You can read it at 



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The Senate should reject Jerome Powell -- we're published in today's American Thinker
Howard Richman, 1/11/2022

by Howard Richman and Jesse Richman

Today (January 11), the Senate Banking Committee will hold a hearing on whether Federal Reserve Chair Jerome Powell should be awarded a second four-year term. The Senate should reject the nomination.

As we explained on April 26, here in the American Thinker (Jerome Powell and the Coming Inflation), Powell doesn’t understand economics. He couldn’t even see the difference between President Trump’s economy in which increased supply made inflation unlikely and President Biden’s economy in which reduced supply made inflation almost inevitable.

Back then, prices were going up at a 2.6% rate according to the most recent release (March 2021) of the Consumer Price Index (CPI). Now, according to the most recent CPI (November 2021), inflation is going up at a 6.8% rate. Tomorrow, the December CPI will be reported and the consensus estimate is that it will go up to 7%.

Jerome Powell has printed too much money, has stoked inflation by cutting supply, has taken incompetent actions against inflation, and is currently creating inflationary expectations that could increase both inflation and unemployment for decades. We will discuss each of these huge mistakes in turn.

Printing Too Much Money

Mismanagement of the money supply by the Fed can have massive consequences for the economy. For instance, in what was arguably the worst Fed mistake ever made, Roy Young and Eugene Meyer presided over a contraction by one-third in the US money supply (1929 to 1932) which greatly extended and intensified the Great Depression.

When Federal Reserve Chair Ben Bernanke encountered the same sort of financial collapse at the beginning of the Great Recession in 2008, he invented quantitative easing (massive buying by the Fed of both short-term and long-term government bonds) to make sure that the US money supply wouldn’t fall. Bernanke succeeded! QE1 (the first version of Quantitative Easing) was a great success.  

Powell responded to the Covid-lockdown recession with a massive quantitative easing effort despite the fact that this was not a money-destroying financial crisis. Where Bernanke’s actions kept the money supply relatively stable despite a financial crisis, Powell’s actions induced the most rapid growth in the US money supply since at least 1960, as seen in the graph:


Stoking Inflation by Cutting Supply

Powell is actually taking actions that stoke inflation.  In his renomination message President Biden praised Powell’s belief that “urgent action is needed to address the economic risks posed by climate change,” perhaps a reference to changing finance costs that are reducing oil and gas development.

Powell is thereby accelerating the very inflation that he is supposed to fight when he prevents banks from making loans to fossil fuel developers, loans that would reduce the future prices of energy, increase US energy exports and reduce US energy imports.

Some recent evidence suggests predictions of catastrophic global warming are based upon a mathematical error.  Be that as it may, decreasing the supply of energy is a clear recipe for inflation as demonstrated in the 1970s.

Incompetent Actions Against Inflation

Past Chairs of the Federal Reserve have “tapped on the brakes” when inflation started to rise above 3%, but Powell has refused to do much of anything, relying through most of 2021 on wishful thinking about “transitory” inflation instead of action, and his own untrained intuition instead of economic understanding or the Federal Reserve’s own economics models.  (The sum total of this lawyer’s economics course work was the introductory economics course he took as an undergrad.)

In the early days of the pandemic, the impact of his massive increase in the money supply may have been dampened by a diminished velocity that money changed hands due to lockdowns and other pandemic precautions.  But as the economy has reopened, inflation has too. Basic monetary theory states that a massive increase in the money supply is going to cause inflation. And it is causing it now.

Powell’s planned actions appear likely to be too little and too late. According to Federal Reserve minutes released recently he doesn’t plan to end quantitative easing until March and only plans to raise interest rates three times during 2022, probably by about a quarter percent each time, bringing the US short-term interest rate up to about 0.8%.  This is not nearly enough to make much of a dent in an inflation rate that is much higher than that.

Creating Inflationary Expectations

Powell seems to be intent upon repeating the mistake made by Federal Reserve Chair William McChesney Martin who let inflation rise from 3.0% in 1967 to 4.7% in 1968 to 6.2% in 1969 (according to the CPI). Like Powell, Martin was doing so in order to facilitate the tremendous increase in government spending being made by his president.

In December 1967, while Martin’s inflation rate was climbing, Milton Friedman, then head of the American Economic Association, urged in a speech at its annual meeting (pdf) that the Federal Reserve be required to stick to a target of 3-5% monetary growth. If his recommendation had been followed, the economic malaise of the next 15 years would have been avoided.

The problem is that once the inflation rate gets high enough, inflationary expectations change. Lenders begin demanding higher interest rates and workers begin demanding higher wage rates so as to keep up with inflation. The following graph [used with permission] by conservative economists Paul R. Gregory and Roy J. Ruffin shows that inflationary expectations jumped up in 1969, 1973, and 1979:


As shown, each jump upward in inflationary expectations resulted, simultaneously, in a new relationship between inflation and unemployment, with both being generally higher than previously. [Note: The inflation rate shown in the above graph was calculated from the GDP Price Deflator which is more accurate than the CPI, but not reported as quickly.]

Powell is playing with fire. Once inflationary expectations get going, they are very difficult to bring down. After the inflation-ridden 1970s in which the buying power of a dollar dropped by more than 50 percent, it took President Reagan’s supply-side economics combined with Federal Reserve Chair Paul Volcker’s reduced money supply growth to finally bring them down. And, as anyone who lived through that period can attest, it required sky-high interest rates and a painful recession.

The Senate must reject Powell. If they don’t, it will take another supply-side president, such as Ronald Reagan or Donald Trump, and another Paul Volcker at the Fed to bring down the inflationary expectations that the incompetent Jerome Powell is now creating.


Click here to read a slightly edited version of this piece on the American Thinker website.


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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]