Trump & Biden: Money Supply, Inflation & Debt
As election season heats up more people will begin blindly cheering for their candidates. I believe it is vital that voters make informed decisions. In support of that effort I want to surface some facts regarding money supply, inflation & national debt.
Money Supply
Every president since America’s worst president, Woodrow Wilson, has contributed to inflation. The federal reserve is built upon the misguided idea that government printing money and creating inflation will lead to economic growth. This is the ‘2% target inflation’ we hear of. It is often used as a talking point with little honesty in the discussion. M2 is a measure of the total money supply (good video here), and is seen as a good indicator for inflation. The charts and data are pulled from FRED-M2
Trump-flation
That near vertical line of money printing occurred during Trump’s administration. When COVID hit Trump had 2 options. Let the bubble burst ( a bubble he called out as a candidate), or print money to forestall the collapse. Unsurprisingly, we printed our way out of that collapse, 5 months after the COVID crash the S&P500 was above pre-COVID levels. When Trump took office M2 was 13284 and increased to 19384. Money supply increased by 46% ($6.1 Trillion). If you are not assigning Trump blame for inflation, you are not being honest.
Biden-flation
Biden undoubtedly contributed to the decrease of our monetary value by printing money, but not nearly as much as Trump. Under Biden the money supply went from 19384 to peak at 22048 then down to 20863. The decrease was the impact of our increased interest rates (that is how they are supposed to work). As of May, the money supply has increased under Biden 7.6% ($1.479 Trillion).
Debt
The other side of government spending is national debt. Some point to Biden’s $2 trillion ‘American Rescue Plan’ as a reason HE is responsible for inflation, yet I show above the M2 supply. The other side of this equation is debt. It should be noted, the likely long term impact of our out of control debt is rampant inflation as we try to print our way out of debt, we just aren’t officially at that point…yet. Charts and data pulled from FRED-Total Public Debt.
Trump Debt
Under Trump, we saw a debt increase of 41% , from $19.84 trillion to $28.13 trillion. Trump laid $8.29 Trillion of debt on the American people.
Biden Debt
Under Biden, we saw a debt increase from 28.13 trillion to (as of 1/1/2024) 34.58 trillion. This is a $6.45 trillion dollar (22.9% ) increase while he still has about 7 months left in office.
Oil Reserves
Strategic Oil reserves were put into place after the oil embargo of 1973. The idea was that if there was ever a supply disruption, the United States would not be left unprotected.
Energy (including gas) accounts for about 7.3% of CPI (the government consumer price index) [1]. So it makes up a relatively large and very NOTICEABLE part of the inflation calculation. Often times the ‘go-to’ figure when pundits and others talk about inflation is the ‘price at the pumps’. While Trump had a significant hand it the rising inflation, Biden has been depleting our reserves to soften its impact during his entire first term. Around the start of his term we were at 637,921 (thousand barrels) we hit a low of 346,759 July of 2023. We have burned through 46% of our reserves under Biden. This is clearly not sustainable, the current, comparatively favorable metrics above will likely dissipate as we either run out of our SPR or stop tapping into it. It should be noted that across the past 3.5 years, the average price per barrel of oil is $79.74. When Biden first announced releasing reserves in November 2021, gas was at $3.395 per gallon, it peaked in June 2022 at 4.929.
Selling our reserves will avoid people ‘feeling inflation at the pump’ and it will lower the government reported CPI. In regards to debt & money printing, with $23 billion in reserves sold it isn’t enough to directly move the needle much, but perhaps secondary effects can have an impact. Additionally, depletion of the SPR has strategic geopolitical implications that will likely be covered in another article (think back to America’s Waning Power and the Petro-dollar).
The United States has since early this year been working to slowly purchase more reserves for the SPR. A few days ago it was announced that we purchased 3 million barrels. It will be interesting to see how the cessation of sales impacts gas prices & the economy. It should be noted that part of Biden’s plan to mitigate his release of SPR is to prevent its previously congressionally mandated sale that was to offset government spending[2] (which will increase debt).
Conclusion
There are PLENTY of reasons to choose Trump over Biden (I intend to cover more issues in the future and will add in other candidates where possible), but please know that when it comes to inflation Trump is largely responsible. A 46% increase in M2 is HUGE, for added comparison, Obama’s second term had a 26% increase in M2, a ~$3 trillion increase vs Trump’s $6 trillion. If a candidate isn’t coming in and cutting HUGE swaths of government and planning to dismantle the federal reserve than they are NOT GOOD ON INFLATION and they are NOT GOOD on debt.
Resources
https://www.investopedia.com/ask/answers/06/oilpricesinflation.asp#:~:text=higher%20inflation%20rate.-,Cause%20and%20Effect,2
https://www.reuters.com/business/energy/us-buys-3-million-barrels-oil-strategic-petroleum-reserve-2024-06-03/#:~:text=WASHINGTON%2C%20June%203%20(Reuters),largest%20sale%20ever%20in%202022.
Economics books I recommend:
Disclosure: The book links below are Amazon affiliate links, meaning that at no additional cost to you, I may receive a commission if you click through and make a purchase.
I wanted to list out a few economics books that might help people understand how bad our government is and how much it is destroying our wealth. An easy one to get through is Economics in One Lesson. If you have a bit more time, The Bitcoin Standard is a great book on economics, even if you have no interest in bitcoin itself. I’m about halfway through another book from Saifedean Ammous, Principles of Economics & have enjoyed it so far as well. Audiobook versions are good too but I like them as a supplement more than as a stand alone (especially when looking to resurface points from the books!), I personally like to write & highlight as I read.
Biden implemented PPP loan forgiveness and continued to inflate when there was an opportunity to bring it down. Trump acted to save the market and also caved to Democrat demand that he implement more stimulus than he actually wanted to at the time if you recall. I think placing blame on the emergency response is unfair. Biden was neglectful after the emergency response and prolonged a situation that could have been ended sooner by caving to special interests who were in panic rather than calming the situation. Furthermore he continues to implement policies which increase economic instability and promises to continue to do that... One thing would be student loan forgiveness. That's not good for an inflation strapped economy. While it's easy to compare numbers it's more important to compare context and I think that Biden loses on context. I don't think you are being honest in your assessment... Even though you said that we were being dishonest in ours. It needs a more holistic point of view.