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Former Obama global economic chief warns inflation is here to stay

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(Source: Fox News)

Inflation continues to rise under the Biden administration, whose policies have stymied the economy, leading to higher prices, empty shelves, an assault on the wallets of working Americans, and, according to a former Obama administration economic chief, inflation isn’t going anywhere.

In an interview with Fox News host, Sandra Smith on “America Reports,” Obama’s former Global Development Council Chairman Mohamed El-Erian said that the inflation the country is experiencing is not “transitory” despite what the Biden administration argues.

“So there’s been a view, and it’s a view I’ve disagreed with for months, that inflation is ‘transitory,’ that yes, it’s going to go up, but it’s going to come straight back down again,” El-Erian explained. “I think there’s enough evidence here… to suggest that inflation will be more persistent and higher than what both the Federal Reserve and the administration expect.”

El-Erian’s frightening prediction came as he criticized the Federal Reserve for being “behind the curve”.

“This is not a Biden administration issue. A lot of things in front of Congress today would enhance supply responsiveness, would increase labor participation, which means it would address the supply problem which has pushed inflation higher. This is a Federal Reserve issue and the Fed has been behind the curve for too long,” El-Erian criticized.

The belief that inflation is ‘transitory’ is based on coronavirus stimulus, spending, and supply and demand.

“[Prices] will go higher, and the Fed has misread the inflation dynamics in a big way, the Federal Reserve is still hostage to this notion that it’s transitory,” El-Erian said.

The former Obama economic official criticized the Fed’s monthly purchase of Treasury securities and mortgage-backed bonds focused on heightening levels of consumer borrowing and spending.

“The first thing it should do is stop injecting $120 billion every month. It should stop that. Do we really need the Fed to buy $40 billion of mortgages and push house prices even higher? No!” he declared.

He is not the only former Democrat administration official sounding the alarm. Treasury Secretary for former President Clinton and the Director of the NEC for former President Obama, Lawrence Summers, predicted on Twitter that despite Treasury Secretary Janet Yellen’s assurances, inflation will continue to soar above two percent well into 2022.

“We are more at risk of losing control of inflation than at any time in my career,” Summers predicted.

“I do think the facts are more on Larry’s side here,” Doug Holtz-Eakin, former Congressional Budget Office director asserted in the Fox News interview with Smith.

“We’ve got wage inflation running in the mid-five percent, that’s part of the cost push on consumer price inflation that’s running near seven percent. Behind that, there’s pipeline inflation that are double digits, and the important thing is people are now expecting inflation,” he continued.

Hotlz-Eakin added that America has all the ingredients it needs for steadily rising inflation and “the only thing that stands between us and that is good policies.”

The former CBO director contended that Democrats’ reconciliation package is a “front loaded spending bill with some tax increases” and that its passage would be a repeat of the mistakes made in March with the stimulus bill.

“Repeating that mistake again is a recipe to rash inflation up, not bring it down,’ Holtz-Eakin predicted.

Part of the problem with the Fed is that they are paralyzed as they wait for appointments, according to the former CBO director.

The primary root of the issue began with coronavirus stimulus and could be exacerbated by another massive federal tax and spend package

“In the end, the Fed will be responsible for the inflation rate. Supply shortage problems are real, but they’re always relative to demand and they really exacerbated the problem with the stimulus bill and they really shouldn’t do it again,” Holtz-Eakin maintained.

“That’s what really lit this flame and made inflation take off, and so don’t make any more mistakes. The Fed should start moving more quickly and that would give us a chance for this to come down, but it’s not going down overnight and it’s not going to come down to two percent any time soon,” the former CBO Director predicted.

In the short term, even left-leaning outlets like The New York Times are acknowledging the squeeze that Americans will feel on their wallet this holiday season.

On Tuesday, the outlet published an article entitled, “This Year’s Thanksgiving Feast Will Wallop the Wallet.”

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