On Friday’s broadcast of CNBC’s “Squawk Box,” Deputy Treasury Secretary Wally Adeyemo stated that inflation hasn’t just happened in the U.S., massive spending happened under the Trump administration, but when you look at pandemic spending, “you have to think about what the alternative was. And we’re seeing that alternative in China today, where you’ve seen them deal with the virus for far longer and their economy has struggled.”
Co-host Joe Kernen asked, “Do you think that the pandemic spending, post-pandemic spending, some of the trillions that we’ve spent in the last couple of years, do you think that that exacerbated prices in terms of inflation and that’s why the Fed is forcing — we’re forcing its hand to do this, it was kind of self-inflicted? Or do you think it’s pandemic reopening, supply chain, the war in Ukraine? Do you at least acknowledge that maybe the Fed had to enable all the spending on the fiscal side and stayed at zero for too long?”
Adeyemo answered, “So what we both know is that inflation isn’t an American phenomenon alone. We’re both seeing high rates of core inflation and headline inflation around the world. And central banks, not only in the United States, but in Europe and in the U.K., are dealing with that. And I think the thing we have to think about is that that spending happened — you’re right — during the Biden administration, but also during the Trump administration. But you have to think about what the alternative was. And we’re seeing that alternative in China today, where you’ve seen them deal with the virus for far longer and their economy has struggled. So, ultimately, the investments we made gave us an opportunity to get out of the COVID — get out of a COVID recession and now we’re addressing those supply chain issues and the high costs in the economy. And I’ll point out the fact that, over the last six months, we’ve seen inflation come down while we still continue to see the economy grow and we’re able to create jobs. So, we’re working through the pandemic-induced high costs that have not only impacted the United States [but] the rest of the world, including places where they didn’t have plans like the American Rescue Plan, which ultimately helped us create jobs.”
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