Larry Kudlow: A different plan to crush inflation

Today's CPI inflation report came in a lot stronger than folks expected and in fact, there were numerous signs that not only is inflation not peaking, but actually, it may be accelerating. I'll get to that in a moment, but I feel it's my duty to report President Biden's response. "Exxon made more money than God this year," and then he proceeded to bash the oil companies for not drilling.  

Why aren't they drilling? Because they make more money and they buy back their stock, which should be taxed. I'm paraphrasing his indecipherable word salad, but that's the gist of it — blame big oil. 

Later on, his NEC director, Brian Deese, said that if you really isolate what's going on here, Vladimir Putin decided to take on this irresponsible war. 

There you have it: the blame game — big oil, big pharma, big poultry, big, big, big, blame business and of course, blame Putin. 

HASSAN SAYS IT’S ‘FRUSTRATING’ BIDEN ADMINISTRATION HASN’T SUPPORTED PUSH TO TEMPORARILY SCRAP FEDERAL GAS TAX 

Of course, what's driving inflation is the lagged impact of massive federal spending, borrowing and money printing and on top of that, Biden's radical environmental policies, which have made it virtually impossible to get a permit for almost anything- — oil, natural gas, pipelines, highways, roads, bridges, even wind and solar farms will be stopped by the woke policies of the most radical EPA in history. And then throw in the Energy and Interior Departments pursuing the same Green New Deal agenda. 

So, oil companies don't feel like making long-run investments because they read the newspapers and they watch our show and they know all about the Biden war on fossils and they figure there may not be a fossil industry after Biden gets done. Frankly, I can't blame them. Can you? 

Anyway, it turns out that topline CPI over the past three months increased 10.7% at an annual rate, which is a couple of points higher than the 12-month rate of 8.6%. 

Core prices (ex. food and energy) picked up 6.3% over the past three months, which is higher than the 6% 12-month change. 

Hang on, folks, I've got even more numbers coming. Outside of food and energy, housing and shelter prices are picking up steam — 6.7% over the past three months compared to 5.5% over the past year. Another bad trend. 

Services prices, not good, but services: up 9% the past three months, compared to 5.7% for the year and even if you took out energy, services are up 8% compared to only 5.2% for the year. 

 GOV. SUNUNU BLAMES DEMOCRATS IN WASHINGTON FOR 'DOING ABSOLUTELY NOTHING' TO TACKLE INFLATION 

Used car prices are booming and so are new car prices. Health care costs are starting to pick up steam and power and utilities are off the charts. Electricity, for example, is up 18.3% for the past three months compared to 12% for the year. 

Consumer confidence plunged today in the University of Michigan report and inflation expectations in that tally went up again. The Atlanta Fed wage tracker is now up 6.1% in May. That's another troublesome number and the other day, Janet Yellen, our friend from the hostage video, claimed that Europe and all the big countries have the same inflation problems that we do in the U.S., but that is a big falsehood. 

A couple of months ago, the San Fran Fed showed the core inflation in the U.S. was more than double the OECD countries and former Clinton and Obama economist Jason Furman just the other day in a WSJ op-ed showed that the U.S. has had about 3% points more cumulative inflation than the Euro area since the onset of the pandemic. 

In fact, recently, U.S. core inflation in May is up 6.3% as I mentioned, while only 3.8% in the Euro area, and wages in the U.S. are growing about twice as fast as in the Euro area. Most of this is because our fiscal policies in the U.S. have created a significant excess demand, while Europe's nominal GDP remains several percentage points below trend. 

Messrs. Furman, Sommers and Ratner have consistently warned about excess spending, but neither Ms. Yellen or Mr. Deese or their boss Mr. Biden will admit to that and never owning it means never understanding it. 

Now, I remember years ago, the famous movie quote "being in love means never having to say you're sorry," but being in high inflation is really a different matter. 

RUSSIAN SANCTIONS TARGET JANET YELLEN, NETFLIX CEO, AIRLINE EXECUTIVES 

Another thing Ms. Yellen refuses to learn: when she testified before Congress this past week, she continued to push the FY23 Biden budget, which has at least $5 trillion in new spending and $3.5 trillion in higher taxes — both of which would massively increase inflation and of course, with today's report, real wages continue to plunge over 3% and frankly, the economy is barely at break even, having dropped 1.5% in Q1. 

The latest GDP tracker from the Atlanta Fed is 0.9% for Q2. Most regrettably, the Federal Reserve, which erred mightily along with the Bidens a year-and-a-half ago, will now have to adopt a much more aggressive policy to raise their target rate and pull cash out of the economy. 

To quote my pal Steve Forbes, "If they can print money, they can un-print it." There's probably no way out of this inflationary recession scenario, but as an optimist, I have a different plan.  

CLICK HERE TO GET THE FOX NEWS APP 

First, make Trump tax cuts permanent and slash personal tax rates as well in a simplified code. That would increase the production side of the economy. 

Second, de-regulate energy and industry everywhere, also boosting the supply-side of the economy. Third, freeze domestic spending. Fourth, defend the value of king dollar. Wrapped up in a balanced budget plan, this will skyrocket growth and crush inflation. It doesn't have to be any harder than this. 

The cavalry is coming.

This article is adapted from Larry Kudlow's opening commentary on the June 10, 2022, edition of "Kudlow."