Trump created the Biden inflation

Recently we looked at this graph. I like the colors, so I'm showing it again:

Graph #1: Blue is the interest rate. Tan is inflation. Brown is blue behind tan.

The purpose of the graph is to compare inflation to the interest rate, because the interest rate is the tool used by the Federal Reserve to control inflation. Inflation increased for a whole year with the interest rate at zero, before the Fed raised the interest rate. 

The graph only shows a few years. It would be difficult to see what the graph shows, if it showed a lot of years. But I can show it a different way: I can subtract the blue data from the tan. I can subtract the interest rate from the rate of inflation. This way we get only one line on the graph, a line that shows how much the rate of inflation is above (or below) the interest rate. This graph:

Graph #2: The Rate of Inflation less the resistance provided by the Interest Rate

The graph is a hobbyist's version of the Federal Reserve "reaction function": It shows how hard the interest rate is pushing down on inflation.

The tallest spike on the graph, on the right, after the year 2020, shows the so-called Biden inflation. It shows that the rate of interest (which was then zero) did not push inflation down at all. The graph shows how very unusual policy was in response to that inflation. Policy was never more lenient. No spike ever went so high.

The early years on the graph, until 1980, show rapid increase at every recession. The biggest (highest and widest) of these spikes comes late in the 1974 recession. But even that spike is small, compared to the Biden spike.

After 1980 on the graph the plotted line goes low, because the interest rate went very high due to the policies of Paul Volcker. It takes a long time for the line to come back up to the zero level. This shows a long period when the interest rate was significantly more than the rate of inflation.

When we get to the Great Recession of 2008-09, interest rates drop to zero, so even 2 percent inflation puts the plotted line above the zero level.

Recovery from the Great Recession was lengthy and slow. Late in 2015 the Fed at last had enough confidence in the economy to start bringing the interest rate up from zero to something closer to normal. Then in 2020 the coronavirus hit, and the Fed dropped the interest rate back to zero.

A year later, in March 2021, Fed Chairman Jerome Powell warned that we would be getting some inflation, some "transitory" inflation he said. That same month, inflation started climbing. 

Interest rates remained at zero for a year after Powell's warning.

The interest rate started going up in March 2022. The tall spike on the graph peaked in March 2022, and started to come down as interest rates went up. Not a coincidence.

Interest rates at zero offer no resistance to inflation. As the first graph shows, when the Fed finally started raising the interest rate in March, inflation peaked three months later, in June. By July inflation was coming down. It was not difficult to stop the rise of inflation. There was no lengthy process involved. 

There was a whole year when the Fed chose to do nothing instead of raising the interest rate. So inflation went up and up. And then, because inflation went up so high, it took a year to come back down. But when they finally did decide to raise the interest rate, there was no difficulty getting inflation to go down instead of up.

So the question is: Why did the Fed refuse to raise the interest rate for a whole year? I blame Trump. This wasn't Biden's doing. It was election interference by Donald Trump. 

By the way, Biden supports Federal Reserve independence. Trump doesn't. Trump wants to stick his finger in there to make things go his way. I think he already did. I think Trump created the Biden inflation.