<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1654872614969,"cms.content.publishUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1654872614969,"cms.content.updateUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_54872601", "obj": {"id":"27789","width":"16","height":"9","video":"1027997"} }); ","_id":"00000181-4e18-d590-a5f1-cebb1e570000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video Embed
Treasury Secretary Janet Yellen pushed back on the notion that the country’s crippling inflation is being caused by corporations trying to rake in profits.
Yellen, who previously served as chairwoman of the Federal Reserve, was asked whether corporate greed is the key cause of inflation during a New York Times event. The more liberal wing of the Democratic Party has been pushing that theory since prices have begun rising.
“Demand and supply is largely driving inflation,” Yellen said, adding that while price-to-cost margins have increased, that is not what is pushing prices to their highest levels in 40 years.
Inflation quickened to 8.6% for the 12 months ending in May, according to the consumer price index, a discouraging sign for the country’s plan to drive down prices considering most economists expected it to clock in at about 8.3%.
INFLATION UNEXPECTEDLY TICKS UP TO 8.6% AS FEARS OF RECESSION GROW
The Federal Reserve announced in March that it would raise its interest rate target by a quarter of a percentage point in an effort to rein in the higher prices.
Last month, the Federal Open Market Committee announced it would hike its interest rate target by half a percentage point. The central bank typically raises rates by just a quarter of a percentage point, so the move shows how concerned the central bank is with the growing prices.
Yellen said the administration looks to the Fed “first and foremost” for dealing with inflation, although she reiterated her support for stringent antitrust policies.
During a Senate hearing this week, Yellen also batted away the idea that inflationary pressures are primarily the result of greedy corporations. She said that the “bulk of inflation” was caused by issues related to supply and demand.
“You are answering the question in a way that I’m glad you answered it because I think your answer rejects the corporate greed argument that we’ve been hearing,” said Sen. Chuck Grassley (R-IA) after cutting her off.
Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) have championed the concept of corporate greed fueling price increases.
“One clear explanation for higher inflation? Giant corporations are exploiting their market power to further raise prices. And corporate executives are bragging about their higher profits,” Warren tweeted earlier this year. “We need to boost competition and break up these monopolies to bring down prices.”
Larry Summers, a Democrat who served as treasury secretary under President Bill Clinton and director of the National Economic Council under President Barack Obama, has brushed aside the argument as well. Summers was one of the first economists to ring the alarm bells about the potential for too-hot inflation more than a year ago.
“Business bashing is terrible economics and not very good politics in my view,” Summers said.
The higher prices have been President Joe Biden’s biggest political challenge yet and have greatly driven down his approval ratings.
“With the typical family now having to spend about $450 per month more to buy the same goods and services they did a year ago, life is harder for Americans in the Biden economy,” said the ranking member of the Ways and Means Committee Rep. Kevin Brady (R-TX).
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The biggest driver of the high inflation numbers has been energy costs, which are up more than 34.6% year over year. Many people are feeling pain at the pumps, especially those in the rural parts of the country who have long daily commutes.
The average price of gas in the United States soared past $5 per gallon on Thursday, passing the mark for the first time in the country’s history.
