She just disqualified her self – it does not work this way – at all:
Treasury Secretary Janet Yellen told CNBC on Friday that the administration’s infrastructure spending proposal will lower inflation at a time when it is increasing rapidly.
Speaking from Rome, she insisted that “what this package will do is lower some of the most important costs, what they pay for health care, for child care. It’s anti-inflationary in that sense as well.”
She certainly knows economics – when prices are subsidized, the market clearing price will go higher.
When consumers have lower costs for goods or services through subsidies they are able to consume more of those goods and services than they would in the absence of subsidies. This a basic tenant of economics.
Demand increases faster than supply and the pricing curve adjusts accordingly, upwards.
Higher prices are paid for by all – including the government providing the subsidy and those that do not receive subsidies. Those who are subsidized pay less – but tend to purchase more, driving up prices.
Janet Yellen is well qualified and knows what effect subsidies will actually have on increasing prices. Which means she she is lying for political purposes. No one in the media questions her on this statement and lets her get away with telling this lie.