The Federal Reserve has lost its rose-colored glasses. The Federal Reserve is increasing interest rates faster than anticipated, but not as quickly as inflation. Do not expect the “soft landing” promise of the government. Inflation scares even the most sleepy politicians.
Janet Yellen is the U.S. Treasury’s inflation denier-in-chief. She admits that she was wrong to claim that inflation would soon pass. Since Inauguration Day 2021, the stock market has lost all its gains. Savers and retirees are being beaten down on the economic battlefield. They retreat to their bunker with any remaining savings. Young people are being hit in the face by rising rents in desirable markets. The 40-year-old high of inflation is alarming. Both the bond and stock markets are in serious trouble simultaneously, which is a rare occurrence. We can only hope that we don’t face a Black Swan. This is what economists refer to as calamities that don’t ever seem likely until they do.
Ludwig von Mises (the late Austrian School economist) summed it up well. There is no way to avoid the collapse of credit expansion’s boom. There are two options: the crisis can be triggered sooner by the voluntary ending of credit expansion or later as a result of the total collapse of the currency system.
Modern Monetary Theory (MMT) is the new euphemism to describe irresponsible credit expansion, and all its evils. This is the favorite program of the Left and its legion egghead economists. They claim that neither spending nor tax revenue (income) from the government matters. How you manage your money supply can help you manage to spend. It works like a charm!
If you can spend as much as you want and taxes don’t really matter, then why tax anyone? What purpose does taxes serve if revenues and expenses are not required to match? Are taxes there to penalize savers and workers? Perhaps they are there to punish workers and savers? Today’s Washington spendocrats are slowly destroying the bipartisan workfare philosophy that was pioneered decades ago by President Bill Clinton, and House Speaker Newt Gingrich.
Joe Biden was a great economist. He claimed that a) employment has increased since the CDC geniuses made everyone stay home. And spending is down from last year! Maybe because of the Democrat Senators. Kyrsten Sinema and Joe Manchin helped defeat the new Build Back Better stimulus spending of $3 to $5 trillion. The White House stated that the cost of the Build Back Better Agenda was $0 and added that it wouldn’t increase our national debt. Just think about the inflation rate if President Obama had allowed himself to spend more than he did in 2021. This proves that Joe Biden will take credit for anything positive, including the defeat of his own cockamamie scheme!
Biden’s argument sounds like saying that students are more likely to go to school after summer vacation, or that after purchasing two new cars last year, you’re an economic wizard for not buying another car this year.
Everybody knows someone who thinks this way. They lie to themselves. They’re like the hapless man who wonders why everything doesn’t work out for him. Instead of trying to solve the problem, Team Biden asks why the country isn’t succeeding. They know the answer so don’t be fooled by them.