I think that we would all really, really, like to know what will happen to the economy over the next year.
Will the economy drop into a recession as a result of sharply higher interest rates and an inverse yield curve?
Will moderate inflation and moderate growth allow the Fed to start lowering interest rates by mid-2024? Or will the Fed start lowering interest rates in mid-2024 anyway, just because?
Will inflation stay up at 3.5 to 4 percent and force the Fed to raise interest rates again (but not till after the election this year)?
Or are we approaching a breakdown in the U.S. economy as high government debt meets high inflation meets high debt service costs meets high interest rates?
Let's unpack the official Narrative coming out of the Biden administration. My Narrative Filter notes that there have been several Narratives communicating the beliefs of the Bidenoids to the peasants.
First, we used to hear that inflation was "transitory." And the big spending bill passed in August 2022 labeled the "Inflation Reduction Act" showed that our national leaders believed their Narrative. Of course, in the FY2023 Budget issued in early 2022, there was no inflation forecast:
Inflation at 2.5 percent: nothing to see here, peasants. Only by the FY2024 Budget published in early 2023, inflation for 2023 was forecast at 6 percent.
Thank goodness they have lots of experts agreeing in the Biden administration.
Second, the Biden administration labeled its economic policy as "Bidenomics." When President Biden makes a speech, you often see "Bidenomics" on the blue background. At La Wik, they talk about Bidenomics being a confident replacement of the hated neoliberalism.
Bidenomics Seeks to Remake the Economic Consensus: Declaring end to neoliberalism, new thinkers play down constraints of deficits, inflation and incentives.
I interpret that as a confidence in the Biden White House back in 2021-22 that by the time that the 2024 election came along, inflation would be down and growth would be up. Really? After jolting the M2 money supply by 39 percent in two years, you Bidenoids thought that everything would return to normal without serious hardship and economic dislocation? No doubt all it would take would be an application of Modern Monetary Theory facilitated by a corps of DEI administrators hired from the Haitian Concrete Industrial Complex.
Remember when our liberal friends wanted "Reaganomics" to be a dirty word and it boomeranged on them? Somehow, I expect we'll be hearing more about Bidenomics from Trump than from Biden when the fall campaign season opens.
The reality is, I think, that the Bidenoids didn't really think about how ordinary voters would be experiencing the economy down the road. Why would they? The Bidenoids are the Anointed, and ordinary Americans are the Benighted. The Anointed want to save the world from climate change with massive spending on renewable energy. That's the whole point of being Anointed: it means that you are the Chosen, whether the Anointed of God, as in the olden time, or those Anointed by elite institutions as the Best and the Brightest. The Anointed are there for one thing and one thing only: to save the world. That's Job One.
Meanwhile every politician knows that Job Two is to shower their supporters with spending and subsidies. Let's see; what would be a really cool way to gift Democratic Party supporters, who now primarily are in the educated class? Hey, I know! Let's forgive their student debt for a mere $400 billion. It's only justice!
But whatabout the lower class? Nancy Pelosi understands what they want:
So we can talk more about what [Biden] has done, what it means at the kitchen table for people to have lower cost for prescription drugs, lower cost for healthcare.
Yes, but dear Democrats, whatabout the economy? After you've spent hundreds of billions on renewable energy, and hundreds of billions on student loan forgiveness, and more billions for government healthcare that is already sucking up over 8 percent of GDP, what's left to grow the economy?
I will tell you: we cannot know what will happen to the economy. When it's been knocked sideways by a 39 percent jolt in the money supply, and then a pedal-to-the-metal splurge on renewable energy and a panoply of regulations to prevent fossil-fuel exploration, production, and use, and a heedless spending bonanza for Democratic voters, the results won't be pretty.
Will it be inflation? Or recession? Or "stagflation"? Next month? Next year? All we know is that the politicians and the activists just cannot leave the economy alone, because they always want to save the world with somebody else's money.
Whither the economy? Never mind, peasant: first we have to save the world and then we have to give out more money for prescription drugs and government healthcare. To say nothing of the cost of housing migrants in our sanctuary cities.
Christopher Chantrill @chrischantrill runs the go-to site on US government finances, usgovernmentspending.com. Also get his American Manifesto and his Road to the Middle Class.
Whither the Economy, this Election Year?
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20
16.01.2024
I think that we would all really, really, like to know what will happen to the economy over the next year.
Will the economy drop into a recession as a result of sharply higher interest rates and an inverse yield curve?
Will moderate inflation and moderate growth allow the Fed to start lowering interest rates by mid-2024? Or will the Fed start lowering interest rates in mid-2024 anyway, just because?
Will inflation stay up at 3.5 to 4 percent and force the Fed to raise interest rates again (but not till after the election this year)?
Or are we approaching a breakdown in the U.S. economy as high government debt meets high inflation meets high debt service costs meets high interest rates?
Let's unpack the official Narrative coming out of the Biden administration. My Narrative Filter notes that there have been several Narratives communicating the beliefs of the Bidenoids to the peasants.
First, we used to hear that inflation was "transitory." And the big spending bill passed in August 2022 labeled the "Inflation Reduction Act" showed that our national leaders believed their Narrative. Of course, in the FY2023 Budget issued in early 2022, there was no inflation forecast:
Inflation at 2.5 percent: nothing to see here, peasants. Only by the FY2024 Budget published........
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