Bidenomics Continues to Hit the Poor Hardest

Yesterday, the Federal Reserve announced another increase in interest rates because of ongoing high inflation. This is the third straight increase, matching rate increases not seen for decades.

Continue reading “Bidenomics Continues to Hit the Poor Hardest”

Inflation and Government Spending

The Federal Reserve Board of Governors held their annual symposium in Jackson Hole, Wyoming last week. The symposium is a meeting of the Federal Reserve along with leading economists and others who can weigh in on the state of the US economy.

A reported clear consensus by the attendees was that huge spending by governments exacerbates the problem. One study presented at Jackson Hole argues that half of U.S. inflation is fiscally driven, meaning that government spending is driving at least half of the increase in prices, and the Fed will fail to control prices without government cooperation.

President Biden’s answer? Spend more, first pumping hundreds of billions of dollars more into the economy with the climate stimulus bill and hundreds of billions, in addition to that, by giving money for outstanding student loans, both just in the past month.

No Such Thing As Loan ‘Forgiveness’

To be clear, there is no such thing as ‘student debt forgiveness’. There is only ‘student debt transfer’.

The money has been loaned and spent. You can only transfer the debt from those who took out the loan to people who did not take out the loan.

And as an aside, Mr. President, your income guidelines say that any one individual earning up to $125,000/year is eligible to not have pay their student loans. If someone is making $125,000 they can certainly pay off their own loans and they do not need others to do it for them.

Inflation Continues to Hit Poor Hardest

The latest inflation report shows that low income households are continuing to be hardest hit.

The report, released by the Federal government, showed that inflation moderated driven by a decrease in the price of gas. The cost of food, however, went up by 13.6% from the previous year. Food, of course, is not something you can do without and so even the people who can afford it least are affected but can do nothing about it.

As any economist will tell you, inflation has the effect of being a regressive tax, hitting the lowest income households or those on fixed incomes the hardest. Judging by policies of the current Administration, they just do not seem to care.

Biden…Carter? Pota-to…Potat-o

On Friday the Federal government announced that the economy shrank in the most recent quarter, for the second one in a row. Gross domestic product (GDP) shrank roughly 1% after also falling in the beginning of the year.

A shrinking economy, rampant inflation and rising gas prices…for those old enough to remember, does this remind you of Jimmy Carter?

Supply Chain Problems? Blame the Government, Not Covid

Months ago, this columnist commented that the ‘supply chain problems’ were mostly self-imposed and were the result of government policies that created the shortages. I argued at the time that most of the problem was the result of the price of fuel, environmental regulations that kept truckers from investing in new equipment and laws in California designed to help unions but which ended up hurting small independent business people and truckers.

To be sure, there are lingering effects from the disruptions caused by covid and the resulting shutdowns of economies around the world. But, it has to seem odd that there have been record numbers of ships just anchored off the coast of Los Angeles, Long Beach and elsewhere waiting to be unloaded. I mean, if the problems were the same across the world, how did those ships get to the United States with all of those tons of goods just waiting to be unloaded and shipped around the country? If the supply chain problems were as bad worldwide, how did all of those tons of goods get produced and ready to ship, and how did those goods get to a port and loaded onto ships only to get to the United States and sit?

Continue reading “Supply Chain Problems? Blame the Government, Not Covid”

And In Economic News…

The good news: unemployment remains low.

The…mixed news:  The average price of a gallon of gas dropped below $5, down from the highest price in history. It is good that the price dropped. However, dropping from $5/gallon is not really saying much.

The bad news:

The Univ. of Michigan’s June survey of consumer sentiment hit the lowest point in the history of the survey.

On Wednesday, the Federal government reported that inflation hit 9.1% which was the highest level in 40 years. Which, of course, topped the previous high of the last 40 years set two months ago, which topped the previous 40 year high….well, you get the idea.

Inflation in the United States is worse than Canada, France, Italy, Japan, India, Mexico and China

To combat inflation, the Federal Reserve hiked interest rates by three-quarters of a point which was the largest increase since 1982.

Real wages-increase in wages adjusted by the inflation rate and cost of household goods—decreased yet again last month.

As a result of inflation, which hits low income households the hardest, the number of people behind on their mortgages, the number of car repossessions and the amount of consumer debt all increased rapidly in the last quarter.

GDP declined in the first quarter of the year and most economists are now predicting a recession.

President Biden’s solution? Spend more money and he has proposed tens of billions of dollars in additional spending under various ‘plans’ for the government to fix all sorts of things.

Mr. President, please review your notes from Economics 101. That’s sort of a good part of why we got here.

Release From the SPR Is Another Example That Biden Cannot Seem to Get Out of His Own Way

As President Biden struggles to explain and control the rising price of gasoline, one of the things he has tried to help the problem is to release oil from the Strategic Petroleum Reserve (SPR). Although a very temporary measure, the hope is that putting more oil in the market will control prices.

Unfortunately, the implementation of that has been uncoordinated and unproductive, to say the least.

Continue reading “Release From the SPR Is Another Example That Biden Cannot Seem to Get Out of His Own Way”

Inflation Impacts Low Income Household Most

The average price of gasoline hit $5/gallon for the first time in history. Because gas prices filter through the economy, adding cost to such things as food that is shipped to our stores, to the cost of driving to work, and the cost of energy for our homes it is an indicator of what families are facing.

The average family’s cost of living has increased $450 a month from a year ago. For all of the talk about helping working and lower income families, inflation is what impacts them most. High income households may be inconvenienced by that extra $450 every month but low income and working class families are hit hard and have to struggle. It is the most regressive ‘tax’ that you can have. Need evidence?

A record number of families are behind on their utility bills. Despite massive government money pumped into the economy in the last year and a half, credit card debt is rising rapidly. All this because of inflation.

Unfortunately, it will get worse. The Biden Administration not only made critical mistakes when it said that inflation was not significant and, even if it was, it would only be “transitory”, but continue to fuel inflation by pumping more spending into the economy and by their energy policies that continue to drive up costs. And low income Americans pay the price.

Reminders of Jimmy Carter?

The stock market dropped last week for the seventh consecutive week. Violent crime rates have spiked and continue to rise. A baby formula shortage has sent parents scrambling. And inflation remains at levels that are the highest in 40 years.

The president’s approval rating plunged in an Associated Press poll to a new low 39 percent.

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