The Unaffordability of Biden’s New Spending Proposals… The Poor and Middle Class Pay the Most of Biden’s “Inflation Tax”… Everything is Expensive NOW!

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Bidenomics on hold? Poor economic reports raise caution flags for massive spending plans

Market economists warn of weakened recovery and rising prices, even as Fed chairman counsels calm.

As problems for President Biden multiply at home and abroad, Bidenomics — the massive public spending that drives the president’s economic and domestic agenda — suddenly faces especially strong headwinds, as bad reports on jobs and inflation have raised giant yellow caution flags.

The month of April produced an unexpectedly disappointing jobs report, followed by a sharp rise in inflation — at the grocery store and the gas pump — that is being felt alike in homes across the nation and in the financial markets, which were sent into a frenzy by the numbers. And Americans continue to line up for (expensive) gas all along the East Coast ahead of Memorial Day.

Chairman of the Federal Reserve Jerome Powell has counseled Americans not to worry overly about inflation, arguing that some increase was always an inevitable byproduct of economic recovery after the pandemic. It will subside, he says.

Cecilia Rouse, the chairwoman of the White House Council of Economic Advisers, says the most recent jobs doesn’t account for several factors, including seasonal adjustments, holiday weekends, and the gap between receiving a vaccine and becoming fully immune.

The White House is working to calm nerves surrounding the bad economic reports as it continues to push forward twin legislative packages that would amount to another $4 trillion in spending.

The U.S. can afford about one quarter of the spending that is currently being proposed by the administration, warns conservative economist Peter Morici.

RAND PAUL WARNS AMERICA: Time to ‘Wake Up’ to ‘Profound Repercussions’ of Biden’s Spending Binge.

“When the [Federal Reserve] says this [inflation] is transitory, I think that’s an excuse for government spending and borrowing,” the senator said. “It’s sort of from the same kind of lexicon of ‘deficits don’t matter.’”

But our spending levels aren’t sustainable. “We added four or five trillion dollars’ worth of debt last year,” Paul added. “We’re probably going to do the same again this year.”

It’s more than just bad budgeting, the senator warned. “What you’ve caused is a massive misallocation of resources, a massive infusion of cash into the stock market.”

“There is [going to be] a time in which people wake up and say ‘the emperor has no clothes,’” Paul said. “And at that moment in time, you will discover that there’s a lot of capital that’s gone in the wrong direction, that demand is exceeding supply… because we’ve disrupted the normal marketplace.”

Rand’s point about misdirected capital is a reference to the Austrian Business Cycle Theory, which explains how the creation of new money (generally by central banks like the Fed) causes distortions in the economy that must eventually be ironed out by a corrective “crash.” (For more on this, check out this FEE article by economist Jonathan Newman.)

What could go wrong?

Warren Buffett is right, inflation is running rampant

‘Skyrocketing Inflation for Dummies’ – Brought to You by Joe Biden

If someone were to set out with the goal of learning how to rapidly increase our inflation rate in the shortest amount of time possible, they should start by pulling up a chair, breaking out a notebook, and keeping a close eye on the economic approach of President Joe Biden’s administration. With White House Press Secretary Jen Psaki serving as Adjunct Professor, and President Biden himself as Dean of Curriculum, the Biden Administration is beginning that free Community College education they’ve promised by offering what is essentially an Economics course titled Achieving Inflation 101. And we can certainly give at least an honorary title to First Lady Dr. Jill Biden – America’s favorite doctor who doesn’t treat sick people. Let’s call Dr. Jill the School Chancellor.

Inflation basics

Before we examine the effectiveness of Biden’s tactics for blowing up inflation, we should first consider what inflation is, and the impact it has on citizens. Inflation can be defined as “the decline of purchasing power of a given currency over time.” Inflation means goods and services cost more, and your money buys less. In other words, inflation is bad; really, really bad. And while millions of younger Americans have never experienced high inflation rates, they’re about to get a front row seat for a crash course on its effects.

For decades now, the United States has enjoyed low to moderate inflation rates (aka Consumer Price Index, or CPI). The last time we had inflation over 5% was in 1990 when the annual CPI was 5.4%, and the last time we had double-digit inflation was in the aftermath of President Jimmy Carter’s disastrous administration in 1981 when the annual CPI was 10.4%. For millennials and Gen Z, true inflation, problematic inflation, is an abstract concept. We can tell they haven’t experienced true inflation because if they had they would be gravely concerned with the actions of the president they so enthusiastically support; Mr. Biden.

Biden’s ‘gas tax’ is a pain at the pump

One of my early memories, and not a happy one, is sitting in gas lines in the 1970s. My parents would rustle me out of bed early on frigid February mornings, and we’d pack into the Ford and speed over to the gas station.

When we got there, often there would be six or seven cars in front of us. Sometimes we’d wait 20 or 30 minutes for a fill-up. And we’d notice that every few weeks there would be someone on a ladder posting a higher price on the 20-foot-high sign. It always sticks in my memory because even though I was only about 12 years old, it was a shocking indicator that something terribly wrong was going on in our country. I couldn’t understand how a bunch of Saudi oil sheikhs could hijack the greatest nation on earth.

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Now parents get allowance, too
The Poor and Middle Class Pay the Most of Biden’s “Inflation Tax”

President Biden has repeatedly promised that he won’t raise taxes on American families earning less than $400,000 per year. Yet widespread and growing inflation due to his policies is — at least indirectly — breaking that promise. Call it the Biden inflation tax.

Consumer prices have increased at an accelerated rate every month this year. In April, core inflation rose at its fastest month-over-month pace since 1981. The producer price index grew by the largest amount on record last month.

Commodity prices are skyrocketing, with corn rising by more than 50% this year, lumber elevating to four times its traditional rate, and copper hitting a record high.

Real-Estate Frenzy Overwhelms Small-Town America: ‘I Came Home Crying’
Buyers far from big cities lose out to investors and deep-pocket rivals in places where properties until a year ago offered affordable entry to the middle class

 

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