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Eight Economic Truths – In 700 Words

Posted on Monday, May 23, 2022
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by AMAC, Robert B. Charles
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67 Comments
biden speaking
President Joe Biden delivers remarks on COVID-19 and the economy in the East Room of the White House.

Ok, bear with me. In 700 words, here are eight economic truths.

First, Inflation is at a 40-year high nationally, 8.5 percent in April, and is projected to stay high. Some sectors are getting shellacked. Inflation for used cars and trucks was 22 percent, gasoline 44 percent, and fuel oil 80 percent.

Second, high inflation has two big causes. The first is the Biden team’s hostility to fossil fuels, slowly crippling the U.S. energy sector, imagining fast renewable energy. Federal regulations, penalties, shutting down pipelines, fracking, drilling, licenses, and production ended U.S. energy independence – despite enormous fuel resources. Second, massive federal overspending drives inflation. 

Third, U.S. growth seems high – but is low. As we shed low growth from COVID lockdowns, the perception is that we are gaining. That is only half the story. Moving from .001 to .002 is a 100 percent jump, but hardly four percent growth (as under Trump). We may even face two-quarters of negative growth.

Why does this matter? Why do high inflation, the two real causes, and deceptively low growth – described as high growth – matter? Because of a fourth major truth.

Fourth, the Federal Reserve aims to reduce inflation by presuming we have an “overheated economy.” They will do this by raising interest rates. The idea is that when we have high growth when everyone is trying to buy things and production lags, then prices rise, and the Fed tamps those down by reducing runaway demand. Higher rates mean a higher cost of borrowing – so people borrow less, and things slow.

But wait a minute. What do we know? Is this a time of booming demand, an “overheated” economy? No. THIS inflation is caused instead by cuts in fossil fuel production and massive federal overspending.

Raising interest rates – apparently another 1.5 percent this year, already at five percent – will not fix the emasculated energy sector or fiscal irresponsibility. With all deference, higher rates will just slow the economy further, causing higher job losses.

Fifth, watch unemployment. As prices rise, unions will argue for higher wages. This always happens, creating a cycle of wage inflation, pushing added price inflation, etc. Ironically, wages are already a problem since federal giveaways and COVID money dried up the worker pool, elevating wages.

So, think about it. If hiring people is already expensive and higher interest rates brings down borrowing, investing, spending, and hiring, what will happen? Growth will slow, and unemployment will rise. Firms will hire fewer people because doing so is more expensive, and demand for what they make is falling.

Sixth, the Federal Government will, of course, report on all this – they must. Politicians sympathize with the unemployed consumer, blame each other, blame Russia, blame the weather, blame the private sector, and give away more free money, which is never free and will only drive inflation higher.

They call this cycle “stagflation” – like stagnation and inflation – which happened under Jimmy Carter. With unending Democrat actions, we could see double-digit inflation and double-digit unemployment.  That would be, well, rather bad.

But seventh – there is a hopeful truth. NONE of this bad news is permanent; it is all reversible. It is all fixable. Needed, as you know, are just serious leaders who will cut federal overspending, bringing debt, deficits, and entitlements under control, ending federal giveaways, restoring fiscal responsibility.

Maybe in a year, we could restart our energy sector, push toward 20 million barrels a day, restore U.S. energy independence – lower prices for everything, gas, food, heating oil, and raise employment again.

Calling a-spade-a-spade, we could lower interest rates, causing every sector to rally, re-igniting the stock market to keep returns, pensions, and savings up. This would trigger investment and spending.

Here is a real secret. While Biden pushes high inflation, high unemployment, and low growth, this can all be fixed. Restoring stability, jobs, and consumption restarts the economy. Recovery can follow in November 2022 if Republicans regain control. In 2024, we can introduce Biden’s misguided team to a concept – unemployment, up close and personal. Call that the eighth economic truth. What do you say?

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Winston Hooker Sr.
Winston Hooker Sr.
1 year ago

inflation is defined as too many dollars chasing too few products.there are too few products on the shelves. if we want more products then we need for manufacturers to expand or build more plants. to do this they need to borrow money. to do this they need LOWER interest rates. The FED is raising interest rates. Raising interest rates will cause manufacturers to cut back on increasing producing more products.The FED is going the wrong way with interest rates.
when the only tool the FED has is a hammer, everything looks like a nail.

Gil
Gil
1 year ago

Sounds good but if the Republicans take control of congress and senate and we have two more years of recovery, many of the uneducated voters will think it has to do with Biden and vote for him again. We must stay vigilant and be ready to do something if this happens.

Richard Mineti
Richard Mineti
1 year ago

Sounds good – they all have to go in this year!

JEFFREY JONES
JEFFREY JONES
1 year ago

Arrest the whole biden administration for treason!!!!

Anthony
Anthony
1 year ago

I think your absolutely correct and read David Bahnsen’s new book “250 Economic Truths”. We also need another Donald Trump in the Whitehouse to guide the process.

Drue
Drue
1 year ago

Not even Carter was as economically dense as Biden. All Joe has to do is reintroduce the Trump policies that were in place when he took office. But that won’t happen as Obama, Soros and their far left cronies are pulling Biden’s strings. God willing, even the most dense voters will see the light and clean out both houses of congress in November. If not, it does not look good for America’s future.

PIDL
PIDL
1 year ago

I just posted a couple of items that “Awaiting Approval”. The first I cannot determine why they would have to approve it. The second has some quotes from Wikipedia about CFR members. I can se why they would not want that information out there.

Gerhard Usinger
Gerhard Usinger
1 year ago

There is hope that we can reverse this. Starting with the next election. It really is simple to just reverse the damage that Biden has done.

Jerold
Jerold
1 year ago

And let’s go Brandon!!!

Patriot Will
Patriot Will
1 year ago

Biden is swiftly destroying our economy. Even if we just focus on Biden’s hostility for fossil fuels and his overspending and printing money like the US is part of a monstrous ponzi scheme, there is no real attempt to save our country from fiscal ruin. It’s so ironic that there still are about 30% of Americans who believe that Biden is doing a good job.

PaulE
PaulE
1 year ago

Here’s how I sum up everything you’ve laid out so eloquently:

ELECTIONS HAVE CONSEQUENCES! Whether legitimate or not, elections matter.

When the office of the President is turned over to a lifelong career politician, who was never the brightest bulb in the room and who has all the symptoms of early to mid-stage dementia, the outlook is never going to anything to boast about. One would expect a disaster and that is what has been delivered. When you add in the fact that everyone should have known Biden would be surrounded and controlled by an administration formed almost entirely of Obama-era people, failed “progressive” academics with no track record of success, the fire alarm bells should have all been going off non-stop before election day 2020.

The fact that the Democrats were also brazen enough to spell out in plain language exactly what they would do, if they regained total power of the WH and Congress, was the cherry on top of the dog poop sundae they were offering up should have set off air raid sirens across the country. Yet everyone in Washington seems content to ignore all this and instead pretend everything coming out of the Biden administration and Democrats in Washington is either a surprise or the result of incompetence. Until you’re willing to address the reality of the situation, you can’t formulate a proper corrective response.

As for your expectation that the midterms will drastically alter most of the issues you’ve laid out, you of course know that almost every one of the items you’ve listed are controlled or influenced by the President. Congress can’t make the Federal Reserve do anything. Congress can’t tell the individual departments and agencies of the federal government to reverse the destructive policies of the Biden administration. All Congress can do is withhold budgetary funding for the various parts of government. In regards to the Federal Reserve, it is self sustaining entity that actually generates a surplus at the end of each fiscal year, so budgetary threats in that direction would fall flat.

Since it is plain that the leaders of a GOP controlled House and Senate would be McCarthy and McConnell, both men terrified of ever standing up in this fashion, that card is off the table. Potential relief will have to wait until the next Presidential election in 2024, if the country can survive the balance of Biden’s term in office.

Rachel
Rachel
1 year ago

I say that you nailed it. Thanks, now all we have to do is MAKE Mr. Biden read this article and tell him to do what it is stated. Good luck with that.

Demeter
Demeter
1 year ago

If the RINOS gain control, it will be more of the same. Both parties need to grow a brain and a heart and some common sense. And all those legislators over 70 need to be fired, resign, or die.

DEAN
DEAN
1 year ago

TRUMP WON THE WHOLE WORLD KNOWS IT!

Art
Art
1 year ago

Howdy RBC,– Miracles don’t just happen when it comes to our current and dangerously inept administration. Repairs and recovery will take time. So much damage has been done and there is more in the making because of these persons of questionable resolve. Is the public finally catching on or are the sheep grazing well?? Wait until the bills come due. Will they get it then? I wouldn’t bet on it. We are several years away from some balance but we have to throw the garbage overboard now. I am mature enough to have survived the early eighties. I just found a bank book for a CD that was paying 14%-15% interest in 1981 and 1982. . Huge rates today are at 1.5%. THIS TRAIN WRECK MUST BE STOPPED.

Peter Semiraro
Peter Semiraro
1 year ago

No, we have to raise the Fed funds rate a lot more to stop inflation. Volker had to induce a recession, so will Powell if he were courageous but he is so scared of causing a recession and destroying the Democrat party, he will not. He wants this slow growth, higher inflation economy, particularly with energy prices, so he forces the green, woke agenda on the country. This will fail and at some point we will have a serious recession if not worse. The longer he waits to really raise rates,the worse the pain will be.

Paul W
Paul W
1 year ago

“What do you say?”
I say, well said RBC. The fix will require winning, first in ’22 and then in ’24. Easier said than done. The dims SHOULD get annihilated in November, but will they? They are the champs of voter fraud and election tampering in a myriad of ways. I expect lockdowns ahead of the election as well (See-Surrendering our medical sovereignty to w.h.o..). Second, in addition to winning, the “R”s have to seat not just quantity, but quality. There is currently very, VERY little quality on the right side of the aisle (none on the left…sorry I don’t consider manchin or sinema to be quality. They are occasionally reasonable…for political expediency no doubt) and more of the same won’t fix anything. I pray that it all comes together, as the fix in the article describes. If not…

HOMER SIMPSON
HOMER SIMPSON
1 year ago

NICE PEP TALK… however, you left out some minor details… “democrats’ corruption,” The Sun’s impact on the climate…, lawlessness in the streets, lawlessness in the corporate board rooms, lawlessness in the courtrooms, (activist judges and unethical lawyers/LIARS), lawlessness in the FBI, CIA, DOJ, DOD, etc etc etc… the butt sniffing in DC is so bad that it is now endemic and part of the federal structure… you have folks with access to top secret and sensitive information LIKE NATION SECURITY issues sleeping in the same bed with folks no ones are married because they retain their respective names! Journalists licking the tires of any politician for a lollipop or 5 seconds of fame! SCOTUS is compromised, JUDAS PRIEST! Law enforcement doing egregious selective enforcement allowing mobs to harass our last bastion of HOPE, Intimidation of a law abiding judge should be punishable by a felony charge, yet these folks maybe intimidating an activist judge so who cares? Trump figured all of this out yet, evil in the worst form rose up and smothered good! not everything is measured in DOLLARS$$$$$$$$$$! Without The RULE of LAW, there is no hope!

Bob Olden
Bob Olden
1 year ago

For those who have never considered the Biblical prophecies of the end times, this economic madness makes no sense. But if God says there will be pestilence (world wide pandemic) and famine (food shortages which impact all countries), and wars and rumors of wars (nuclear powers getting ever closer to open conflict and actually happening in Ukraine), and lies and perversity getting worse and worse (as personified in the Democratic Party)— everything makes perfect sense. The message is this: “Get ready for the End! Repent and humbly ask God to forgive and save us! Our problem is not politics! It is SIN.” (See the book of Jonah in the Bible.)

James Jensen
James Jensen
1 year ago

I must have an electric pick up truck. Every time I put gasoline in it, I get SHOCKED.

Morbious
Morbious
1 year ago

Theres a core problem here. The illustrious thomas sowell refers to it as a conflict of visions. We know bits and pieces of the leftist vision but a fuller view entails the logical consequences of their policies, none of which are blunders or accidental. Basically they dont like anything about how this country has developed since 1945. The suburban single family home, multiple cars, disposable income…they despise all of it. The reason is that they fear and hate independence in those who should be their subjects. The seven points are demolishing the economic powerhouse this country became, on purpose, by design. Theres a desolation at the center of these people and they wont stop until they’ve made everyone miserable. Fixing this will take more than reactionary spasms. A blueprint is needed to keep them minding their own business.

Roy ketcher
Roy ketcher
1 year ago

This is so true and as long the dumbos are in charge nothing will get better.Just hope that the Republicans will get out and vote instead of lips flapping…

barbara
barbara
1 year ago

We need the red wave in Nov. But they need to step up to the plate. The dems step on us and noone on our side speaks up, or fights back. Enough is enough. Take control Fight the fight for the American people. I can’t afford the high gas prices, the fuel and feeding my family . We need to back the blue, close the border , and start drilling in the US.Elections need to be secured. Let’s take back our country. God help the USA and god Bless America.

Kim
Kim
1 year ago

“NONE of this bad news is permanent; it is all reversible. It is all fixable.” Well, of course it’s fixable because biden/psaki said it’s all “transitory”! We’ll circle back to low prices and prosperity again, won’t we? We trust biden’s word, don’t we? (I am not being serious here.)

Yes, the obvious remedy is to get rid of the socialists and install conservatives into office. But they need to present a plan to the American people that demonstrates how x-trillion dollars will be shaved off the national debt within a reasonable amount of time. A solid plan, in writing, that conforms to “regular” economics and not fuzzy utopian hopes and dreams. Lower taxes, business-friendly regulations. No pork-filled bills, please, and less spending (that includes you, Republicans). None of this “Buy electric cars” nonsense. Let the free marketplace (you and me) decide what we’ll consume.

This requires cooperation from Congress, so good luck with that. But if Washington politicians don’t commit to a turnaround with the next election cycle and bring us back to the founding fathers’ concept of liberty and the pursuit of happiness, we’ll muddle through as we have done over the past year and a half, with much of America functioning barely above the poverty level while the federal government sinks deeper in debt.

Frankly, I don’t see much improvement in reversing inflation without sending us into a recession. I do see many employees being laid off from their artificially high-paying jobs and replaced with people willing to accept lower wages. We can’t live in this bubble very long without it going “Pop!”

Bill on the Hill
Bill on the Hill
1 year ago

RBC, I will say this: The Nov. midterms will never be that magic bullet red wave we need to straighten out the mess we are in, period…Biden will get impeached. Biden will finish his one & done term, Kamala Harris will return to her crime ridden state of CA along with Nancy Pelosi, hopefully…The midterms will not stop Biden’s irresponsible behavior nor that of his Obama era cabinet, we will continue to be stuck with a woke Pentagon that is gearing up for the next war. Having a GOP majority in both houses will help to slow things down from this insane administration’s spending, that is assuming the Congressional lawmakers don’t starve their own states in the process, in other words, more spending, by individual state’s Congressman/women & Senators that consistently get reelected year after year for their specialty in getting as much pork barrel gravy out of the Fed’s for their individual states. I live in the ” pork barrel ” capital of the NE, Vermont, 100% under Democrat control with a compliant RINO governor. We have CRT being taught in K-12 schools throughout the state. We have mid to lower income folks up here that rely on Federal subsidies, in it’s myriad of forms. Senator Patrick Leahy has brought home the bacon for these people for some 30 odd years now & he is stepping down after his term is up this time around…( He sees the writing on the wall plus his age is a factor )
Congressman Peter Welch, another Democrat that no doubt is looking at Leahy’s spot with several Democrats already stumping for the Congressman’s spot, we have the self avowed socialists, i.e. communist Senator Bernie Sanders, the man refuses to go away!
All of these anti-American politicians from VT are fully on-board with the insanity coming out of Washington under the puppet Biden regime…All ( 3 ) of them fully support, CRT, Woke, an all controlling form of gov’t over the people & all (3) of them love spending other people’s money…
The thing that amazes me, the people of my state reelect these leeches, year in, year out without fail…It is as predictable as the rising & setting of the sun, sadly enough…
Best regards,
Bill… :~)

Rik
Rik
1 year ago

Exactly what has Comrade President Jackass Joe done so far to improve the quality of life for American Citizens?

Jeb
Jeb
1 year ago

I can do it in less than 700 words…those running this country have zero understanding of economics. If you don’t believe that head to the grocery store, fill your vehicle with gas, and pay your utility bills. Once you have done those three things get back to me.

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