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Here comes the recession and inflation.

The economy posted a 12 month inflation index of 9.1%. That is a 1.3% jump from May 2022 to June 2022. The inflation rate from May to June is running at an annual rate of 15.6%. This the highest rate since 1981.

 
Which party held the Presidency in 1981? Oh, thaT’s right, the party of economic geniuses.
Carter was president until January 1981. Reagan took over after that. Reagan and Paul Volker were largely credited with installing the policies that broke the back of inflation. Volker controlled m1 and m2 money supply. Remember when interest rates were 18%? Reagan cut regulations, cut marginal tax rates, simplified the tax code, controlled government spending, wrecked the Soviet Union, etc ... The two primary contributors to inflation- government spending and expansive monetary supply were controlled. Supply side economics as a theory, and espoused by Milton Friedman and others, led the revolution and is a fundamental underpinning of today's federal economic policy. We learned that regulatory reform is the easiest budget neutral way to spur growth. Cut the EPA, cut OSHA, cut labor regs, remove stupid overreach by the federal bureaucracy...no green new deal, encourage fracking...

It was a hangover of the Carter years.

It took 4 to 5 years, starting in 1979, to fundamentally change this country. That revolution was influenced by the greatest thinkers in history- Freidman, Hayek, Burke, Jefferson, Hamilton and Madison.

The thinking of Jimmy Carter, Keynes, Marx and Lenin were shown as hollow.

The intellectual underpinnings of Biden are also hollow.
 
They are at it again. Joe Biden, Chuck Shumer and Joe Manchin have passed the Build Back Better plan, which raises taxes, provides Green Raw Deal spending and mandates reductions in carbon emissions by 2030. It raises 789 billion in taxes.

"The deal was negotiated privately between Messrs. Manchin and Senate Majority Leader Chuck Schumer (D., N.Y.)."

 
The 2Q showed a decline in GDP of -.9%. We are now in a recession. It will only get worse from here. Nice.
 
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Here is a really good idea- let's tax our way out of a recession.
Here is a partial list of taxes in the Inflation Induction Act:
$6.5 Billion Natural Gas Tax Which Will Increase Household Energy Bills
$12 Billion Crude Oil Tax Which Will Increase Household Costs
$1.2 Billion Coal Tax Which Will Increase Household Energy Bills
15% Corporate Income Tax Hike on U.S. Businesses Which Will Be Passed on to Households
$124 Billion Stock Tax Which Will Hit Your Nest Egg — 401(k)s, IRAs and Pension Plans
95% Federal Excise Tax on American Pharmaceutical Manufacturers
$52 Billion Income Tax Hike on Mid-Sized & Family Businesses
Supersizing the IRS to Increase Audits – $124 Billion


 
It is almost as good as cutting taxes and increasing spending. Now, where have I seen that before?
 
It is almost as good as cutting taxes and increasing spending. Now, where have I seen that before?
This will total 4 trillion in new spending since Biden took office. Increased spending on top of slow supply chain distribution will turbo charge inflation. They undertook spending recklessly, without regard to the underlying economic conditions. Expect inflation to spike from 9.1% to close to 11%. Expect increases of 1% or higher from the Federal Reserve.
 
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Both parties have their own bread and circuses equation. To bemoan, Biden‘s tax & spend while ignoring (applauding maybe?) Trump‘s taxcut and spend (7.8 trillion debt increase) isn’t a balanced look If you care about the debt. The Democrats at least look to raise revenue (real tax increases) to offset the spend vs. the Republican approach to cut taxes and promise to make it up on volume (hoped for extra revenue). Of course $7.8 trillion in extra debt couldn’t ever conceivably contribute to inflation either. Inflation is not a light switch item whether you look at its sources or terminators.
 
Both parties have their own bread and circuses equation. To bemoan, Biden‘s tax & spend while ignoring (applauding maybe?) Trump‘s taxcut and spend (7.8 trillion debt increase) isn’t a balanced look If you care about the debt. The Democrats at least look to raise revenue (real tax increases) to offset the spend vs. the Republican approach to cut taxes and promise to make it up on volume (hoped for extra revenue). Of course $7.8 trillion in extra debt couldn’t ever conceivably contribute to inflation either. Inflation is not a light switch item whether you look at its sources or terminators.
Once inflation expectations are baked into the system, workers will expect higher wages. Businesses will expect higher costs, which they happily push through to their customers. All of this contributes to inflation. Reagan and Volcker knew of the pernicious effects of government spending run amok. We may have to suffer double digit unemployment and 19% interest rates, before inflation is curbed.
 
Even the slavishly revered Gipper agreed to tax increases once he too
understood deficits matter. Sadly, this is a lesson that hasn’t stuck.


Yes, pain is needed in order to combat inflation. Wouldn’t tax increases equal pain?
 
I don't disagree but look at the Federal Budget. The Federal Budget in Fiscal Year 2020: An Infographic Would you cut Social Security, Medicare or Defense? To have meaningful spend cuts, one or more of these will need to come under the knife. Again, this is a problem for both parties. Neither one is willing to tell the public that pain would be involved vs. deficit spending, if only because the public is willing live on what is effectively credit card living (see "what would you cut above?"). The Republicans had a shot with meaningful majorities under Trump and simply cut taxes, allowing the deficit to jump. The Democrats avow to raise revenue to pay for things but then tend to outspend the raise.
 
I don't disagree but look at the Federal Budget. The Federal Budget in Fiscal Year 2020: An Infographic Would you cut Social Security, Medicare or Defense? To have meaningful spend cuts, one or more of these will need to come under the knife. Again, this is a problem for both parties. Neither one is willing to tell the public that pain would be involved vs. deficit spending, if only because the public is willing live on what is effectively credit card living (see "what would you cut above?"). The Republicans had a shot with meaningful majorities under Trump and simply cut taxes, allowing the deficit to jump. The Democrats avow to raise revenue to pay for things but then tend to outspend the raise.
How about eliminating the 4T in discretionary spending begun under President Biden? Eliminate subsidies for rich taxpayers who have the money to buy electric vehicles. Why would someone willing to buy an $80,000 tesla need a tax credit?
 
The tax credit existed before Biden. The 4T (I'll take your numbers at face value) in discretionary spending has tax offsets. Back to the question and knowing the the 2020 budget is not Biden's, what would you cut?
 
The tax credit existed before Biden. The 4T (I'll take your numbers at face value) in discretionary spending has tax offsets. Back to the question and knowing the the 2020 budget is not Biden's, what would you cut?
The 4T had no tax increases associated with it, except for the 439B associated with the Inflation Induction Act. I would start by eliminating any of those unspent funds. Then I would freeze federal non-defense spending for 2 years. I would cut regulations, eliminate the war on fossil fuels, eliminate all new climate change initiatives. See the thread on climate change. Inflation would decrease almost immediately. There would be an increase in federal revenue. The best way to generate revenue without affecting the budget is to cut regulations.
 
So much for the 2020 budget. Uncle. I stand corrected. Everything is the fault of the Democrats.

Hypothetically, however, if Biden should suddenly walk on water, will the complaint be the soles of his wet got damp?
 
Biden's problem, our problem really, is he has water on the brain, not his feet. He simply is too old and too addled to be Prez....whether he is a Dem or a Rep.

If it makes folks feel better, both he and Trump have been embarrassments to the country. We can and must do better in 2024.
 
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Sorry to spoil your recession party.

It is time to eliminate the partisan hyperbole and understand that this country has serious economic issues. The rest of the country knows we are in a recession and that it is the government's fault, as usual.

"While the big media and some economists might disagree, a majority of Americans believe that the U.S. economy is now in a recession, the latest I&I/TIPP data show. And voters, when asked what caused it, are clear in their response: Government."

 
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Joe is going to pump more money into the economy. He is going to forgive about $650 billion in student loan debt, about 300 B in 2022. This will immediately increase inflationary pressures in the economy. It will help the wealthy, at the expense of the rest of us.

"Wednesday President Biden will announce he is canceling student debt and extending the moratorium on student-loan payments for several more months.

This is an inflation expansion act. The reports say Mr. Biden will cancel $10,000 in debt for borrowers making $125,000 or less a year...

About 70% of the loan relief would go to borrowers in the top 60% of income distribution.

With a loan-payment moratorium, what began in March 2020 as pandemic emergency relief now rolls on and on. The moratorium so far is estimated to have cost some $115 billion. Another four-month extension could cost $15 billion to $20 billion more."

 
I have not seen how much of the proposed student debt forgiveness is based on capitalized interest. Capitalized interest on student loans which both parties in Congress have indicated an agreement to eliminate, is a nuclear powered shovel that is probably the biggest factor leading to the large balances owed, I would like to see the numbers if reallocated the numbers based on simple interest on the principal. Really why is the government into making money off of student loans?
 
Talk about buying votes. Actually, it is up to $20,000 per person. Biden is helping the wealthy and NOT the working American. Biden's base are those on the coasts with advanced degrees. This is highly inflationary. Expect multiple rate increases from the Federal Reserve.

"President Biden will forgive up to $20,000 in federal student loan debt for tens of millions of Americans, a move that will provide unprecedented relief for borrowers but is certain to draw political and legal challenges....

This will "include most of the 40 million people with student debt. The action could render up to 15 million borrowers whose balances are under $10,000 free of student debt."

 
The insidious result- Biden's student loan handout incentivizes colleges and universities to increase their prices. This will make schools like the University of Richmond more expensive.
 
Should be careful what we teach.

You sign a contract with clear eyes, then want others to repay the bill for you? Grossly unfair to those who took their obligations seriously and made the sacrifices to live up to them.

Is this what we want to teach young people?
 
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Inflation in the Southwest and throughout the South is running rampant. Arizona saw inflation at 13%, Atlanta, almost 12%.

"Inflation soared to 13% in Phoenix last month, a record for any US city in data going back 20 years and more than twice as high as San Francisco.

Other cities across the South and Southwest saw double-digit increases in consumer prices, with the Atlanta metropolitan area posting annual inflation of 11.7% and Miami reaching 10.7%, according to Bureau of Labor Statistics data."



"The report indicated that the 11.4 percent year-to-year increase in the price of food was the highest in 43 years."
 
Biden is siding with the Unions in the railroad labor strike. The strike will cause bottlenecks and inflation spikes, after after labor Joe gave them billions in handouts through his spending initiatives. You’d think some $5 trillion in new spending by this Congress, much of which will fatten union bottom lines, would be enough. But not for hard working Joe.

"A strike that shuts down the country’s 7,000 long-distance trains would do enormous economic damage. The Association of American Railroads pegs the cost at $2 billion a day in an economy with GDP of about $63 billion a day. The strike would cascade through the business supply chain, creating backlogs and shortages even as pandemic delays are finally easing. That has implications for prices that are still rising at the fastest pace in decades."

 
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