August 13, 2024
Dear Friends and Family,
The economy is a major issue facing “We the People” in the upcoming election. Most voters clearly understand that inflation is with us and has severely impacted our economy. But many do not understand the underpinning reasons why inflation occurred and its consequences to our economy in the future.
The excerpts provide the answer. The inflation of the last three years was the result of excessive spending by the Biden/Harris administration coupled with a scarcity of goods coming out of the pandemic because of a failed transportation agency led by Pete Buttigieg. Thus, too much capital was chasing too few goods: the classic definition and reason causing inflation. This is detailed by six different authors in the attached PDF and what I feel is the best description is in the following text.
The consequence is devastating. First, the inflationary 20% increase in the cost of most goods has been severe to most working families and retirees, causing a reduction in their standard of living. Second, to tame the inflation the Federal Reserve increased interest rates by about 3% on average. That in turn resulted in an increase in government bond yields to continue to finance the national debt. A 3% increase in bonds times the debt of $33 trillion means the country’s increase in annual debt payments is approximately $1 trillion/year. As Congressman David Schweikert, member of the Ways & Means Committee, points out in the excerpts that interest payments consume 45% of all the income taxes collected in 2024.
This has alarmed world trade, specifically the future soundness of the U.S. dollar and its use as the World’s Reserve Currency. A group of countries who call themselves the BRICS (Brazil, Russia, India, China, and South Africa) formed a trade group which conducts their business in currencies other than the dollar and is rapidly drawing in more countries to do the same. In fact, they have created an alternate currency backed by gold to be used in such trade. This quite possibly could lead to the U.S. dollar losing its reserve currency status, which it has maintained since 1945. If this occurs, it would increasingly be more difficult to finance our debt as fewer entities would buy our bonds. Thus, we would have to increase the amount of money we print to finance our deficits leading to a devaluation of the dollar around the world. Net, more dollars would be required to purchase foreign imported goods resulting in more price inflation. If that scenario occurs the government would be forced to cut spending on such items as defense, social security, Medicare and Medicaid, to reduce the deficit. Taxes would also have to be increased thus restricting growth for lack of capital. It is a frightening scenario, so I have rated it as a “Survival Fear.”
The last part of the segment is titled “A Challenge to Republicans” written by Kimberley Strassel, a member of the Editorial Board for the Wall Street Journal, which outlines a few things that must occur to reduce the annual deficit. I can only surmise that she addresses it to Republicans, because of lack of confidence that the Democrat Party would rise to the challenge.
Happy Learning,
Harley
Dear Friends and Family,
The economy is a major issue facing “We the People” in the upcoming election. Most voters clearly understand that inflation is with us and has severely impacted our economy. But many do not understand the underpinning reasons why inflation occurred and its consequences to our economy in the future.
The excerpts provide the answer. The inflation of the last three years was the result of excessive spending by the Biden/Harris administration coupled with a scarcity of goods coming out of the pandemic because of a failed transportation agency led by Pete Buttigieg. Thus, too much capital was chasing too few goods: the classic definition and reason causing inflation. This is detailed by six different authors in the attached PDF and what I feel is the best description is in the following text.
The consequence is devastating. First, the inflationary 20% increase in the cost of most goods has been severe to most working families and retirees, causing a reduction in their standard of living. Second, to tame the inflation the Federal Reserve increased interest rates by about 3% on average. That in turn resulted in an increase in government bond yields to continue to finance the national debt. A 3% increase in bonds times the debt of $33 trillion means the country’s increase in annual debt payments is approximately $1 trillion/year. As Congressman David Schweikert, member of the Ways & Means Committee, points out in the excerpts that interest payments consume 45% of all the income taxes collected in 2024.
This has alarmed world trade, specifically the future soundness of the U.S. dollar and its use as the World’s Reserve Currency. A group of countries who call themselves the BRICS (Brazil, Russia, India, China, and South Africa) formed a trade group which conducts their business in currencies other than the dollar and is rapidly drawing in more countries to do the same. In fact, they have created an alternate currency backed by gold to be used in such trade. This quite possibly could lead to the U.S. dollar losing its reserve currency status, which it has maintained since 1945. If this occurs, it would increasingly be more difficult to finance our debt as fewer entities would buy our bonds. Thus, we would have to increase the amount of money we print to finance our deficits leading to a devaluation of the dollar around the world. Net, more dollars would be required to purchase foreign imported goods resulting in more price inflation. If that scenario occurs the government would be forced to cut spending on such items as defense, social security, Medicare and Medicaid, to reduce the deficit. Taxes would also have to be increased thus restricting growth for lack of capital. It is a frightening scenario, so I have rated it as a “Survival Fear.”
The last part of the segment is titled “A Challenge to Republicans” written by Kimberley Strassel, a member of the Editorial Board for the Wall Street Journal, which outlines a few things that must occur to reduce the annual deficit. I can only surmise that she addresses it to Republicans, because of lack of confidence that the Democrat Party would rise to the challenge.
Happy Learning,
Harley
WHAT IS HAPPENING TO OUR COUNTRY – SEGMENT 9
ECONOMY – EXCERPTS
INFLATION NATION -- The American Rescue Plan: The first of Joe Biden’s many exorbitant expensive initiatives as president was one of the most reckless in American history. In was announced on his inauguration day and ironically called the American Rescue Plan (ARP). It was the first major piece of Biden administration legislation: a $1.9 trillion spend when the economy was already recovering. The onset of the pandemic spurred massive job losses in 2020, but by early 2021, 60% of those losses had already been recovered. In other words, there was no need for a “rescue,” and if a “rescue” was going to be imposed on us, it certainly didn’t need to be one of the most expensive pieces of legislation in American history.
Piling on this level of superfluous government spending meant automatic inflation, as Larry Summers and Olivier Blanchard warned it would. Summers, who was the secretary of the U.S. Treasury from 1999 to 2001 and served as the director of Obama’s National Economic Council from 2009 to 2010, went so far as to call it the “least responsible” economic policy in 40 years. Blanchard, the former chief economist at the International Monetary Fund and maybe the most cited economist in the world, said he was concerned that the size of the plan could lead to overheating and inflation, and ultimately concluded it was a political decision by Biden and not an arithmetic one. Even far-left senator Elizabeth Warren (D-MA) acknowledged the package was inflationary. Senator Mark Warner (D-VA) would say in 2022 that the plan was “absolutely” too large.
Source: Breaking Biden by Alex Marlowe (2023)
Along with every other Democrat, Joe Manchin had read an op-ed in the Washington Post by Larry Summers, the former Treasury Secretary, the former president of Harvard, the longtime economic oracle of Democratic administrations. Summers wrote the verboten thing: the Rescue Plan had dangerously swelled. According to Summer’s calculations, Biden/Harris were about to spend six times more than what the economy needed to recover. The American Rescue Plan, he argued “will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”
Source: The Last Politician by Franklin Foer (2023)
Biden understands politics better than most, but he does not appear to comprehend basic economics. In March 2022, he said in a speech at the White House, “I’m sick of this stuff. We have to talk about it because the American people think the reason for inflation is the government is spending more money. Simply not true.” Passing the buck while he simultaneously distorts the truth. The chutzpah is impressive. He tried to blame Russian president Vladimir Putin. “Today’s inflation report is a reminder that Americans’ budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike,” Biden said. This statement is absurd. Inflation was already above 7% when Putin invaded Ukraine on February 24, 2022, and economists had projected that it would remain high before the invasion.
Simply put, the main cause of the inflation is an abundance of cash in the hands of average citizens. Even while people were not working, they were collecting massive amounts of government (that is, taxpayer) funds. Yes, some Americans would have had to take a pay cut if they went back to work instead of cashing in on the various unemployment benefits and bonuses available to them. Carney estimated that in 2021, a family of five could get $92,000 a year and not work through a combination of the Child Tax Credit, enhanced unemployment benefits and stimulus. Inflation tends to hit the poor and working classes harder than it hits the wealthy. When food and energy prices go up, when supply chain issues reduce the supply of goods and drive-up prices, it becomes more expensive to own a home or rent one, it is the least among us who suffer the most. Biden could spin it all he wants, but Americans were living a new reality every day.
Though vast federal expenditures were the main cause of the Bidenflation, government incompetence, and mismanagement were also contributing factors. For example, the crisis was magnified when the Biden administration let dozens of fully loaded cargo ships idle off the Southern California coast, unable to dock.
The person who should have been in charge was Secretary Peter Buttigieg, the former mayor of South Bend, Indiana, who was installed atop a massive bureaucracy, the Department of Transportation, presumably because he endorsed Joe Biden after ending his own presidential run in 2020. Buttigieg’s main resume item when he got the job was that he was the mayor of a small town best known as the home of the University of Notre Dame. Thus, his experiential knowledge of seaway transportation logistics was nonexistent. He was the least-qualified person to be appointed to any role in Biden’s cabinet, which is itself a feat. Yet it is not 100% accurate to say that Pete failed his first big test, because he wasn’t even around to tackle the problem. Buttigieg is not a woman, he’s not even a birthing person, but he was on a two-month paternity leave. (He and his husband had adopted twins in mid-August). Pete did convene a meeting on the budding crisis in July, but as the situation worsened, he stayed home. The White House acknowledged that no one was left in charge while Pete was away, they knew there was no “point person.” That fact makes it all the more negligent that Buttigieg declined to meet with Senator Grassley (R-IA) while he was taking his break, despite repeatedly saying that he would be available “24/7.” When Buttigieg returned to work in mid-October, there were approximately 100 ships idling off the West Coast at the time because they couldn’t get unloaded, a record. The number would peak at 109 ships.
He took to CNN to announce, “short-term and long-term steps,” he would be taking. The main solution he offered was to get the ports operating 24/7. It was a worthless plan, as the supply chain holdup had nothing whatsoever to do with the hours the ports were open. There were not enough warehouse workers and truckers. When asked about the ineffectiveness of the 24/7 model, Buttigieg flippantly stated that it’s “not like flipping a switch.” Biden pitched in by dusting off another familiar tactic: scolding private companies for failing to make adjustments to attract enough workers. (Recall that he scolded gas station owners when prices began to rise; he also threatened a windfall profit tax on oil companies if they didn’t increase drilling. Not only is this obnoxious, but it’s also counterproductive). Leadership matters and installing someone clearly out of his or her depth at the top of a major bureaucracy – and keeping him there despite a series of failures, because he is a “rising” political “star” – can cause massive problems for a society.
The Inflation Reduction Act (IRA) signed by Biden in August 2022 and costing around $700 billion, will not – despite its name – reduce inflation. It passed on a party-line vote in the Senate (51-50, with Kamala Harris breaking the tie) and a party-line 220 – 207 vote in the House of Representatives. The true intention of the IRA was to use a moment of national insecurity as an excuse to appropriate hundreds of billions of dollars to Democrats’ legislative priorities like climate change. More than half of the cost of the bill is allocated toward energy and environmental provisions. The legislation also expanded Obamacare, with new health care spending -- about $100 billion. IRS funding was boosted by $80 billion, making it larger than the Pentagon, State Department, FBI, and Border Patrol combined.
Some of the new IRS funding would target the working class, contrary to promises repeated by Biden and the Democrats. The Congressional Budget Office found that the IRA might actually drive inflation up. Then why did we pass it? Democrats saw a crisis and didn’t let it go to waste. It was their excuse to spend. Yes, when you’re Joe Biden, even inflation is an excuse to spend. While Americans struggled with mounting costs, and with no hope in sight, Joe Biden had the audacity to call a bill this name when it was nothing more than a blowout taxpayer-funded shopping spree for his voters and donors. This is how Washington works. This is how Joe Biden and Kamala Harris work.
One of the lessons I learned during my time in DC is that a Democrat is never done spending. That rule is ironclad. This is how they justify their political existence. This is how they enrich their friends; this is how they ensure job security for themselves and their family members, and this is how they earn the accolades of our media. A new program, a new package, a new deal. The gradual slide toward socialism, is a feature, not a bug, of the modern Democrat Party.
Source: Breaking Biden by Alex Marlow (2023).
THE CONSEQUENCE: A few decades from now, what will historians say is the most enduring harm Biden inflicted on his country? Inflation? No, it comes and goes over the years. Crime? Unless you are a victim, it is just a statistic. Illegal immigration? By then, Trump will have come back and shut it down. None of the above.
His greatest harm will have been to let the American dollar lose its preeminence in the world and no longer enjoy its status as the global currency. Should the Biden/Harris policies continue to lead us down this road, it will mean the close of the era of American ascendency in the world. The dates on its gravestone will read, “1945 – 2024.” If we lose our privileged perch atop the global financial system, we will suffer mightily from the loss.
Right now, the U.S. government, unique among all the nations of the world, can simply print all the money that it wants or needs. No checks or balances or even any questions are needed. When another nation runs a deficit and needs to borrow to make it books balance it must first convert its currency into dollars on the world market. It cannot just run its printing press and churn out more of its own currency without incurring incredible inflation and finding that its money no longer buys anything around the world Only the U.S. can print money and be confident of its acceptance everywhere.
Today, we spend about $6.5 trillion a year and take in only $5 trillion in revenues. With the ability to print our own currency, we can bridge the deficit. But without that power, we would have to make huge cuts in our spending, slicing social security, Medicare, Medicaid, and all other programs back to nearly approximate our tax revenues. But the main consequence would be to force us to cut our defense budget, giving China military superiority.
Is it to force a reduction in our defense spending that China is leading the effort to dethrone the dollar? We earned the right to be the global currency after World War II. At the war’s end, the U.S. was the only country left standing. Whether they won or lost, every other country depended on America. Back then, we produced half of the world’s GDP (now we are down to 15%). At the Bretton Woods Conference in 1944, the dollar formally became the global currency. In that role, we nursed the world back to health, beginning with our allies in Europe and our former enemies in Germany and Japan. We largely funded the free world in its opposition to communism and led much of the third world out of absolute poverty.
But Biden abused our power to print money to the point where we may be on the verge of losing it. Until Obama, our budget deficits, while a national problem and political issue, were comparatively minor. In the late 1990s, under Clinton, our budget was balance. We had no deficit. Under Bush, in 2003 and 2004, responding to the increased military spending after 9/11 we ran an annual deficit of about $400 billion. In 2009 following the world economic (subprime) crisis, our deficit soared up to $1.4 trillion, as the Federal Reserve System, under Bush and then Obama, frantically printed money to stop the financial meltdown from pushing the whole economy over the cliff. From 2009 to 2012, the hangover from the crisis persisted, and it was not until 2013 that the deficit dipped below a trillion dollars ($700 billion). It continued to be relatively under control during the Trump administration, as the deficit stayed below a trillion. In 2017, it was $665 billion; in 2018, it reached $779 billion, and in 2019, it rose to $984 billion.
Then, of course, all went to hell as COVID-19 struck, and Trump and Congress acted together, swiftly and well, to cushion the economic shock of the national lockdown. In 2020, the deficit went up to $3.1 trillion. But by the year’s end, as Biden took office, businesses reopened, and tax revenues again began to flow. This is where America went wrong.
Biden should have reduced the deficit now that the emergency had passed, but instead, he used his majority in Congress to continue to spend massively. Even though the worst of the COVID-19 pandemic was behind us, the deficit was $2.8 trillion. Had Biden ratcheted back spending gradually, we would never have faced the inflation and loss of faith in the dollar we do today. Our credibility as the world’s benchmark currency would have stayed intact.
But Biden and the Democrats couldn’t help themselves. They had a unique opportunity to raise the federal baseline spending, citing the pandemic as their excuse, passing out hundreds of billions of stimulus checks, and starting all kinds of new programs to buy votes. The massive stimulus this spending injected into the economy, coming at a time when it was bouncing back, created far too much consumer demand, and the cramped supply chains found that they could not keep up with that demand. Major inflation ensued, after very low inflation for the previous forty years. With each uptick in prices, the dollar lost more of its value, losing a quarter of it from 2017 to 2023.
The world got nervous. Particularly the Arabs did not want to part with their precious oil for the dollars that were becoming worth less and less. So, the Organization of the Petroleum Exporting Countries (OPEC) began to demand payment in gold, which had retained most of its value. Michael Wilkerson of Wall Street’s Stormwall Advisors puts the deficit/dollar crisis in perspective: “We are on the verge of a debt and deficit fueled inflationary crisis, one in which our trading and investment counterparts lose all faith and confidence in our government and our currency, and price stability goes out the window.”
He quotes economist Peter Bernholz, who wrote in his book Monetary Regimes and Inflation: History, Economic and Political Relationships that all recorded high inflation and hyperinflation are linked to unsustainable budget deficits. When the government prints money to pay for its deficit spending, as the U.S. has done for years now, inflation is sure to follow, albeit often at a lag of several years. “Initially,” he writes, “runaway deficit spending can be economically stimulative, as we saw last year, but if moderate inflation turns into high inflation, the economy will slow dramatically.”
Then things got worse when Russia invaded Ukraine and the United States imposed a global embargo on Moscow. Nobody could do business with Russia in dollars – and nobody wanted to do it in rubles – so gold became the medium of exchange for Russia and the nations that traded with it. As the embargo forced Russia to stop using dollars and switch to gold, Moscow decided to bank together with China to turn away from the dollar entirely as the global currency. China saw the weakness of the dollar and pounced.
In 2010, the leaders of Brazil, India, and South Africa joined with Russia and China to form the international group that became known as BRICS (Brazil, Russia, India, China, and South Africa). As the dollar fell at the end of the decade, the countries came to modify their trade either in their local currencies or, more and more, in gold. The BRICS countries have 41% of the world population, 24% of the world GDP, and over 16% share in the world trade. In August 2023, Iran, Saudi Arabia, Argentina, Ethiopia, the UAE, and Egypt joined the BRICS bloc.
Couching their association in nonpolitical terms, the BRICS countries made no secret of their desire to escape from under American hegemony. Michael Wilkerson asserts that sanctions are already pushing the BRICS and other countries to turn away from the dollar, knowing that what happened to Russia could easily happen to them. It was not so bad that the U.S. government stopped Americans from doing business with Russia. But it also pursued what is called “secondary sanctions,” punishing third parties that did business with Russia. Wilkerson argues that “secondary sanctions” would lead the sanctioned countries and companies to abandon the dollar entirely and do their trading in local currencies or gold.
In 1945, the Saudi committed to sell oil only for U.S. dollars, a deal that may now be ending during the Biden/Harris administration. The collapse of US-Saudi relations can be laid at the doorstep of Joe Biden, whose anti-fossil fuel policies and antagonistic attitude toward Saudi Arabia have led to the current rift. Talk of de-dollarization is increasingly rife, and under pressure from Russia, the BRICS countries are now developing a new currency to replace the US dollar.
Now the European Commission has publicly welcomed the end of the American petrodollar, heralding what they describe as a new “multipolar global currency regime.” The EU ways that it would like to see its euro currency adopted for more international energy transactions soon.” The Commission will continue promoting the international role of the euro and, more generally, is supportive of a multipolar global currency regime.
On July 8, 2023, Reuters ran a story that the BRICS countries are planning to issue a joint currency backed by gold. Such a currency would be a giant step toward ending the dollar’s supremacy. After all, if you have a choice between a currency backed by the say-so of the US government and one backed by gold, you would be a fool to stay with the dollar. [Note: according to several sources on the Internet, such a BRICS currency now exists.] Biden fails to grasp that “with Middle Eastern energy-rich countries looking to join the BRICS alliance, the grouping could become stronger than ever with all partners bringing necessary resources. Meanwhile, Biden’s domestic economic policies almost seem to be designed to undermine the dollar. By massive borrowing and spending, he is weakening the dollar’s credibility, and by refusing to cut spending, even as the U.S. teeters on the brink of a global default, he hastens the dollar’s demise.
Indeed, Fitch, the global firm that evaluates the financial stability of the world’s countries, has just knocked the U.S. down a notch, perhaps the beginning of the end for the dollar. With Joe Biden, we are always forced to choose whether his policies are stupid or designed to hurt the United States of America and to benefit his patron, China. The demise of the dollar – hastened by Biden – poses just such a conundrum.
Source: Corrupt by Dick Morris (2023)
A CHALLENGE TO REPUBLICANS: The current U.S. domestic budget is an embarrassing spectacle of duplicative programs, wasteful agendas, and entire workforces that exist solely to intrude on states’ rights. Most of this funding can and should go away. The question should be: What jobs can only the federal government perform? Only the federal government can maintain federal infrastructure. But it’s time to get rid of the huge surface transportation programs that transfer federal tax dollars around from “giver” to “taker” states. Only the federal government will engage in certain types of basic scientific research. Yet that definition has narrowed over the years as private industry becomes more competitive in technology, space exploration, and biotech. The federal government requires dollars to maintain the judiciary, and a stable currency, and a diplomatic corps and certain offices. But arts funding, educational grants, mental health counseling, midnight basketball – it all needs to go. And earmarks need to become a thing of distant memory.
It's time to reconsider getting rid of entire pieces of government. There is no more rationale today for the Department of Education than there was in Carter’s day. It exists to dictate testing standards and to grant or withhold money on the basis of woke ideology. Someone please justify the existence of the Agricultural Department’s Rural Housing Service. The United States Geological Survey was --- as its name make clear – set up in 1879 to catalog the nation’s geology and mineral resources. That mission was accomplished eons ago which is why the outfit now explains it has “evolved” and exists to “provide science about the natural hazards that threaten lives.”
If Congress lacks the courage to get rid of other useless departments, it should at least have the backbone to get rid of their more wasteful or intrusive programs. Trump proposed eliminating more than sixty-two agencies and programs in his budget, but Democrats balked, and Republicans lacked the will for a fight. Yet Republicans would only win plaudits from zeroing them out altogether.
A GOP government needs to reimpose sensible work requirements for welfare – and double down on programs that help people back to gainful employment. It’s time to simplify and pare back the Earned Income Tax Credit, which is rife with abuse. It needs to take a hard look at alternatives to Head Start – a program that has never worked since its creation in 1964. And let’s have the federal government exit entirely the student loan business. Obama promised the federalization of that market would save taxpayers money. It is instead costing hundreds of billions.
It's also past time for the GOP to fulfill its promise to overhaul health care – to repeal Obamacare and to move millions of Americans off Medicaid and the Children’s Health Insurance Program. Americans deserve free market programs that will provide better benefits, more mobility, and lower costs. Trump Republicans nearly accomplished some of this in 2017 until sabotaged by a few recalcitrant Republican senators. And while Republicans will wince, they must seize the third rail of Social Security and Medicare – and hold tight. GOP promises of fiscal discipline will fall flat so long as the party closes its eyes to these two main drivers of costs – both of which in their current forms are financially unsustainable. Social Security and Medicare alone account for more than one-third of all federal spending. Add in Medicaid and Obamacare, and those four programs equal half.
No one thinks the U.S. government should renege on its promises to pay out to hardworking Americans who paid in. Yet even as Social Security disintegrates, entire generations of younger people have grown comfortable with 401(k) and investing, and more interested in controlling their retirement futures. There are no lack of proposals for a redesign of Medicare for future generations, to create a program that is more market-based and provides better care to an aging population. These topics may be scary for some politicians. But America is aching for fresh ideas. And anything is better than today’s autopilot status quo.
Trump upon taking office immediately signed a brilliant executive order, requiring agencies to revoke two regulations for any new one issued. This groundbreaking approach resulted in one of the first serious examinations of stupid rules in decades and is what resulted in that dramatic decrease in the number of pages in the Federal Register. Yet Biden/Harris have worked hard to restore those rules that were cut, plus many more. Republicans can double down on the Trump deregulatory approach. This will prove easier if they first go through that process of cutting entire programs from the executive remit – that alone would take a lot of regulations off the books.
Source: The Biden Malaise by Kimberley Strassel (2023).
A massive portion of your 2024 income taxes paid to the government solely cover the cost of interest on our national debt. Since our gross interest totals $1.14 trillion, and this year’s income taxes total $2.5 trillion, that means that 45.68% of all income taxes collected are used to pay down debt interest. It’s a brutal reminder, but since our country has become financially vulnerable, we’re starting to lose our capability to compete as an economic superpower. Why isn’t anyone concerned about prioritizing morality for our Americans?
Source: August Letter to Constituents by Congressman David Schweikert, 1st District of Arizona and Member of the House Ways and Means Committee (2024).
The unabbreviated version of the above can be found in the pdf document below.
ECONOMY – EXCERPTS
INFLATION NATION -- The American Rescue Plan: The first of Joe Biden’s many exorbitant expensive initiatives as president was one of the most reckless in American history. In was announced on his inauguration day and ironically called the American Rescue Plan (ARP). It was the first major piece of Biden administration legislation: a $1.9 trillion spend when the economy was already recovering. The onset of the pandemic spurred massive job losses in 2020, but by early 2021, 60% of those losses had already been recovered. In other words, there was no need for a “rescue,” and if a “rescue” was going to be imposed on us, it certainly didn’t need to be one of the most expensive pieces of legislation in American history.
Piling on this level of superfluous government spending meant automatic inflation, as Larry Summers and Olivier Blanchard warned it would. Summers, who was the secretary of the U.S. Treasury from 1999 to 2001 and served as the director of Obama’s National Economic Council from 2009 to 2010, went so far as to call it the “least responsible” economic policy in 40 years. Blanchard, the former chief economist at the International Monetary Fund and maybe the most cited economist in the world, said he was concerned that the size of the plan could lead to overheating and inflation, and ultimately concluded it was a political decision by Biden and not an arithmetic one. Even far-left senator Elizabeth Warren (D-MA) acknowledged the package was inflationary. Senator Mark Warner (D-VA) would say in 2022 that the plan was “absolutely” too large.
Source: Breaking Biden by Alex Marlowe (2023)
Along with every other Democrat, Joe Manchin had read an op-ed in the Washington Post by Larry Summers, the former Treasury Secretary, the former president of Harvard, the longtime economic oracle of Democratic administrations. Summers wrote the verboten thing: the Rescue Plan had dangerously swelled. According to Summer’s calculations, Biden/Harris were about to spend six times more than what the economy needed to recover. The American Rescue Plan, he argued “will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”
Source: The Last Politician by Franklin Foer (2023)
Biden understands politics better than most, but he does not appear to comprehend basic economics. In March 2022, he said in a speech at the White House, “I’m sick of this stuff. We have to talk about it because the American people think the reason for inflation is the government is spending more money. Simply not true.” Passing the buck while he simultaneously distorts the truth. The chutzpah is impressive. He tried to blame Russian president Vladimir Putin. “Today’s inflation report is a reminder that Americans’ budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike,” Biden said. This statement is absurd. Inflation was already above 7% when Putin invaded Ukraine on February 24, 2022, and economists had projected that it would remain high before the invasion.
Simply put, the main cause of the inflation is an abundance of cash in the hands of average citizens. Even while people were not working, they were collecting massive amounts of government (that is, taxpayer) funds. Yes, some Americans would have had to take a pay cut if they went back to work instead of cashing in on the various unemployment benefits and bonuses available to them. Carney estimated that in 2021, a family of five could get $92,000 a year and not work through a combination of the Child Tax Credit, enhanced unemployment benefits and stimulus. Inflation tends to hit the poor and working classes harder than it hits the wealthy. When food and energy prices go up, when supply chain issues reduce the supply of goods and drive-up prices, it becomes more expensive to own a home or rent one, it is the least among us who suffer the most. Biden could spin it all he wants, but Americans were living a new reality every day.
Though vast federal expenditures were the main cause of the Bidenflation, government incompetence, and mismanagement were also contributing factors. For example, the crisis was magnified when the Biden administration let dozens of fully loaded cargo ships idle off the Southern California coast, unable to dock.
The person who should have been in charge was Secretary Peter Buttigieg, the former mayor of South Bend, Indiana, who was installed atop a massive bureaucracy, the Department of Transportation, presumably because he endorsed Joe Biden after ending his own presidential run in 2020. Buttigieg’s main resume item when he got the job was that he was the mayor of a small town best known as the home of the University of Notre Dame. Thus, his experiential knowledge of seaway transportation logistics was nonexistent. He was the least-qualified person to be appointed to any role in Biden’s cabinet, which is itself a feat. Yet it is not 100% accurate to say that Pete failed his first big test, because he wasn’t even around to tackle the problem. Buttigieg is not a woman, he’s not even a birthing person, but he was on a two-month paternity leave. (He and his husband had adopted twins in mid-August). Pete did convene a meeting on the budding crisis in July, but as the situation worsened, he stayed home. The White House acknowledged that no one was left in charge while Pete was away, they knew there was no “point person.” That fact makes it all the more negligent that Buttigieg declined to meet with Senator Grassley (R-IA) while he was taking his break, despite repeatedly saying that he would be available “24/7.” When Buttigieg returned to work in mid-October, there were approximately 100 ships idling off the West Coast at the time because they couldn’t get unloaded, a record. The number would peak at 109 ships.
He took to CNN to announce, “short-term and long-term steps,” he would be taking. The main solution he offered was to get the ports operating 24/7. It was a worthless plan, as the supply chain holdup had nothing whatsoever to do with the hours the ports were open. There were not enough warehouse workers and truckers. When asked about the ineffectiveness of the 24/7 model, Buttigieg flippantly stated that it’s “not like flipping a switch.” Biden pitched in by dusting off another familiar tactic: scolding private companies for failing to make adjustments to attract enough workers. (Recall that he scolded gas station owners when prices began to rise; he also threatened a windfall profit tax on oil companies if they didn’t increase drilling. Not only is this obnoxious, but it’s also counterproductive). Leadership matters and installing someone clearly out of his or her depth at the top of a major bureaucracy – and keeping him there despite a series of failures, because he is a “rising” political “star” – can cause massive problems for a society.
The Inflation Reduction Act (IRA) signed by Biden in August 2022 and costing around $700 billion, will not – despite its name – reduce inflation. It passed on a party-line vote in the Senate (51-50, with Kamala Harris breaking the tie) and a party-line 220 – 207 vote in the House of Representatives. The true intention of the IRA was to use a moment of national insecurity as an excuse to appropriate hundreds of billions of dollars to Democrats’ legislative priorities like climate change. More than half of the cost of the bill is allocated toward energy and environmental provisions. The legislation also expanded Obamacare, with new health care spending -- about $100 billion. IRS funding was boosted by $80 billion, making it larger than the Pentagon, State Department, FBI, and Border Patrol combined.
Some of the new IRS funding would target the working class, contrary to promises repeated by Biden and the Democrats. The Congressional Budget Office found that the IRA might actually drive inflation up. Then why did we pass it? Democrats saw a crisis and didn’t let it go to waste. It was their excuse to spend. Yes, when you’re Joe Biden, even inflation is an excuse to spend. While Americans struggled with mounting costs, and with no hope in sight, Joe Biden had the audacity to call a bill this name when it was nothing more than a blowout taxpayer-funded shopping spree for his voters and donors. This is how Washington works. This is how Joe Biden and Kamala Harris work.
One of the lessons I learned during my time in DC is that a Democrat is never done spending. That rule is ironclad. This is how they justify their political existence. This is how they enrich their friends; this is how they ensure job security for themselves and their family members, and this is how they earn the accolades of our media. A new program, a new package, a new deal. The gradual slide toward socialism, is a feature, not a bug, of the modern Democrat Party.
Source: Breaking Biden by Alex Marlow (2023).
THE CONSEQUENCE: A few decades from now, what will historians say is the most enduring harm Biden inflicted on his country? Inflation? No, it comes and goes over the years. Crime? Unless you are a victim, it is just a statistic. Illegal immigration? By then, Trump will have come back and shut it down. None of the above.
His greatest harm will have been to let the American dollar lose its preeminence in the world and no longer enjoy its status as the global currency. Should the Biden/Harris policies continue to lead us down this road, it will mean the close of the era of American ascendency in the world. The dates on its gravestone will read, “1945 – 2024.” If we lose our privileged perch atop the global financial system, we will suffer mightily from the loss.
Right now, the U.S. government, unique among all the nations of the world, can simply print all the money that it wants or needs. No checks or balances or even any questions are needed. When another nation runs a deficit and needs to borrow to make it books balance it must first convert its currency into dollars on the world market. It cannot just run its printing press and churn out more of its own currency without incurring incredible inflation and finding that its money no longer buys anything around the world Only the U.S. can print money and be confident of its acceptance everywhere.
Today, we spend about $6.5 trillion a year and take in only $5 trillion in revenues. With the ability to print our own currency, we can bridge the deficit. But without that power, we would have to make huge cuts in our spending, slicing social security, Medicare, Medicaid, and all other programs back to nearly approximate our tax revenues. But the main consequence would be to force us to cut our defense budget, giving China military superiority.
Is it to force a reduction in our defense spending that China is leading the effort to dethrone the dollar? We earned the right to be the global currency after World War II. At the war’s end, the U.S. was the only country left standing. Whether they won or lost, every other country depended on America. Back then, we produced half of the world’s GDP (now we are down to 15%). At the Bretton Woods Conference in 1944, the dollar formally became the global currency. In that role, we nursed the world back to health, beginning with our allies in Europe and our former enemies in Germany and Japan. We largely funded the free world in its opposition to communism and led much of the third world out of absolute poverty.
But Biden abused our power to print money to the point where we may be on the verge of losing it. Until Obama, our budget deficits, while a national problem and political issue, were comparatively minor. In the late 1990s, under Clinton, our budget was balance. We had no deficit. Under Bush, in 2003 and 2004, responding to the increased military spending after 9/11 we ran an annual deficit of about $400 billion. In 2009 following the world economic (subprime) crisis, our deficit soared up to $1.4 trillion, as the Federal Reserve System, under Bush and then Obama, frantically printed money to stop the financial meltdown from pushing the whole economy over the cliff. From 2009 to 2012, the hangover from the crisis persisted, and it was not until 2013 that the deficit dipped below a trillion dollars ($700 billion). It continued to be relatively under control during the Trump administration, as the deficit stayed below a trillion. In 2017, it was $665 billion; in 2018, it reached $779 billion, and in 2019, it rose to $984 billion.
Then, of course, all went to hell as COVID-19 struck, and Trump and Congress acted together, swiftly and well, to cushion the economic shock of the national lockdown. In 2020, the deficit went up to $3.1 trillion. But by the year’s end, as Biden took office, businesses reopened, and tax revenues again began to flow. This is where America went wrong.
Biden should have reduced the deficit now that the emergency had passed, but instead, he used his majority in Congress to continue to spend massively. Even though the worst of the COVID-19 pandemic was behind us, the deficit was $2.8 trillion. Had Biden ratcheted back spending gradually, we would never have faced the inflation and loss of faith in the dollar we do today. Our credibility as the world’s benchmark currency would have stayed intact.
But Biden and the Democrats couldn’t help themselves. They had a unique opportunity to raise the federal baseline spending, citing the pandemic as their excuse, passing out hundreds of billions of stimulus checks, and starting all kinds of new programs to buy votes. The massive stimulus this spending injected into the economy, coming at a time when it was bouncing back, created far too much consumer demand, and the cramped supply chains found that they could not keep up with that demand. Major inflation ensued, after very low inflation for the previous forty years. With each uptick in prices, the dollar lost more of its value, losing a quarter of it from 2017 to 2023.
The world got nervous. Particularly the Arabs did not want to part with their precious oil for the dollars that were becoming worth less and less. So, the Organization of the Petroleum Exporting Countries (OPEC) began to demand payment in gold, which had retained most of its value. Michael Wilkerson of Wall Street’s Stormwall Advisors puts the deficit/dollar crisis in perspective: “We are on the verge of a debt and deficit fueled inflationary crisis, one in which our trading and investment counterparts lose all faith and confidence in our government and our currency, and price stability goes out the window.”
He quotes economist Peter Bernholz, who wrote in his book Monetary Regimes and Inflation: History, Economic and Political Relationships that all recorded high inflation and hyperinflation are linked to unsustainable budget deficits. When the government prints money to pay for its deficit spending, as the U.S. has done for years now, inflation is sure to follow, albeit often at a lag of several years. “Initially,” he writes, “runaway deficit spending can be economically stimulative, as we saw last year, but if moderate inflation turns into high inflation, the economy will slow dramatically.”
Then things got worse when Russia invaded Ukraine and the United States imposed a global embargo on Moscow. Nobody could do business with Russia in dollars – and nobody wanted to do it in rubles – so gold became the medium of exchange for Russia and the nations that traded with it. As the embargo forced Russia to stop using dollars and switch to gold, Moscow decided to bank together with China to turn away from the dollar entirely as the global currency. China saw the weakness of the dollar and pounced.
In 2010, the leaders of Brazil, India, and South Africa joined with Russia and China to form the international group that became known as BRICS (Brazil, Russia, India, China, and South Africa). As the dollar fell at the end of the decade, the countries came to modify their trade either in their local currencies or, more and more, in gold. The BRICS countries have 41% of the world population, 24% of the world GDP, and over 16% share in the world trade. In August 2023, Iran, Saudi Arabia, Argentina, Ethiopia, the UAE, and Egypt joined the BRICS bloc.
Couching their association in nonpolitical terms, the BRICS countries made no secret of their desire to escape from under American hegemony. Michael Wilkerson asserts that sanctions are already pushing the BRICS and other countries to turn away from the dollar, knowing that what happened to Russia could easily happen to them. It was not so bad that the U.S. government stopped Americans from doing business with Russia. But it also pursued what is called “secondary sanctions,” punishing third parties that did business with Russia. Wilkerson argues that “secondary sanctions” would lead the sanctioned countries and companies to abandon the dollar entirely and do their trading in local currencies or gold.
In 1945, the Saudi committed to sell oil only for U.S. dollars, a deal that may now be ending during the Biden/Harris administration. The collapse of US-Saudi relations can be laid at the doorstep of Joe Biden, whose anti-fossil fuel policies and antagonistic attitude toward Saudi Arabia have led to the current rift. Talk of de-dollarization is increasingly rife, and under pressure from Russia, the BRICS countries are now developing a new currency to replace the US dollar.
Now the European Commission has publicly welcomed the end of the American petrodollar, heralding what they describe as a new “multipolar global currency regime.” The EU ways that it would like to see its euro currency adopted for more international energy transactions soon.” The Commission will continue promoting the international role of the euro and, more generally, is supportive of a multipolar global currency regime.
On July 8, 2023, Reuters ran a story that the BRICS countries are planning to issue a joint currency backed by gold. Such a currency would be a giant step toward ending the dollar’s supremacy. After all, if you have a choice between a currency backed by the say-so of the US government and one backed by gold, you would be a fool to stay with the dollar. [Note: according to several sources on the Internet, such a BRICS currency now exists.] Biden fails to grasp that “with Middle Eastern energy-rich countries looking to join the BRICS alliance, the grouping could become stronger than ever with all partners bringing necessary resources. Meanwhile, Biden’s domestic economic policies almost seem to be designed to undermine the dollar. By massive borrowing and spending, he is weakening the dollar’s credibility, and by refusing to cut spending, even as the U.S. teeters on the brink of a global default, he hastens the dollar’s demise.
Indeed, Fitch, the global firm that evaluates the financial stability of the world’s countries, has just knocked the U.S. down a notch, perhaps the beginning of the end for the dollar. With Joe Biden, we are always forced to choose whether his policies are stupid or designed to hurt the United States of America and to benefit his patron, China. The demise of the dollar – hastened by Biden – poses just such a conundrum.
Source: Corrupt by Dick Morris (2023)
A CHALLENGE TO REPUBLICANS: The current U.S. domestic budget is an embarrassing spectacle of duplicative programs, wasteful agendas, and entire workforces that exist solely to intrude on states’ rights. Most of this funding can and should go away. The question should be: What jobs can only the federal government perform? Only the federal government can maintain federal infrastructure. But it’s time to get rid of the huge surface transportation programs that transfer federal tax dollars around from “giver” to “taker” states. Only the federal government will engage in certain types of basic scientific research. Yet that definition has narrowed over the years as private industry becomes more competitive in technology, space exploration, and biotech. The federal government requires dollars to maintain the judiciary, and a stable currency, and a diplomatic corps and certain offices. But arts funding, educational grants, mental health counseling, midnight basketball – it all needs to go. And earmarks need to become a thing of distant memory.
It's time to reconsider getting rid of entire pieces of government. There is no more rationale today for the Department of Education than there was in Carter’s day. It exists to dictate testing standards and to grant or withhold money on the basis of woke ideology. Someone please justify the existence of the Agricultural Department’s Rural Housing Service. The United States Geological Survey was --- as its name make clear – set up in 1879 to catalog the nation’s geology and mineral resources. That mission was accomplished eons ago which is why the outfit now explains it has “evolved” and exists to “provide science about the natural hazards that threaten lives.”
If Congress lacks the courage to get rid of other useless departments, it should at least have the backbone to get rid of their more wasteful or intrusive programs. Trump proposed eliminating more than sixty-two agencies and programs in his budget, but Democrats balked, and Republicans lacked the will for a fight. Yet Republicans would only win plaudits from zeroing them out altogether.
A GOP government needs to reimpose sensible work requirements for welfare – and double down on programs that help people back to gainful employment. It’s time to simplify and pare back the Earned Income Tax Credit, which is rife with abuse. It needs to take a hard look at alternatives to Head Start – a program that has never worked since its creation in 1964. And let’s have the federal government exit entirely the student loan business. Obama promised the federalization of that market would save taxpayers money. It is instead costing hundreds of billions.
It's also past time for the GOP to fulfill its promise to overhaul health care – to repeal Obamacare and to move millions of Americans off Medicaid and the Children’s Health Insurance Program. Americans deserve free market programs that will provide better benefits, more mobility, and lower costs. Trump Republicans nearly accomplished some of this in 2017 until sabotaged by a few recalcitrant Republican senators. And while Republicans will wince, they must seize the third rail of Social Security and Medicare – and hold tight. GOP promises of fiscal discipline will fall flat so long as the party closes its eyes to these two main drivers of costs – both of which in their current forms are financially unsustainable. Social Security and Medicare alone account for more than one-third of all federal spending. Add in Medicaid and Obamacare, and those four programs equal half.
No one thinks the U.S. government should renege on its promises to pay out to hardworking Americans who paid in. Yet even as Social Security disintegrates, entire generations of younger people have grown comfortable with 401(k) and investing, and more interested in controlling their retirement futures. There are no lack of proposals for a redesign of Medicare for future generations, to create a program that is more market-based and provides better care to an aging population. These topics may be scary for some politicians. But America is aching for fresh ideas. And anything is better than today’s autopilot status quo.
Trump upon taking office immediately signed a brilliant executive order, requiring agencies to revoke two regulations for any new one issued. This groundbreaking approach resulted in one of the first serious examinations of stupid rules in decades and is what resulted in that dramatic decrease in the number of pages in the Federal Register. Yet Biden/Harris have worked hard to restore those rules that were cut, plus many more. Republicans can double down on the Trump deregulatory approach. This will prove easier if they first go through that process of cutting entire programs from the executive remit – that alone would take a lot of regulations off the books.
Source: The Biden Malaise by Kimberley Strassel (2023).
A massive portion of your 2024 income taxes paid to the government solely cover the cost of interest on our national debt. Since our gross interest totals $1.14 trillion, and this year’s income taxes total $2.5 trillion, that means that 45.68% of all income taxes collected are used to pay down debt interest. It’s a brutal reminder, but since our country has become financially vulnerable, we’re starting to lose our capability to compete as an economic superpower. Why isn’t anyone concerned about prioritizing morality for our Americans?
Source: August Letter to Constituents by Congressman David Schweikert, 1st District of Arizona and Member of the House Ways and Means Committee (2024).
The unabbreviated version of the above can be found in the pdf document below.
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