The biggest reason the U.S. economy is an increasingly confusing mess is simple: the Federal Reserve is trying to slow down the economy while President Joe Biden and the congressional Democrats are feverishly trying to stimulate it.
The minutes of the July meeting of the U.S. Federal Reserve Board, released on August 17, show the governors and Chairman Jerome Powell are losing enthusiasm for the ongoing interest rate increases the Fed has imposed this year to combat the worst rate of inflation in more than four decades.
That is good news. Unfortunately, even if the Fed changes course (which is not quite imminent in any case), its efforts will be stymied by what President Biden and congressional Democrats have been doing.
“Mr. Powell described 0.75-percentage-point rate rises as ‘unusually large’ and appeared to endorse projections made in June that showed rates rising by another percentage point through December, implying a slowdown in the pace of increases later this year,” The Wall Street Journal reports.
That is an improvement. There is no sensible reason to punish Americans any further in response to Biden’s inane policies, which have raised oil prices. The American people have suffered high and rising gasoline prices for more than a year because Biden did all he could to shut down U.S. oil production, starting on his very first day in office, which made us vulnerable to the global supply shock that occurred when nations around the world refused to buy Russian oil and natural gas in response to the Ukraine invasion.
Two years earlier, you will recall with some nostalgia, the United States was energy-independent for the first time in decades, and an exporter of oil and natural gas.
Sensing an urgent need on the part of U.S. consumers, the Fed “lowered gasoline prices” by stalling the economy. That is not what most people hope for when they hear the words “stabilize prices.”
To be fair, the Fed’s options are limited, after years of zero interest rates and “quantitative easing” inflicted by former chairs Ben Bernanke (2006 to 2014) and Janet Yellen (2014 to 2018), the latter now doing additional major damage as Biden’s Treasury Secretary.
Meanwhile, the Fed looks positively Solomonic in comparison with the Biden administration and congressional Democrats. The leftist pols infesting the nation’s capital are trying hard to stimulate the economy. That is meant, of course, to increase their bleak prospects of sustaining a congressional majority that can continue ransacking the economy and regulating us into pre-Industrial Revolution poverty.
That’s the reason for the Democrats’ weird choice to raise government spending dramatically during a strong economic upswing last year, and give it further jolts this year. Goodies for all, and more votes for Democrats from a grateful nation, according to their scenario.
Hiking spending without offsetting it with additional government revenue increases the federal budget deficit. This puts upward pressure on interest rates and inflation alike, which even the Biden administration realizes is not good.
What’s more, raising taxes during a recession is a proven way to worsen an economic contraction. Of course, we are not in a recession, if Biden and his puppet masters are to be believed.
Apparently, they do not believe it either. Their brilliant solution: increase federal tax revenues by hiring 87,000 Internal Revenue Service agents. This will only further suppress productive economic activity, placing still-more pressure on the federal budget (by reducing tax revenues below projections) and the hapless Fed.
Reducing productive economic activity is a recipe for a recession or, a prospect unthinkable until recently, a depression. The Fed might hope to prevent that through a return to “loose” monetary policy, but that will certainly unleash even worse inflation thanwhat we have seen thus far.
The only real solution to the problem is for the federal government to cut taxes and spending significantly—by at least $2 to $3 trillion.
However, that is the one thing that is truly unthinkable in the nation’s capital.
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Once again the Democrats prove they have no acumen for economics. Their socialist concept is all money belongs to the government (except for certain individual connected to the party insiders) while the people are allowed to use it if they comply with party restrictions. They tax and spend and destroy! At least they haven’t had the audacity to claim they are following the science of economics!
They have great acumen. IN KNOWNG HOW TO RUIN the economy!
Every time the Fed raises interest rates, the cost of the interest we now pay on our trillions of foreign held national debt goes up hundreds of billions of dollars EACH YEAR,,,,just to China alone. Just how much are the Chinese paying the Biden crime family and others to stab the productive American working taxpayer in the back. Joe has more enriched the Russians ($300 billion so far this year to Putin) with his nit wit energy policies, and the Chinese with his dropping of import tariffs and ignoring of American technological thefts, not to mention the stripping of our Billions in military assets left to the Taliban in Afghanistan, that there is no way that the world establishment socialist attack on America from within is not both planned and ongoing, and traitors now are so plentiful in our Washington government and American media that nothing short of a Joe McCarthy resurrection will carve out the cancerous subverters, who have made our drug ridden borders as leaky as Joe’s adult diapers.
YET the interest rates WE GET FROM BANKS< for our savings/checking accounts, STILL NEVER amount to jack squat… Over the past decade, i think i've earned maybe 40 total dollars, on the 1-2 thousand i generally have in my savings account… THAT's WELL under .5%….
The one thing we all can depend on is that the treasonous, unethical, socialist Democrat Party LIES.
“What’s more, raising taxes during a recession is a proven way to worsen an economic contraction. Of course, we are not in a recession,
if Biden and his secret puppet masters are to be believed.”
“Apparently, they do not believe it either. Their brilliant solution: increase federal tax revenues by hiring 87,000 Internal Revenue Service agents. This will only further suppress productive economic activity,”