It is important to understand what actions President Biden took during his first two years. Their consequences are severe today and worthy of the President’s current approval rating that has fallen to 39%, the lowest in his presidency.
President Trump, mostly spent for pandemic-related relief – $3.28 trillion. President Biden in 2021 signed the American Rescue Plan Act in March 2021 for $1.8 trillion. From thereafter there is constant printing of money: Infrastructure Investment and Jobs Act $765 billion, Promise to Address Comprehensive Toxics (PACT) $278 billion, CHIPS Act $255 billion, Build-Back Better legislation $51 billion. In 2022 the Congressional Budget Office was asked to tally spending on Executive Orders, which came to $532 billion, The Inflation Reduction Act $51 billion, an additional $300 billion in Executive Orders, $34 billion for Supplemental Nutrition Assistance Program, pausing student loan repayment, $40 billion and $85 billion to bring the two-year spending spree to $4.6 trillion. Combining two years of each President brings the total spending to an incredible nearly $8.0 trillion.
We consider now what the results are today. The trillions of dollars spent during the pandemic produced some unusual consequences. The CARES Act was foolishly well beyond what was necessary to compensate unemployment, so much so that the recipients saved a great deal of the money they received. At its peak, the amount of subsidy-money saved reached a high of $2.1 trillion. Today, more than $500 billion remains in savings. Those savings could support consumer spending late into this year according to the Federal Reserve Bank. The rate of unemployment is low at 3.4%. Unemployment is not an issue, the problem is that the job market has lots of openings, and these vacant jobs are part of the reason that inflation remains over 5.0%. and the long-term inflation rate averages 3.28%.
Since March 17, 2022 the Federal Reserve Bank has been forced by duty to the people, to raise the Federal Funds Rate, ten times for a total increase of 5.0% to tame inflation. There is some likelihood that inflation today has no longer been caused from too much money chasing too few goods and services as was the situation in the beginning. Now, inflation is not so much a monetary issue, but more from upward pressure on costs of producing goods and services from increases in wages. Raising interest rates is better suited to monetary issues, not labor issues. This change requires different approaches by the Federal Reserve and some caution is required so as not to risk pushing the economy into a recession.
There is also a threat to the economy from the banking industry. When interest rates rise, it has the result of decreasing the market value of stocks and long-term bonds, particularly so for fixed coupon rate bonds, mortgages and other similar securities. The market value of Long-term debt obligations automatically decreases in value when interest rates increase. That situation is taught in economics and finance courses in the first two weeks of classes. For banks to not have heeded this factor is inexcusable of both the bank’s management and the government’s regulators. The National Bureau of Economic Research – the best economic research in the nation — determined that among the 4,844 FDIC Insured banks, their loses of amounted to $2.2 trillion of value in their holdings of long-term bonds and mortgages. Only three banks so far have totally gone out of business, but certainly there is considerable damage to a large number of survivors. The loss of asset values among plenty of banks raises alarms that regulations were not being heeded. This situation should never have occurred if bank auditors were on the ball.
All of these consequences arise from the actions of President Biden. Not only did the President make bad political choices, but the instincts he showed by his actions indicate he does not understand government beyond its politics. It also depicts a man that either does not seek advice or is unwilling to heed advice that is given. Senator Biden’s job performance as Chairman of the Senate Judicial and Foreign Relations Committees was mediocre at best, and even so, those committees had many much better performers to help steer the Committees out of danger. As the President it seems obvious he does most of his thinking alone. There is a fable that tells the story applicable to Biden as a leader: This emperor has no clothes on! It takes but a child to discern it.
Publiustoo.com May 9, 2023
Not for the Faint of Heart Concerning our Nation.docx