In this installment of “Following Your Money”, we will provide our perspective of President Biden’s comments on inflation, and what we believe may be of interest to those investigating the Biden family’s financial relationships with foreign powers.
As reported by many traditional news gatherers, President Biden ostensibly joked on July 28, 2023, that House Republicans considering impeachment of him for his potential participation with son Hunter’s business adventures could add lowering inflation to the charges.
“Earlier this week, the Washington Post suggested Republicans may have to find something else to criticize me for now that inflation is coming down,” Biden said in an economic speech.
“Maybe they’ll decide to impeach me because it’s coming down,” he quipped.
Let’s look at dots the “Gaslighter-In-Chief” ignored, perhaps showing his own “dot-age”:
- Biden’s policies created the inflation.
- Biden and his entire economic team ignored the “transitory” inflation, then denied it by claiming “supply chain issues”, which perpetuated pain onto Americans.
- The pain of reducing inflation via generational high interest rates has been inflicted hardest onto Main Street USA’s working classes, retirees, and Generations X and Z.
- We still face significant unaddressed inflationary risks resulting from the bloated Fed balance sheet, fiscal overspending, and replenishment of strategic energy reserves.
Creating Inflation: Inflation is a result of too much money chasing too few goods.
- As previously noted in “Following Your Money”…….”The Biden Administration pushed The Radical Left’s agenda driven spending programs with unnecessary spending for the $1.9T “American Rescue Plan Act of 2021”, and the $1.2T “Infrastructure Investment and Jobs Act”. Moreover, the Wall Street Journal editorial of March 24, 2023, determined the real cost of the Inflation Reduction Act’s energy and climate subsidies at $1.2T, far more expensive than the Congressional Budget Office’s estimate of $391B.”
- Moreover, Biden Administration created 2021-2023 fiscal deficits of $2.7T more than pre-pandemic levels!
- When it’s all his party in charge of the legislative and executive branches, Joe’s blame of MAGA Republicans for his own unforced errors defines “Gaslighting”.
Ignoring Inflation: Inflation erupted to levels not seen since the late 1970s/early 1980s.
The Bureau of Economic Analysis annual inflation stats speak for themselves:
|Biden:||2022 – 6.5%; 2021 – 4.7%||Average: 5.6%|
|Trump:||2020 – 1.2% 2019 – 1.8%; 2018 – 2.4%; 2017 – 2.1%||Average: 1.9%|
The highest inflation rate was Carter’s 1980 13.6% and was coupled with recession.
Denial of Inflation: The “Inflation Deniers” developed an Echo Chamber.
Federal Reserve Board Chair Jerome Powell, Secretary of the Treasury Janet Yellen, and the supporting talking heads of the New York Times wanted us to think inflation would magically disappear from their radar screens and our pocketbooks once they were more settled into their jobs. They proffered “transitory inflation” as if prices would suddenly drop to prior levels.
Fed Chair Powell’s Federal Open Market Committee (FOMC) advised in April 2021 they would migrate “above the 2% inflation target for a period of time before raising rates to allow the economy to have more time to heal.” So much for the end of “Quantitative Easing” and unwinding $8T of bonds it held since 2009 to allegedly prop up the economy. The decision to increase interest rates was postponed by the Fed but the bomb would not be easily defused.
In May 2021 Secretary Yellen claimed the early Biden era price spikes would last only a few more months before they were to fade away. They continued for two more years, far from a self-correcting condition. The price spikes stayed high and higher without retreat or relief.
In 2023 New York Times Columnist Paul Krugman concurred with the Fed’s playbook, while noting it took years rather than months for transitory to play out, ignoring that cancer is also “transitory” while under chemotherapy treatment. He cited appreciation for the Fed’s ability to reduce inflation without higher unemployment, overlooking that wages did not keep up.
Then we went through the “supply chain disruptions mantra” as the excuse when inflation lingered into 2022. Biden cabinet secretaries and the New York Times columnists were no longer on the “Transitory” bandwagon. The group jointly leap frogged onto a “New Normal” theme that we were to accept just because they said so.
The Pain from Reducing the Inflation Rate: The Fed flipped the rate increase switch on in 2022, raising the Fed Funds Rate as below. We started from minimal interest rates of 0.25% to 0.50% when inflation in 2021 was at its 40 year high of 4.7%. The Fed Funds Rate is critical to financial markets as it represents the rate the Fed will pay to its member banks for deposits and charge for loans, becoming the starting point for most other interest rates. The Fed’s charter is both to stabilize prices and boost employment. The gap of this magnitude between inflation and interest rates creates an unsustainable disconnect to the financial system. The rate increases were in concert with other central banks, arguably protecting weaker currencies.
Here’s the table illustrating the 2022 rate increases which have continued at a somewhat reduced pace so far into 2023.
|Meeting Date||RATE CHANGE||FED FUNDS RATE|
|March 17, 2022||+0.25%||0.25% to 0.50%|
|May 5, 2022||+0.50%||0.75% to 1.00%|
|June 16, 2022||+0.75%||1.50% to 1.75%|
|July 27, 2022||+0.75%||2.25% to 2.50%|
|September 21, 2022||+0.75%||3.00% to 3.25%|
|November 2, 2022||+0.75%||3.75% to 4.00%|
|December 14, 2022||+0.50%||4.25% to 4.50%|
|February 1, 2023||+0.25%||4.50% to 4.75%|
|March 22, 2023||+0.25%||4.75% to 5.00%|
|May 3, 2023||+0.25%||5.25% to 5.50%|
|July 26, 2023||+0.25%||5.50% to 5.75%|
The rate increases were of historical frequency and magnitude. Customer demand dropped in almost every segment of the economy. The rate of inflation fell from prior levels simply because Americans could no longer afford to buy things they wanted. The most immediate impact was felt for items that would be financed at interest rates 5.25% higher than in early 2022. Mortgages, car loans, and “Big Ticket” items became far more costly simply due to carrying costs, which squeezed out demand for anything discretionary and requiring cutbacks for essentials. Please note prices rarely fell, it’s just the rate of increase was reduced.
Unnecessary pain was inflicted on Main Street USA. Local banks had to manage their deposit portfolios in ways they were not used to in a near zero interest rate environment. This impaired their desire to make loan commitments, which holds back the economy. We previously commented on bank failures where both management and regulators were too “woke” to recognize and address their changed operating environment. More recently we commented on the tepid post-pandemic growth in the US economy. Profligate government spending failed to grow the economy resulting in record high credit card debt of over $1T. Our youngest generations took on disproportionate amounts to make ends meet. Moreover, all Americans suffered as real wages declined 1.61% in 2022 and 2.19% in 2021 following real gains of 4.09% in 2020 and 0.83% in 2019.
Most critically, the ongoing inflation risk to our economy still has not been addressed.
The Inflation Reduction Act will not Reduce Inflation: This is a pork barrel program that does not identify the cost of “The New Green Deal” or “Build Back Better”. Most of the funds are yet to be spent. Expect skyrocketing costs of anything construction related.
The Fed’s Bloated Balance Sheet: The Fed currently has $8.1T of assets on its balance sheet to unwind and does not wish to tighten over $1T per year due to risk of recession. As reported in Fortune, Chair Powell admitted to Congress in June 2023 the 2019 effort to tighten the balance sheet failed. We are to now rest assured the Chair now has “experience”, even though the balance sheet risk has grown larger with the pandemic.
Replenishing the National Strategic Petroleum Reserve: The reserve was depleted by half in efforts to ease the pain at the pump from the Biden’s mismanaged energy policies. At the end of July 2023, crude oil inventory stood at 346 million barrels (MMB) versus an absolute capacity of 727 MMB. December 2019’s inventory was a normal sized position of 635 MMB. The purchase price paid for the current reserve is $30 per barrel with current prices at $80 per barrel, suggesting replenishment cost approaching $15B above the original investment. This is two weeks’ worth of consumption, roughly 4% of our annual usage. By the way, as renewables are far tougher to inventory and transmit, storage capacity of fossil fuels will likely go up to meet the shortfall from renewables.
- Housing, Housing, Housing: The core services component of the Consumer Price Index (CPI) remains stubbornly high as shelter is over a third of the CPI and over half of core services. Higher financing, construction and energy costs for our homes will continue as a headwind, ironically making a transition away from fossil fuels even more costly.
Since you brought up the Impeachment word, Joe, is it merited? Or did you trip while awarding yourself a fantasy induced victory lap?
From the US Constitution, Article II, Section 4: The President, Vice-President, and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.
Mismanagement of the economy, and general ineptness are not Constitutionally granted grounds, but Treason and Bribery certainly head the list of impeachable offenses.
Common Sense things we may want to look at:
An Impeccable Game Plan: Any impeachment proceedings cannot be perceived as “just partisan politics” or a high stakes game of “gotcha”. They must be undertaken with utmost seriousness rather than as political theatre, as we have seen two many times in recent years. It cannot be perceived as “get even political scorekeeping”, “making the other side pay”, or “we can do this to you, too”. The impeachment managers and House leadership must prudently bring a case that goes beyond airtight facts.
It must be presented to show misdeeds beyond relatively minor errors in judgement or personal indiscretions, but as actions that have placed the United States of America in a most significant harm’s way. This cannot be an exercise in finding clerically incorrect tax returns but must demonstrate Joe’s real treason in his conduct of foreign policy and how it has hurt America, even if committed as “Vice”-President. As a point of reference, the 1974 Nixon Impeachment hearings, the House Judiciary Committee defeated a proposed article regarding underpayment/avoidance of income taxes. Let’s respect these precedents and follow the facts to their fullest implications. The adverse Biden entanglements may take significant time to unwind, whether with friends or foes.
The Initial Corruption Indicator: How can Joe Biden afford to live in the DuPont Mansion when he has officially worked for only a government salary for approximately 50 years? As we know, the math does not add up. It might have been convenient that Beau Biden was previously Attorney General for Delaware. By the way, does Hunter (or Uncle James) have any notable business accomplishments without a connection to Joe? There are enough photos of Joe, Hunter, and business associates to ask lots of very direct questions of Joe’s involvement.
Ultimately, where do the dots in Ukraine really connect? Not only do most of the family business relationships involve a foreign government, but Joe’s boasting of getting a prosecutor fired as a contingency to release $1B leaves him wide open to his own corruption. If it can be proven this prosecutor was anywhere on the trail of Hunter and Burisma, this is the most impeachable presidential offense in US history. If this bribery and treason is not worthy of an impeachment conviction, we might as well eliminate the clause in the Constitution. If we don’t think there are long term consequences of this relationship, then why are we so extensively supporting the Ukraine militarily, risking our own munition stockpiles?
The “Deep State” coverup deserves its own Congressional investigation. Who signed off on Hunter’s “pardon”, otherwise officially claimed to be a plea deal? Anyone appointed by Joe, or who worked for someone appointed by Joe? Were we only a whistleblower away from this case permanently buried from justice?
Was AG Garland’s appointment of a special counsel to publicize the truth or obscure the truth? Is the AG subject to his own censure and/or impeachment?
Where this is likely to lead: Joe prioritizes his family’s financial wealth ahead of yours and mine. The money suggests Bribery; the foreign “entanglements” suggest Treason. The foreign aspects require us to look at the risk of any compromised entanglements. The actions with Ukraine are exceptionally suspect and we may find similar regarding China. Whatever a Biden has done in an official or personal relationship is likely to have severe and adverse long-term consequences. We need to know where the US has been compromised and undo the damage!
Lisa McClain is the only Michigan representative on the House Judiciary or Oversight committees. We need to provide her encouragement and support!