Maybe Just Dig a little bit Deeper
Earlier, I wrote about When you find yourself in a hole, stop digging. Recently Senator Joe Manchin and Majority Leader Shuck Schumer agreed to a tax increase plus $300B in added spending, and are calling it inflation reduction. Then, we learned that after a contraction of the economy in the January-March quarter, the economy shrank an additional 0.9% in the April-June quarter. Two consecutive quarters of negative growth has been the definition of recession since we began keeping records. The White House denies this, saying the definition of a recession is . . . something too complex for mere mortals to understand. We’re repeatedly assured by people who know better that two consecutive quarters of economic contraction is not the technical definition of a recession. They point to the fact that employment continues to grow. That’s actually part of the problem. When input (labor) goes up, but output (GDP) goes down, that’s productivity reduction.
Productivity increase is what is needed to get us to prosperity. We’re going in the wrong direction. The voters recognize this; for some reason, our President does not. I am not smart enough to craft the message that, at minimum, it’s time to hand the shovel over to someone else.
According to Time Magazine, the claimed savings in the inflation reduction bill includes $288 billion in prescription drug costs over ten years by allowing Medicare to negotiate prices for prescription drugs. How one can deduce a specific number that will apply over ten years from negotiations that have not yet taken place is beyond me.
I Am Not Trump
Inflation is at rates not seen for forty years, the economy is slowing, productivity is down, and our President is negotiating with China to cancel the tariffs imposed by the Trump administration. He continues doing whatever will negate what Trump did, for no reason other than to keep his only campaign promise: “I am not Trump.”
This has the perverse result that Trump once again becomes the center of discussion, the subject du jour for our mainstream media. This will drown out anything other Republicans have to say, so it is possible that it’s intentional. It cannot be intentional on the part of Joe and his wife, although she is clearly one-third of the real Presidency. The other two-thirds are Ron Klain, Chief of Staff, and Nancy Pelosi,
To quote Nancy Pelosi (Above), “He’s just perfect.”
We have “supply chain problems” that are blamed for shortages. As I reported in June, 2020, these are policy problems, not supply chain problems. There is no amount of technology nor policy tweaks that can fix the situation. Only policy changes will bring changes on the ground.
No matter what else happens, the Administration must halt its war on fossil fuels. We are in the idiotic situation of cozying up to Iran, while ignoring the advances made by Trump in the Abraham Accords. These represent the first genuine progress on the ground in half a century.
Hey, but at least there are no more mean tweets.
Good to see a new post. A recession is likely here despite full employment. What isn't happening is any increase in productivity and still stubborn supply chains. Inflation eventually ends with demand destruction as witnessed by the decrease in fuel prices due to higher prices and a very real Chinese slowdown. India is benefiting from discounted Russian fuel and has a decent growth path. There will be little US growth in the next year or so and more inflation is likely. All is somewhat relative given nearly all of the West has little choice but to impose inflation as a tax. The gains China had hoped for are collapsing as well as they face great difficulties from their failing policies.
Increases in interest rates hurt the supply side as well as the consumer side. But the astute investors have seized the real estate market and will benefit. And that increases the income gap. Not sure our Congress has a clue as food lines grow. We are nearing the desired breakdown that so many have wanted and we, the people, did it to ourselves. But I do sense real anger building. We shall see.