EMERGENCY RISK REDUCTION

And it always has been. Money talks, and we are all enslaved by our budgets – whether individual, small business, corporate, local, state, or federal.  At least we used to be. The current administration seems to have thrown my Econ 101 theories out the window.  And hope we do the same.

The present administration has unleased Trillion dollar budget proposals. For perspective, here is what I use as the averages — the US GDP (Gross Domestic Product) is about $20 Trillion annually. This is the sum total of all goods and services produced and exchanged in the US. It is huge.  About $4 Trillion is government budgets  – local, state, and federal. Of this, about $2 trillion is paid for by all sorts of taxes and levies, etc. About $2T is borrowed, either thru federal or state notes and bonds – and ‘invested’ in both domestically and internationally (i.e. other countries).  So we roughly cover our fiscal bases, although creep up with annual deficits…which add to our national debt.

The Biden administration, with Democratic House and Senate approval, has floated (and is trying to pass) new budget elements that amount to >$6 Trillion in addition. This includes additional funding for CoV relief, family support, and infrastructure. The devil is in the details, and all of this “necessary” federal spending has immense ‘pork’ attached. Many are fulfillment of campaign promises.

As noted earlier, where does this $6 Thousand Billion (i.e.  Six Trillion) come from? No one or no country left to ‘invest’. Taxes surely won’t cover a small fraction. The only answer is to print hard USD cash. And this will ultimately usher in inflation. Almost all economists agree to this. Biden is spinning it that it is only ‘acute transitory’ inflation – meaning that it will spike and then regress.  Sounds like spin to me.  By the way, we already feel it –  creeping price rises. Gas up $1 in one year. I built simple steps onto my deck, and the wood cost more than the rest of my deck a few years ago!  I have another deck project on the drawing board but it is on hold.  I can’t afford the wood! Just my anecdotal homeowner experience of everyday inflation.  And let’s not talk of food prices.

As an outsider, I am unsure the administration cares.  I hate to be jaded but they seem to want the economy to fall. They appear anti-capitalist. For example, some of this $6T has gone to unemployment benefits for those unemployed due to the CoV.  The amounts are generous, with little accountability (i.e. looking for a job). The fed has now added $300/week/person to this amount, until Sept 2021 because jobs are so “scarce”. However, job postings are everywhere. Small and large business owners are begging for employees – signing bonuses, high hourly wages, etc.  Economists say that the total benefit for an unemployed person is $32,000. Why would anyone work when they can sit at home and earn $32,000. And this is only direct money – indirectly it may be 50% more.  People aren’t stupid.

The result is that many businesses won’t find employees and will close their doors. The fed seems oblivious, or is this purposeful. Some in the administration speak of a ‘basic living wage’ provided for every working adult. Everyone gets a check. We’re not speaking of equality of input. We’re speaking of equality of output. Everyone gets the same, regardless of effort. Not merit-based. Everyone is equal. Read: equally poor. Another name for this is socialism. Is this what the US is heading toward? Actions speak louder than words. Especially the words of politicians —  whether on the right or the left. 

Don’t settle for my diatribe. On my perspective. Read widely. Investigate. Become informed.