Don't Believe What You Read
That goes for a couple of things. One, Don’t expect to see me write more consistently until the summer ends. Remember, I have a million dollar tan on 12 dollar body. Two. Certainly do not believe that the “Inflation Reduction Act” is going to reduce inflation.
Although the Democrats and the White House are crowing about getting this victory, they have yet to adequately explain how increasing government spending is going to reduce inflation.
That increased government spending in 2020 and 2021 is the primary reason we have been jolted by rampant inflation. So, a spending bill that insists it will be paid for primarily by increased corporate taxes is going to reduce inflation. Huh? How in any World is that possible?
I have not done a deep dive into this little piece of Democratic sleight of hand but it just seems if you add cash to an already overheated economy, you will add demand to that economy and demand will outstrip supply. Or inflation.
The legislation, which will surely pass in the House this week, supposedly tackles everything from climate initiatives to bringing semiconductor production back into this country. It seems there is a little( or a lot) for pretty much every Democratic district in this country. Every politician can go back home and say “look what I did for you!”. Then tell his constituents that big bad business will be paying for it all.
Yet, the facts are simple. You add spending, you add debt. This administration has not tackled the massive debt we have built up and believes that spending is the only way to save America. Another generation, somewhere in the future, will deal with it.
We need to get reelected by God and if I can put a chicken in every pot I will.
So the success of this legislation is all the media talks about. The reversal of Biden’s tanking popularity. Will he run in 2024? The GOP has lost steam and the momentum is all ours.
Here is how I see things playing out: 1. Inflation will be stubborn for another two months at least. It may drop this week by a small percentage, it may not. However, I don’t think there is an acceleration coming. 2. The Fed rate hikes will level off and by the end of the year the Fed Funds rate should be around 4.25%. It will stick for a bit. 3. The softening of inflation should come right around the November elections and the White House will crow, along with every media outlet, that the I.R.A. was the main reason that inflation is coming down. Which is pretty much the dumbest thing an administration, known for really stupid things, can say. This legislation according to most economists, will have very little impact on inflation this year and probably very little next year as well. It is important to remember that anything the government does to deal with inflation is not immediate. Even though I will bet every dollar I have, they will say inflation was tamed because of this act. 4. The “R” word is losing its cachet. A bad definition by an organization most Americans have never heard of and they should just call it a day. Technically, we are in a recession. The only data that backs that up is two bad quarters of GDP. Time to retire that little nonsense and come up with something more reflective of on the ground growth and economic activity. 5. The ebbs and flows of politics right now has the Democrats with some positive wind at their backs and the Republicans will be scrambling to try to figure things out. Americans vote with their wallets. Their wallets are still doing pretty well, for the most part. The people who’s wallets are not doing well and have traditionally voted Democrat will soon be getting something to fill their wallets so their economic conditions will seemingly improve as well. Amazing how that happens around election day. I am no expert but I believe if Republican candidates in toss up districts don’t get their act together, we may see the Democrats retain control of Congress. I wouldn’t have said that four months ago.
One thing of note. President Biden might be doing his party a big disservice if he doesn’t decide soon if he will run in 2024. He might feel that his mission, whatever that is, is not complete and with the momentum he has, he may decide to run. He needs to say something now because as we all know, the Democrats have a very thin bench as far as potential Presidential candidates go. It goes without saying that Kamala Harris will not be on that list, but who? It will take the party a full year to find the right candidate and then he/she will need to do the whole campaign for the nomination thing. The Republicans on the other hand have many viable candidates and the possibility of President Trump returning is also very real.