Looming Economic Crisis Amid “Bidenomics” Agenda

As the White House continues to highlight the purported successes of President Biden’s economic agenda, troubling data suggests that a massive economic crisis may be on the horizon. Most alarmingly, a key economic indicator, not seen since the 1930s during the Great Depression, has begun flashing warning signals.

The warning comes as a consequence of persistent inflation, attributed in part to excessive government spending. If swift measures are not taken to address this issue, the consequences could be catastrophic.

Historical Context:

In 2020, during the height of the COVID-19 pandemic, former President Donald Trump and the Democratic-led Congress injected trillions of dollars into the economy to stave off collapse. This unprecedented government spending was financed through debt and money printing, with the Federal Reserve playing a crucial role in encouraging Congress to continue these policies, despite economists’ warnings about potential inflationary risks.

Upon taking office in January 2021, President Biden initially appeared poised to steer the economy toward recovery, with the development of COVID-19 vaccines and states reopening their economies. However, rather than reducing government spending to pre-pandemic levels, Biden and congressional Democrats, with the Federal Reserve’s endorsement, opted to maintain significantly elevated levels of government expenditure.

This prolonged period of high spending, coupled with the Fed’s decision to keep interest rates low, in addition to international events such as the Ukraine crisis, led to inflation soaring to levels not seen in four decades. Prices for essential consumer items, from groceries to gasoline, skyrocketed.

Not Since the Great Depression:

In response to runaway inflation, the Federal Reserve began a significant increase in interest rates in 2022, a policy that has persisted into 2023. Simultaneously, the Biden administration and Congress continued to maintain government spending well above pre-pandemic levels.

As a result of these policies, while inflation rates have dropped, they remain significantly higher than before the pandemic. The prices of consumer goods and services, as well as housing and rent, have not returned to their pre-pandemic levels.

Remarkably, despite inflation, the money supply—comprising cash, checkable deposits, and bank savings accounts—has sharply decreased. This means that even as prices continue to rise, the available money is diminishing, placing an unprecedented burden on American households.

The latest economic data reveals that the annual M2 money supply growth rate has been negative for the past three quarters, indicating a rapid decline in available money. The last time this occurred to such an extent was during the early 1930s, at the peak of the Great Depression. However, a significant difference exists between the two eras: in the 1930s, when the money supply turned negative, prices also dropped. In the current situation, prices continue to rise despite the collapse in the money supply—a phenomenon without precedent.

Household Savings:

The reduction in the availability of money, driven by the Fed’s policies and the inflationary spending of the Biden administration, has placed American families in a dire predicament. A growing number of people are depleting their savings and accumulating debt to cover basic living expenses like food, utilities, and housing.

Federal Reserve survey data indicates that the bottom 80% of income earners, representing the majority of Americans, now have less real household savings than before the pandemic. Even for top income earners, savings are anticipated to fall below pre-2020 levels within the next year.

The combination of higher prices, increased government spending, rising debt, and dwindling household savings has led to an unprecedented dependence on credit cards and consumer debt. In the spring, collective credit card debt in the United States surpassed $1 trillion for the first time in history.

In essence, “Bidenomics” is manifesting as higher prices, increased government spending, mounting debt, and diminished household savings.

The Need for Fiscal Responsibility:

Currently, Congress and the Biden administration are embroiled in a contentious battle over government spending, with the threat of a temporary government shutdown looming. The time to reduce spending and restore fiscal prudence to Washington, D.C. is now—before it’s too late.

The U.S. economy teeters on the precipice. To bring down prices and inflation, a reduction in spending is imperative. If this corrective action is not taken, the United States may soon find itself plunged into another severe economic crisis.

If that dire scenario unfolds, it will be essential for Americans to remember who bears responsibility.