Biden's stagflation and America's road to ruin

Government actions and policies are killing the economy and the American Dream

Incompetent fools are running our government. The left’s hypocritical and ineffective lockdowns, profligate social spending, open borders, higher taxes, and growth-killing regulations are killing our free enterprise market economy.  The socialist model has failed the Democrats. Rising crime and costs are eroding the quality of life. The Republicans favor low taxes, low regulation, border security, and a commitment to public safety and private enterprise.

People and businesses in big blue cities are moving to low-tax states because many are paying 50% of their income to local, state, and federal governments.  As the Republican mayor of Miami recently pointed out in a WSJ op-ed: “They (its citizens) are effectively employees of the state, beholden to a government with public services that neither deliver value nor ensure their personal safety”.  

Higher inflation pushes more middle-class and working-class Americans into higher tax brackets and reduces standards of living. This is especially true for low-income earners and people of color.

Stagflation and below potential growth are the byproduct of bad governance and progressive policies.

Profligate social spending today means higher taxes and/or cuts in social spending tomorrow.  US household net worth declined in the second quarter by the most on record as aggressive action by the Federal Reserve to tame rapid inflation sent stocks plunging.

Household net worth decreased by $6.1 trillion in the April-June period, or 4.1%, after falling about $147 billion in the first quarter, a Fed report showed Friday. The back-to-back quarterly declines pushed the total down to $143.8 trillion, the lowest in a year.

The value of equity holdings slumped by $7.7 trillion, while the value of real estate held by households rose by $1.4 trillion. Real estate values will be the next shoe to drop as higher mortgage rates drive down affordability and home values. A negative wealth effect will reduce GDP, job growth, corporate earnings, and investment.  Standards of living for the majority of Americans will continue to fall.

Recession fears increased in the second quarter as inflation worsened, gasoline prices surged to record highs and the Fed deployed back-to-back historically large rate hikes. That sent the S&P 500 Index tumbling more than 16%. The Fed will likely raise the Fed funds rate by .75% next week, another .50-75% in November, and .25% in December.  The objective is to restrain spending, investment, and job creation.  Having created the bubble in assets with excessive liquidity, the Fed must now pop the bubbles with excessive tightening. This liquidity played a major role in allowing price hikes from various supply chain disruptions to be passed on to beleaguered consumers who suffered from a much faster rise in prices than wages.

Real median pre-tax household income fell $402 last year to $70,784—$2,024 lower than in 2019.  Real median earnings declined 4.1%.  US National Debt is now $31 trillion, which works out to be $92,735 per citizen and $245,191 per taxpayer.  The Congressional Budget Office has estimated that the debt will reach 110% of GDP in 2032—higher than ever—and 185% of GDP in 2052.

“Moreover, if lawmakers amended current laws to maintain certain policies now in place, even larger increases in debt would ensue,” read the Budget and Economic Outlook: 2022 to 2032.

Biden’s decision to cancel student loans and alter their payment terms will cost between $605 billion to more than $1 trillion over the next 10 years. That amounts to an average cost of roughly $4,700-$7,700 for every household in the United States.

The cost of providing for the needs of illegal aliens who entered the country under President Biden adds a $20.4 billion annual burden on American taxpayers. This figure is in addition to the well over $140 billion a year taxpayers already bear to provide benefits and services for the longer-term illegal alien population.  Each illegal alien costs American taxpayers $9,232 per year.

If the Democrats win in November, our country is on a path to financial ruin and one-party rule. As Friedrich Hayek warned, the road to serfdom and an authoritarian state beckons. Political elites are oblivious to the destructive consequences of their socialist policies. Spending, taxing, and regulating is the Democratic Party's way and they are killing the American dream and way of life—at an accelerating pace.

Now, we must look to the midterm elections, hoping that, given the massive and unsustainable public debt and deficit spending, it is not already too late.