President Biden: The NEW one and only politics thread

Too many things for even one of my posts to address.

But the biggies are that he reappointed Jay Powell to the Federal Reserve, thinking the same old script of a central bank doing more and more to monetize a rapidly growing national debt could keep on going this time. When the pandemic hit, he then urged Congress (and signed this stuff into law) to do the equivalent of borrowing trillions of dollars and helicopter dropping the money all over the place. The central bank monetized all of that debt with an insane amount of bond buying, as it hijacked the debt markets to keep real interest rates negative because the amount of debt that had already been monetized was already a credit crisis in the making due to its misallocation all over the economy. All of that new money created out of thin air in 2020 through now did nothing economically productive. It created an insane amount of demand as people felt flush. Supply couldn't keep up, something exacerbated by the pandemic. So you had the money supply on the back of the central bank being blown up and you had too few of those dollars chasing dwindling goods and services. And it's exactly what Biden called for, with the trillions of dollars of spending he went right for when he got into office. That was a formula for massive price inflation. ... in a nutshell.

Does that put it all on Joe Biden? Nope. He's just the poor shmuck who thought he could continue with the debt monetization so he could sign massive spending bills into law, and that someone else would get holding the bag. Just make the mess bigger and kick the can down the road. Unfortunately for him, though, he's getting caught holding the bag, because the central bank is trapped now. Fight the inflation genie that got out of the bottle, and it's a credit crisis more than a decade in the making and a brutal economic outcome. Try to do more of the same, and people who can't afford their grocery bills and to fill up their cars will be marching on the White House with pitchforks. But I'm sure Biden will placate them with "Putin's price hike" nonsense.

 

1) Because everyone went to the same exact script. Whether it was the BOJ or ECB, they all did the "It's an emergency!" thing, the central banks went into eighth gear buying assets to keep prices artificially high and yields down. ... and the governments spent like drunken sailors. It wasn't just the U.S. And because of the scope of how much they expanded the various money supplies of those currencies. ... well, you are seeing it in generalized prices worldwide.

3) Trump was Trump. We ran up trillions of dollars of new debt with him as president, which he signed into law. And he not only watched the Fed monetize a lot of it, he browbeat them to do it, lobbying for artificially suppressed rates, as only Trump could. In some ways, Biden is paying for the lag in the Fed's stupidity that began while Trump was president. Their emergency bond buying programs, which blew up the money supply, began when Trump was president. But for his part, Biden came right in and pushed for stuffing trillions of dollars of that freshly created money (which they were frantically monetizing) into everyone's pockets, which created the supply / demand imbalance that took the monetary inflation that before that was mostly showing up in the housing market (due to their hijacking the mortgage-backed securities market) and in the valuations of risk assets (my 401(k)!) and made it so that prices of almost everything have taken off.