President Biden: The NEW one and only politics thread

Nothing has really crashed. But all the major equity indexes are down way more than 10 percent from their highs. S&P 500 has lost around 25 percent of its value since its peak. Nasdaq 100 and Russell 2000 down well more than 30 percent. Bonds have been in a blood bath because rates have come up quite a bit.

A giant equity bubble (among other bubbles) has started to deflate. It was already raging when Donald Trump was president due to the Federal Reserve's action after the financial crisis, where they took a giant debt bubble they were responsible for in the first place, and rather than allowing it to correct itself, they propped it up by doing crazy things to pile more debt on top of a mountain of debt -- basically taking a lot of money that has been misallocated throughout the economy and making it so that nothing can ever fail, whether it is a business that earns nothing, a government that runs up endless debt, consumers piling up debt to buy things they can't really afford.

It started to pop when Donald Trump was president, right before the pandemic, when the short-term lending markets were about to implode. But they did more of the same to try to keep it from happening, making a mess even bigger. Then the pandemic happened, and it gave them an excuse to go crazy, with no oversight from a public that had no idea what was happening. A bubble economy for which the stock market was mornically the a source of pride (it was like the tumor being the source of pride for your cancer) got reinflated and taken to a eurphoric blow-off top when Donald Trump was president during the pandemic, because in 4 1/2 years (until just recently), they created as much money out of thin air as the U.S. had in the prior 350 years. That fuels monetary inflation, which has mostly found a home in speculative assets. ... and a little bit now in consumer prices, which has caught people's attention.

The fact that the stock market boomed for the last two presidents wasn't a sign of anything good, it was a sign of reckless behavior. The fact that it is deflating now isn't a sign of anything bad Joe Biden has done, he's just the shmuck there when something that was very artificial started to buckle.

That said, Congress and the president haven't helped things over the last 2 years. Fiscally, we have spent ourselves into oblivion (we did it with Obama as president and with Trump as president), and part of the effect of what the Fed was doing was to monetize all of the debt they were running up; enabling the stupidity. Because the monetary inflation started to show itself in consumer prices (and poorer people are looking for their pitchforks) the Fed has had to try to reverse course a little (although they haven't yet done much to withdraw much of the liquidity they injected into the U.S. economy, because it is going to lead to a debt crisis), but Congress and Biden are still idiocally trying to spend money and run up debt the way we did under Obama and Trump, with a giant spending bill a month ago, a big subsidy bill to chip makers, etc. So it's not like he's helping things. It's more that he's no different than the last several presidents; populist blather and wild spending. All destroying the country from the top down, while a clueless public lets it happen. If rates ever really normalize (heaven forbid if we let buyers and sellers determine prices), our country can't afford the interest on the trillions of dollars of debt we have run up. Which is why they price-fixed rates to zero for so long, creating a mess we are now going to spend a long time digging ourselves out of, and with a lot of pain as a result.