Balancing supply and demand in market driven economy is tricky at best. It requires regular adjustments which the competitive market place does as efficiently as anything. But when the government interferes all bets are off – off because there is no offset to government incompetence.
Last week I watched the stock market continue its march into the depths of hell and strongly considered moving to an all cash position. But on Saturday, an article in WSJ (the weekend edition of the Wall Street Journal) reminded me about how strong the United States economy really is and how the current economic disaster is ALL government made. And that made me reflect on the previous economic downturn – the Bush/Obama recession. It too was government made and its recovery was delayed significantly by the government.
Let me digress. This is mostly a liberal/progressive (Democrat) problem but it is not without the weak-kneed assistance of the congressional Republicans*. But that is what you get when you send career politicians to Congress who have never accomplished a thing in life except to be elected or appointed to one government position or another.** Over the past fifty years the government has become more and more engrossed in the affairs of business and the lives of individuals while sending people with little or no experience to public office. It is reminiscent of the old (slightly modified) public saw:
Those that can, do. Those who cannot, run for public office so they can tell those who can what do to.
But back to the main point. The Bush/Obama recession was caused by a burst of the housing market bubble. The bubble was caused by congressional action which required lenders to make home loans to people who could not repay them. These were called “subprime loans” and were made without the traditional requirements of borrower equity or financial disclosures. Of course the federal government guaranteed these loans and so the banks and federal mortgage companies were more than happy to make the loans. Like people who had no experience in the private business world, these politicians thought they could provide “woke equity” in home ownership. The flood of new buyers in the market caused prices to go up and a resulting flood of new housing – the natural reaction of demand outstripping supply. But when it came time to actually make the mortgage payments, thousands of borrowers defaulted; the banks and federal mortgage companies were inundated with properties in default and supply reflexively outstripped demand with the resulting collapse of the housing market. Because housing is such a large part of the economy, the ancillary effect on the general economy was catastrophic.
This in part led to the election of Sen. Barack Obama (D) – a nobody back bencher from Illinois who never held a job outside government grants and political office. He defeated Sen. John McCain (R) who refused to fight back fearing accusations of being a a racist while saving his withering criticism for his fellow Republicans and establishing himself as the Brutus of Republican politics. To put it in the vernacular, Mr. Obama didn’t know diddly-squat about the economy and instead opted for the liberal/progressives favorite default – increasing government regulations and suppressing growth particularly in the natural resources industries. But despite Mr. Obama’s myopic insistence on micromanaging business, business persevered and the economy began the slowest recovery in national history. The essence then is that the government caused the recession and the government impeded its recovery.
But so resilient and strong is the American economy it withstood eight years of abuse under Mr. Obama and when President Donald Trump (R) succeeded Mr. Obama and took the government’s foot of the air hose of business it took off like a missile. It’s not that Mr. Trump (an accomplished business man) did something special, something untried, something unique. He simply canceled much of the government interference and let American enterprise do its thing. But that upset the liberal/progressives who could not explain how wrong they had been during Mr. Obama’s tenure and the bureaucrats who were outraged that their jobs were being demonstrated to be unnecessary and counterproductive.
But Mr. Trump was defeated in the 2020 election. The reasons for his defeat are legion but they included his big mouth, a federal government (the Federal Bureau of Investigation, the Justice Department and the State Department) weaponized by Mr. Obama and twice-failed presidential candidate, former Secretary of State Hillary Clinton, and an unholy alliance between liberal/progressives and the mainstream media producing a propaganda machine that abandoned the truth in favor of speculation and prurient sensationalism. It was disgusting to know that the rest of the world thought less of America because of its politicians and better about China because it refused to be distracted.
And then came COVID. America’s political class did not cause COVID, the Communist Party of China (CPC) did by the releasing (purposefully or accidentally) a modified coronavirus and the subsequent cover-up of both its existence and its properties. But it was America’s political class that shut down the American economy for over one and a half years, closed America’s schools, and scared its children to such an extent we now have a whole generation lacking in educational achievement and scared of their own shadow. Instead of treating the pandemic as a scientific and medical problem, the politicians and their allies in the bureaucracy treated as an opportunity for control. They abandoned “science” almost from the beginning seizing only the title “science” as its reason for near directorial control. It is only now in the aftermath of the pandemic that the real science is proving that virtually everything the government did was wrong, was unnecessary and was unsupported by facts, logic or real science.
And as fate would have it, as the pandemic began to wane and the economy began to recover, a newly elected President of the United States, Joe Biden, once again demonstrated how those that can, do and those who cannot, run for public office so they can tell those who can what do to. Let’s make sure we understand who Mr. Biden is. He is a lifetime politician who never worked a day in his life and whose singular accomplishment was being elected to public office. Mr. Biden ascended to a position of authority in the United States Senate as chairman of the Senate Foreign Relations Committee not by accomplishment but solely by longevity. He was a long time plagiarist, liar, and BS artist who seldom led but rather raced to the front of every new liberal/progressive hairball coughed up by the Democrat Party as if he was its leader. He ran for the presidency by isolating in his basement knowing that the alliance of the liberal/progressives and the mainstream media formed under Mr. Obama would protect him from hard questions and would do his dirty work by continuing a daily, unrelenting disparagement of Mr. Trump generally disregarding the truth of the matter.
Mr. Biden who was Mr. Obama’s vice-president, opted to reinstate virtually all of the regulations that burdened business and caused the slowest economic recovery in history. He added to that by spending so prolifically that his government flooded the market place with newly minted money causing the highest rate of inflation in over four decades. In doing so Mr. Biden ignored the warnings of virtually every economist not working for the government or dependent on government grants for his/her livelihood. And even when the inflation became certain and the accompanying recession began, Mr. Biden denied them both and washed his hands of responsibility by stating that it was the Federal Reserve’s problem to solve and all the while pushing for more inflationary spending and once again choking the natural resources industry. The end result is another economic calamity created by the government with a solution being prevented by the government.
But the stunning part of all of this was the subject of the aforementioned article in the WSJ. Despite the ineptitude of Mr. Biden, despite the overreach of the government bureaucrats, despite the complicity of the congressional Republicans, and despite the general malaise accompanying Mr. Biden’s tenure, the underpinnings of the American economy are still stable. America’s job market remains robust although it has cooled somewhat since the initial surge post-COVID. Although robust job growth can contribute to the continuance of inflation, it is the primary signal of an economic growth – more workers to produce more goods. More goods (supply) to counter more dollars manufactured by government spending (demand) will help stem inflation. But more importantly, it means America’s economic engine remains primed to breakout once again if the government gets out of the way.
Let those who can, do. Ignore those who cannot and run for public office to tell those who can what to do. It’s pretty simple and you all know it through your own life experiences. To quote President Ronald Reagan: “Government is not the solution to our problem, government is the problem.”
*It would appear that many congressional Republicans are so fearful of being accused of being racist, homophobic, misogynistic, sexist, et al. based on nothing that they knuckle under the absurdities demanded by the liberal/progressives.
**Take for instance Oregon’s congressional delegation. With the exception of Rep. Cliff Benz (R-OR) not a single member has had any experience outside of government. Sen. Ron Wyden (D-OR) – teacher and politician; Sen. Jeff Merkley (D-OR) – government appointee, charities, and politician; Rep. Suzanne Bonamici (D-OR) – government appointee and politician; Rep. Earl Blumenhauer (D-OR) – bicycle enthusiast, government appointee and politician; Peter Defazio (D-OR) – government appointee and politician; and Kurt Schraeder (D-OR) – veterinarian, politician (defeated for being too moderate by Jamie McLoed-Skinner, a career public employee and politician).