President Biden has settled on a new term to describe a shrinking economy beset by massive inflation. Rather than a recession, we’re in a “transition,” but what exactly are we transitioning to when you can’t buy as much as you used to and travel the way you want to?
According to the Biden Administration, the economy is neither in recession or on the verge of one. Instead, when they aren’t crowing about creating the most “equitable” economic recovery in history, “transition” is the brand new word of the hour. The term appears to have made its first appearance last weekend, when National Economic Council Director Brian Deese told Fox News Sunday, that any bad economic news is simply part of a “period of transition” as we recover from the pandemic-induced lockdowns. “We’re moving from the strongest economic recovery in modern history to what can be a period of more stable and resilient growth,” he said. Americans should pay no attention to the massive increase in prices or empty store shelves because we can “take confidence that [the U.S. is] better positioned than any other country to navigate through this and keep our recovery going,” even as we beg Europe for baby formula, apparently. Mr. Deese continued to list a few items the Administration believes will ensure this new transition is a success, including giving “the Federal Reserve the independence to do what it does. It has the tools to combat inflation.”
This is a remarkable amount of trust considering the Federal Reserve is one of the prime reasons we have massive inflation in the first place. Two years ago, they embarked on the largest money printing spree in history at the start of the pandemic, openly admitting that their plan was to flood the system with new money, all with almost no regard for how it would be spent or what the impact might be on the American consumer. At the time, Federal Reserve Chairman Jerome Powell told 60 Minutes’ Scott Pelley, “We’re not trying to move markets to a particular level. We just want them to work. We want, you know, people to be buying and selling. And so, you know, it felt like we really needed to act. And we did.” Mr. Pelley asked if it was “Fair to say you simply flooded the system with money?” “Yes. We did. That’s another way to think about it. We did.” “Where does it come from?” Mr. Pelley wondered, “Do you just print it?” “We print it digitally,” Mr. Powell explained. “So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.” Mr. Pelley followed up with a question about the amount of new money being minted in comparison to previous recessions. “So the things we’re doing now are substantially larger. The asset purchases that we’re doing are a multiple of the programs that were done during the last crisis.”
Of course, you don’t have to be a “real card carrying expert,” as Dr. Anthony Fauci might say, to know that printing an endless supply of money weakens the value of money already in the market, meaning it causes inflation and reduces your purchasing power. Thus, the actions of the Federal Reserve directly led to the pain consumers are feeling today. If they’d turned off the spigot sooner, or pursued a targeted drip rather than a flood, things might well have been different. This didn’t prevent Mr. Jerome from recently insisting there was next to nothing he would’ve done differently even knowing that prices would spike. Kai Ryssdal, host of Marketplace, asked him point blank last week, “So here comes the poke-you-in-the-eye question. Did you blow it, in being late and failing to recognize that inflation was going to stick around?” Mr. Powell came close to refusing to answer the question at first, blaming the lack of anything resembling targeted policies on “series of global, really, inflation, inflationary shocks” from “the first pandemic in 100 years” “followed by the war in Ukraine, followed by, now, the big shutdowns in China.” Finally, he admitted some culpability for the mess, saying “I have said, and I will say again that, you know, if you had perfect hindsight you’d go back and it probably would have been better for us to have raised rates a little sooner.” Still, “I’m not sure how much difference it would have made, but we have to make decisions in real time, based on what we know then, and we did the best we could. Now, we see the picture clearly and we’re determined to use our tools to get us back to price stability.” This future might not be as bright as advertised, however, because even Mr. Powell admitted that “a soft landing,” “may actually depend on factors that we don’t control.”
The Federal Reserve, of course, doesn’t spend the money themselves. Theoretically, they are an independent central bank that operates without any interference from the other branches of government, though Washington, DC being Washington, DC the relationships tend to be rather incestuous. Hence, Mr. Powell’s predecessor at the Federal Reserve, Janet Yellen, is now Secretary of the Treasury in the Biden Administration, which has completely embraced the free money phenomenon, spending every new dollar printed and then some without regard for the American consumer. This new money took the form of an equally unprecedented $3 trillion in new spending on coronavirus relief and infrastructure last year, though many Democrat leaning economists had warned both might lead to inflation. At the time, their concerns were dismissed as the equivalent of a madman on a street corner in New York City brandishing a “the end is near” sign, but there is no doubt the combination of the two, the endless printing of new money and the non-stop spending of it by the Federal Government, are the main underlying factors driving the worst inflation in generations. They, along with a few other misguided policies, are what has almost doubled the price of gas and food, plus everything else. In other words, we can say without question that the “experts” in government are therefore responsible, directly in Mr. Powell’s case, indirectly in Ms. Yellen’s, for causing the current crisis. Moreover, given their open defiance of basic economics including dismissing concerns from left-of-center economists, we might wonder whether some of this was intentional, or at least it’s near impossible to believe they didn’t realize wantonly flooding market with money would result in a devaluation of the currency.
The President himself did nothing to limit this wonder when he picked up on the “transition” language in another context later the following day. While speaking at a joint press conference with Japanese Prime Minister Fumio Kishida, he claimed, “Here’s the situation. And when it comes to the gas prices, we’re going through an incredible transition that is taking place that, God willing, when it’s over, we’ll be stronger and the world will be stronger and less reliant on fossil fuels when this is over.” It’s difficult not to see the statement as an endorsement of high gas prices as a means to an end, especially when progressives have been calling for a price on carbon for decades now. The stated goal has always been to simultaneously increase the price of fossil fuels and subsidize renewables to drive the market towards a green energy future. Progressive Senator Elizabeth Warren explained it recently, also using the transition language. “EVs are one critical weapon in fighting against climate change. We are collectively putting a lot of hope on the impact of getting gasoline-burning engines off our highways and using more EVs and mass transit to move people around. If we don’t make that transition and make it soon there is no way we can meet our climate goals.” What, however, does this future look like when electric cars are expensive, hard to come by, and the Biden Administration is actively slowing the mining of minerals to produce them?
First, the expense: The average electric vehicle cost $65,977 as of March, compared to an average price of $45,927 across the entire industry, and a much lower price of $26,052 for a compact car, meaning going electric will cost a frugal family over 250% more than opting for a small car mainstay like a Toyota Corolla or Honda Civic. Even if you have the funds and are willing to spend them, Politico reported last weekend that most models are sold out until next year. Ford and Volkswagen both anticipate no new vehicles being available until 2023. Tesla’s least expensive model won’t be available until December, and Rivian, a new entry in the market, was forced to cut production in half this year due to supply chain issues. In other words, progressives are actively promoting vehicles that don’t exist even though President Biden has said these vehicles should account for 50% of automotive sales by 2030. One would think achieving that goal would require an infamous whole of government approach, but instead they are actively hindering it. For example, lithium is a primary component of modern batteries, but prices have risen a ridiculous 483% since last year and no one is expecting that number to decline anytime soon because we aren’t mining nearly enough. Joe Lowry, the founder of Global Lithium explained it to Bloomberg this way, “you can build a battery factory in two years, but it takes up to a decade to bring on a lithium project. In a 2050 scenario, there’s time for everything to happen that needs to happen. But in 2030, it just isn’t going to happen. Just look at the mess we’re in from a lithium supply standpoint with less than 10% EV penetration.” Electric vehicles also require far more copper and nickel than traditional cars, but rather than approving new mines, the Biden Administration has been canceling them by declaring a 20 year ban on mining in Minnesota, where Chile-based Antofagasta had planned new operations for both metals.
Once again, it’s difficult not to see this as intentional, a transition to nowhere if you will. The political rhetoric about a brighter, greener future where dirty, gas powered cars are replaced by cleaner electric vehicles that offer consumers the same flexibility and freedom doesn’t match what they are actually doing. Sadly, this should not be surprising when progressives have long maintained that Americans simply consume too much and live too lavish lifestyles, from what we eat to the things we buy for business and pleasure. In 2012, Scientific American reported on “The Outsize Effect of US Consumption on the Environment.” They quoted Sierra Club’s Dave Tilford, who claimed “A child born in the United States will create thirteen times as much ecological damage over the course of his or her lifetime than a child born in Brazil.” They described this as a symptom of “just how profligate Americans have been in using and abusing natural resources.” “With less than 5 percent of world population, the U.S. uses one-third of the world’s paper, a quarter of the world’s oil, 23 percent of the coal, 27 percent of the aluminum, and 19 percent of the copper,” Mr. Tilford claimed. “Our per capita use of energy, metals, minerals, forest products, fish, grains, meat, and even fresh water dwarfs that of people living in the developing world.” Scientific American noted specifically that private ownership of automobiles were a “large part of” our “poor ranking,” bemoaning that we do not walk or bike as much as say the Chinese, and they were not alone. In 2019, the American Medical Association identified “5 Ways to Reduce Consumption and Slow Climate Change.” In 2020, Columbia University reported on “How Buying Stuff Drives Climate Changing,” concluding that buying sustainable good was not enough, “it is essential to reduce consumption.” The progressive website Vox.com agreed, providing tips for how “affluent people can end their mindless overconsumption” by permanently “reducing air travel, driving, home energy use, food waste, and shopping.”
All of this occurs as the World Economic Forum is making plans for the Great Reset, plans that were endorsed by President Biden’s climate envoy, John Kerry. According to them “The Covid-19 crisis, and the political, economic and social disruptions it has caused, is fundamentally changing the traditional context for decision-making.” Traditional decision making, it seems, has produced “inconsistencies, inadequacies, and contradictions across multiple systems.” Now, however, we have “a unique window of opportunity to shape the recovery, this initiative will offer insights to help inform all those determining the future state of global relations, the direction of national economies, the priorities of societies, the nature of business models and the management of a global commons.” The Founder and Executive Chairman of the World Economic Forum described it this way, “To achieve a better outcome, the world must act jointly and swiftly to revamp all aspects of our societies and economies, from education to social contracts and working conditions. Every country, from the United States to China, must participate, and every industry, from oil and gas to tech, must be transformed. In short, we need a ‘Great Reset’ of capitalism.” This includes steering “the market towards fairer outcomes,” ensuring “investments advance shared goals, such as equality and sustainability,” and harnessing “the innovations of the Fourth Industrial Revolution to support public good.”
At the risk of sounding like a conspiracy theorist: The average US consumer’s purchasing power is down as a direct result of US government policy, one which could clearly have been anticipated. This impact is substantial, meaning we can afford to purchase less than just a year ago, reducing our consumption by default. The mainstream media is already reporting that high prices are forcing changes to summer plans, including canceling trips. Products, from chicken wings to convection ovens and sliding glass doors, are harder to find than at any point since World War II, meaning we might not get what we want even if we have the money, also forcing a reduction in consumption. In the meantime, the Biden Administration and progressives are recommending solutions that don’t exist and they are actively thwarting anyway. Putting this another way, if their goal was to limit consumption, what would they be doing differently? What am I missing?