The Biden Administration Easily Demonstrates How to Destroy an Economy

 

The U.S. economy took a body blow in 2020 based on governments’ overreaction to a virus that killed 3 in every 1000 people it infected. That ends up being one million Americans out of a population of 330 m. It’s a grim toll, but not the grim reaper of the Black Death or other plagues that would kill a third or more of the people in the past. Deaths didn’t damage our economy. The government did.

The U.S. economy is like a good car. Money – let’s call it capital – must flow constantly throughout the machine to keep it running. If oil stops flowing to any part, then that part breaks.

So, when governments ordered “non-essential” businesses to close, the money that flows through them stopped. When governments restricted travel, closed schools, and cut back on medical services, the flow of money stopped. Shutting down small businesses hits almost two-thirds of the economy. Closing or cutting back food service zaps a sixth of the economy. Medical services are another sixth of the economy. Then, consider the hits on hotels and every aspect of the travel industry. Add food service that goes to schools, etc., etc.

If America had gone back to normal living after the 15 days to flatten the curve of infection, it would have just been a blip.

But, no, governments broke the economy*. Then, the Federal government made it much worse.

The U.S. government printed billions of dollars to pay businesses for losses that could be recovered and paid lower-waged people not to work.

As the economy reopened, unevenly from the free states like Florida to the Commie enclaves like Washington DC, there was a labor shortage which prevented many small businesses that survived forced closure from getting back on their feet.

Government spending doesn’t fix, heal, or invest in the economy. No matter how many times Democrats and their media say Government does, it doesn’t. Ever.

Government is so inefficient that it takes four dollars out of the economy to produce one government dollar of spending – like every dollar spent on road projects. If that federal government money produces one project job, the taxes taken actually kill four other jobs¹.

Or, the money is just printed on paper.

The trillions printed in the Trump Administration as disaster relief helped create inflation and a bigger deficit. More trillions printed in the Biden Administration made certain an inflation disaster.

But, Biden did more than screw the economy with public health blunders. As much as the masks, mandates, shutdowns, and restrictions failed, they don’t compare to what the attack on the energy sector of the economy did.

Back to the economy as an automobile metaphor, energy to the economy is like gas to the car. Irony and aphorism set aside, it’s that simple. Your car has to run on some fuel. And, since the economic law of supply and demand² is as scientific and empirically-proven as the law of gravity, if you decrease supply or increase the costs of supply, then price goes up.

From day one, Biden and his federal minions attacked American energy production. The U.S. went from exporting oil to importing. Putin didn’t damage the economy. Russia is making bank in energy sales to India and China. Selling our national strategic reserve of oil to the Chinese doesn’t change our demand for energy.

The Climate Cultists want the U.S. economy to switch to “Green” energy with electric cars, wind and solar energy, and mass transit. The economy isn’t structured to support their dreams. Even if their fantasies were fulfilled today, green technologies don’t produce enough energy (measured in BTUs) to serve our economy. They don’t make enough “gas” to make our economic “car” run.

Raising the price of energy makes the price of everything go up. Flash of the obvious to everyone but looney Leftists. Energy, alone, fuels inflation. Pun intended.

Printing money makes inflation much worse.

Raising taxes kills jobs, reduces revenue – as counter-intuitive as that seems, and creates the Stagflation of economic loss with higher prices.

Inflation is the cruelest tax. Inflation isn’t in the tax code, but truly is a government levy on one and all. It robs the middle class of any savings. It punishes the poor and everyone, especially seniors, on a fixed income.

Today’s Orwellian-titled “Anti-inflation” $740 billion dollar spending bill will make inflation worse. And tips the U.S. more toward the real, terrible deficit collapse of the entire economy.

Governments destroyed economies from Rome to Spain in history to Germany, Argentina, and Zimbabwe in the last century to Greece and Venezuela in this time.

Changing political parties running governments in the elections this November and in 2024 can undo the damage. If the pols elected simply legislate and execute common sense, obey Econ 10, and get out of the way of the marvelous machine, the wonderful, powerful car, that is the U.S. economy will run beautifully.

* I can cite many economic texts and books from Adam Smith to Hayek to Friedman to Sowell to support every comment.

1. From memory – Micro-Economics studied at the United States Military Academy and JFK School of Government, Harvard University.
2. From memory – Macro-Economics studied at the JFK School of Government, Harvard University.

 

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