Our new president has been in office for 120 or so days, so maybe it’s time to take a look at the nation and see what’s happened on Joe Biden’s watch.
Let's look first at the job situation and the statistics for April. According to the Department of Labor, there were 8.1 million job openings which, by the way, is an all-time record. The companion statistic relates to the number of jobs filled, and was a paltry 266,000, far short of the one million expected by the “experts.”
I actually expected something like this simply because I have never seen so many small and mid-sized businesses with “Help Wanted” signs taped to their windows and doors. I’ve noticed this here in Florida and we saw the same thing on a recent trip to rural Georgia. Stores, restaurants, bars, contractors, gas stations, supply companies...the signs are everywhere.
Business owners and managers all attribute the labor shortage to the extraordinary unemployment benefits now being paid to those who are out of work. As one owner told me, “People who make less than 40 or 50 grand would be fools to take a job. They get as much or more with unemployment, and get to stay home.” Thanks to President Biden, those benefits will continue into September, despite a booming economy. Interestingly, the Secretary of Commerce said, “The reason people aren’t getting back to work is fear.” She apparently presumes that Americans are afraid to return to the workplace because of COVID, even though anyone can now get vaccinated easily.
And then there’s the rest of the economy. If you lived through the Carter years, you’ll remember inflation and how thrilled you were to get a 16% mortgage. Well, today the Consumer Price Index popped up at an equivalent annual rate of about 7%. And the Dow? It dropped over 1,000 points in two days. If you live in the southeast, you might have noticed the long lines at gas stations because of the hacking of the Colonial Pipeline by a group of Russian criminals. They are indeed criminals but our smart spooks know they’re also supported by the GRU, Russian military intelligence. The President, of course, is taking a hands-off approach since he really doesn’t care much for pipelines.
Under President Trump we achieved American energy independence, but during this pipeline crisis, we’ve had to buy gasoline from Canada. Guess who the Canadians buy much of their oil from? You got it...Russia. Gas prices today are at the highest level since 2014.
Almost 50 years ago, when I was in graduate school I took a few courses in macroeconomics and microeconomics and learned all kinds of wonderful things about supply, demand, inflation, and other boring stuff. But based on the little I still remember, I expect inflation to continue and stick around for a while.
The problem is, when the government gives lots of money to people and then tells them not to work, we end up with a bunch of folks who produce nothing but have real purchasing power. And then, when that same government hammers those who actually produce goods and services by subjecting them to higher taxes, you get even far fewer goods. The result? Lots of money chasing fewer goods, so prices rise and we get inflation.
Interest rates anticipate all this and will likely last for quite some time. The value of assets will drop. Major tax increases will probably, but not surprisingly, lead to less tax revenue. And while all this is going on, the Fed will continue increasing the money supply and buying bonds. Combine all of this with the administration’s wild spending and destructive energy decisions, and the long-term effects can be disastrous.
Keep your eye on interest rates and the price of gold, then watch out for the crash of the dollar. We just might see a return to the ugly economy of 1979. Fortunately, I'm pretty poor and have nothing to invest, so I really don’t have to worry too much about all this.
Of course, all of this ignores the chaos on our southern border as well as the administration’s weak foreign policy and the apparent abandonment of our only real ally in the Middle East, Israel. This week Hamas launched over 1,000 rockets from Gaza into Israel. And who supplied them with these weapons? Iran, the same terrorist nation to whom we gave a billion or more in cash thanks to the firm of Obama, Biden, and Kerry.
Iran is testing President Biden in Israel and doing the same with its Revolutionary Guard gunboats. This week 12 Iranian gunboats swarmed 6 U.S. ships and a submarine in the Strait of Hormuz. Our response? Warning shots. So long as we respond in weakness, they will act with increasing aggression.
None of this even considers our two greatest enemies whom Joe Biden considers mere competitors: Russia and Communist China, who by the way are both supplying weapons to Iran.
How did the old curse go? May you live in interesting times.
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