Fox Business reports
Fox Business recently published an analysis by editor Justin Haskins warning of a deep U.S. economic collapse. He argues:
While the White House continues to tout the alleged achievements of the president's "Bidennomics" policy, mounting data suggests that a huge economic crisis may be just around the corner.
Most worryingly, an important economic indicator has now sent "warning" signals, which have not been seen since the peak of the Great Depression in the 2030s, to remind you of the grim situation.
If the White House and Congress don't cut government spending that causes inflation soon, the consequences could be catastrophic.
One: rising prices, rising government spending and rising debt
In 2020, at the height of the coronavirus government lockdown, President Donald Trump and the Democratic-led Congress invested huge sums of money to maintain stability in the economy, financial system, and stock market. This has led to trillions of dollars in additional government spending, all financed through debt and money printing. The Fed also encouraged Congress to increase spending and keep interest rates extremely low. This lays the groundwork for future inflation.
When President Joe Biden entered the White House in January 2021, the economic crisis caused by the coronavirus lockdown would soon be over. COVID-19 vaccines have been developed, and many states have begun to reopen or prepare to reopen their economies. In this case, the administration should return spending to normal levels, but Biden and congressional Democrats, with the support of the Federal Reserve, have chosen to continue government spending well above pre-pandemic levels.
The government's decision to continue its high spending policy, combined with the Federal Reserve's choice to keep interest rates low and the aftermath of the Ukraine crisis, caused inflation to soar to levels not seen in four decades. Prices have skyrocketed for almost all consumer goods, from eggs and milk to gasoline.
Inflation rate in the United States for 2019-2023
Two: The money supply has fallen sharply
In order to curb runaway inflation, the Fed has raised interest rates sharply since 2022, a policy that continues until 2023. Meanwhile, the Biden administration and Congress have kept government spending well above pre-Great Recession levels.
As a result of these policies, inflation has fallen, but not enough to bring down prices. Most consumer goods and services, as well as rents and housing prices, are much higher than they were before the pandemic.
Incredibly, however, the money supply — amounts in cash, checking deposits, and savings accounts — has been drastically reduced. This means that while prices are still rising, the amount of money available is continuing to decrease, putting unprecedented pressure on American households. The latest economic data shows that the annual growth rate of the M2 money supply has been negative for the past three quarters, meaning that the available money is rapidly decreasing. The only other period in which Americans have seen such a sharp decline in the money supply over the past 110 years was in the early '30s, at the height of the Great Depression.
However, this time is very different from the Great Depression of the 30s of the last century. In the 30s, when the annual growth rate of the money supply turned negative, prices also fell. The current situation in the United States is that prices are rising despite the collapse of the money supply. This has never happened before.
The money supply has fallen sharply
Three: Household savings are falling rapidly
The Fed's policies and the Biden administration's inflationary spending have put American households in dire shape. More and more people are starting to use their savings or borrowing to pay for basic living expenses such as food, water, electricity and housing. This makes it even worse for American families who are not good at saving in the first place. Survey data shows that earners, who make up the bottom 80 percent of the U.S. population, now have less real household savings than they did before the pandemic. Similarly, savings among high-income earners could fall below their pre-2020 level in the next 12 months.
Saving will always be a problem for Americans
Rising prices, rising government spending and debt, and falling levels of household savings are the true face of Biden's economics.
Congress and the Biden administration are currently engaged in a fierce battle over spending. If an agreement is not reached sooner, the government may shut down temporarily. Now is the time to cut spending and bring fiscal sanity back to Washington, D.C., before it's too late