'The government's cure is what is going to kill the economy'
On Tucker Carlson's Wednesday show, Peter Schiff discussed the rising inflation. Unfortunately, the clock ran out before he had a chance to explain his last claim. That claim was the ominous statement that "the government's cure is what is going to kill the economy." Schiff was right when he said that. It's important for everyone to understand how the Biden administration is driving America straight to a crash.
In American Thinker on April 26, my son and I similarly predicted an economic crash when the government tries to cure the inflation. Here's our prediction of how the economy will play out:
Powell's first four-year term at the Federal Reserve ends in February 2022. At that point, the Biden administration will likely reappoint him to a second term so he can continue to restrict loans to fossil fuel developers and keep his feet off the interest-rate brakes.
Eventually, Powell or his successor will discover that it is a lot easier to let inflation get started than it is to bring it under control. Once the Fed puts on the brakes, Biden's sugar high will turn into a post-sugar crash due to rising interest rates and rising trade deficits.
The worst-case scenario will occur if foreigners stop using the inflating dollar as the medium of exchange in international transactions, resulting in a crash in the dollar's exchange rate, much higher prices for imports, and a huge cut in the American standard of living. China appears to be preparing for that scenario by rolling out a digital yuan that could be used as an alternative to the dollar for international transactions.
Since we wrote this, every trend that we predicted has been occurring:
- Inflation has been rising faster than expected.
- The Fed has kept its foot off the brakes.
- The dollar has been drifting downward in foreign exchange markets.
- Russia has joined China's push to switch away from using the dollar for international transactions.
The Fed is blowing things big time. It should be tapping the interest-rate brakes now, but it is not.
President Biden is blowing things big time. He is simultaneously increasing Aggregate Demand (by calling for massive spending increases) and decreasing Aggregate Supply (by calling for large tax hikes). Both are fueling inflation.
There is still hope that Congress will prevent the disaster. If it shelves Biden's proposals for additional spending and higher taxes, the inflation could be transitory. Only Congress can save us now.
The Richmans co-authored the 2014 book Balanced Trade, published by Lexington Books, and the 2008 book Trading Away Our Future, published by Ideal Taxes Association.
Image: Peter Schiff and the inflation threat. YouTube screen grab.
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