Economic Reduction & Inflation Expansion – Everything’s Out-Of-Stock & Nothing Is Cheaper

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

“I was into pain reduction and mind expansion, but what I’ve ended up with is pain expansion and mind reduction. Everything hurts now, and nothing makes sense.“

– CARRIE FISHER, POSTCARDS FROM THE EDGE

So, Davos finally got the mini-me version of Build Back Better through a deeply divided Senate over the weekend. It’s a terrible bill and will be a worse law, but at least it’s only about 12% of the original cost.

I guess it’s true what they say, the US must be broke, even new layers of tyranny are cut-rate at this point.

Whatever happened to dreaming big?

It’s all you can do now but to laugh, right? Nothing in D.C. is what it seems, like having lawmakers who work for Americans and the betterment of America. While this has been clear to me for what feels like my entire life, there is still real resistance to this concept.

No, folks, Chuck Schumer doesn’t work for you. He doesn’t work for Wall St. (except when the pay him) and he doesn’t work for the labor unions or anyone else. He works for globalists and foreign actors whose raison d’etre is the destruction of your life and your family’s future.

That’s what this bill is intended and will do when finally enacted.

I was asked by Sputnik News to comment on this last week and the article is now out in the world. The main point of this is the one I’ve been making for more than a year now about Build Back Better, as blackmail to the Fed:

“This bill is another lame attempt by Democrats to force the Fed to stop raising interest rates by saddling them with new spending which it would have to monetize, similar to last year’s Build Back Better,” argued financial and political commentator Tom Luongo.

“What this is is pure pre-midterm electioneering. The Democrats need something to campaign on.”

Thankfully it’s so small that a few billion in spending next year isn’t going to change much. But what will change is that the Democrats and their Davos paymasters have finally gotten two things they were desperate to saddle the U.S. economy with:

80,000 more IRS agents to increase tax compliance

15% effective minimum corporate tax rate

Davos’ obsession is with tax normalization. They want everyone taxed like they tax the French and the Swedes.

And then they want 100% compliance through Central Bank Digital Currencies (CBDCs) where there is no escape from their 24/7/365 surveillance. The US needs to be brought in line to pay its ‘fair-share’ of the Climate Change crisis.

The sad truth is that too many people in this world actually believe this utter bullshit.

Beyond the creeping and creepy Marxism in all of this is the inherent problem with this model for a society. Innovation comes from capital fluidity and flexibility. It is the ability of people to adapt quickly to changes in their environment that leads to prosperity and growth, not distributing resources on an arbitrary definition of equality.

That system’s inherent tend towards entropy leads to where we are today, insane marginal tax rates subsidizing people who vote themselves largesse from the public treasury. To remind everyone, in Marxist-like reductionist terms, if there are only two classes of people, as Murray Rothbard pointed out, those two classes are tax payers and tax consumers. Once the system turns this predatory where it needs a majority of tax consumers to survive off the tax payers all productivity eventually stops, looting via corruption is maximized and the only ones making ‘bank’ are the enforcers and the ‘corpse-feeders.’

… until the whole engine of the economy stops cold. But, truly I’m not invoking Ayn Rand here.

The belief that we can push this dead whale of an idea, communism, much farther up the beach isn’t reaching critical breakout mass, it’s reaching its mathematical limit.

What’s clearly going on here is that the Democrats needed a win to go into the mid-terms with to shore up their base. At the same time GOP establishment was more than happy to ‘oppose’ it to fuel their election strategy and fundraising while vowing to try and repeal it (which they can’t) when they gain control of the country post mid-terms.

This bill will do nothing to alleviate shortages and supply chain disruptions caused by COVID lockdowns, Biden’s executive orders and ESG/DEI arm-twisting of companies to ‘get woke.’ While they’ve engineered a recession, you’d swear their allergy to saying the word would lead to summoning an Elder God because this is some Lovecraftian nightmare world.

Oh. Wait.

They’ll be happy to summon that image up after they can blame things on the GOP, at least that’s what Schumer is thinking. The issue is that you can’t solve cost-push inflation with raising interest rates. But, at the same time, have zero cost-of-capital in the US doesn’t fix anything that’s broken either.

So, after this brief interruption, while we have a bustlet after a massive boom in commodity prices, expect things to get worse for the average tax payer going forward as real-world inflation will continue while Pelosi, Schumer and the rest of the aliens on Capitol Hill assuring us they are still our friends, restrict our choices and make us feel guilty for still breathing.

The real solution is the one they will never contemplate — cutting taxes and regulation. No, the answer is never more freedom, it’s that we still have too much of it. And there is no changing that dynamic as long as our lawmakers are beholden to the control freaks who have already engineered a world where 75% marginal tax rates are not enough.

Stepping back from this particular issue, it’s incumbent to see it in the larger overall strategy of turning the US government even more into the enemy of the people in order to foment civil unrest, if not outright civil war, as a consequence for our unwillingness to eet ze bugz.

You know this is all just unsustainable commie claptrap when you see subsidies for rich people to buy $80,000 electric cars. We really are dealing with people who have no idea how capital formation works or why any of their perceived ‘successes’ were just them piggy-backing on trends that were already emergent in the market before they got involved.

My full answers to Sputnik’s questions are below the line:

Could this proposed plan help the US economy?

No.  This bill is another lame attempt by Democrats to force the Fed to stop raising interest rates by saddling them with new spending which it would have to monetize, similar to last year’s Build Back Better.

What this is is pure pre-midterm electioneering.  The Democrats need something to campaign on.  The GOP will mostly allow it to progress to also have something to campaign against.

To what extent would the additional flow of money help tackle inflation?

It won’t.  It will do the opposite, obviously.  There is no need for this bill.  What is needed is for Congress to stop spending money it doesn’t have on programs the US doesn’t need.  Moreover, Schumer is lying about who will pay for this.  They want to tax the rich to play to their base, nothing more.

But raising taxes in a recession is a recipe for making the recession worse, not better. And no amount of jawboning will change that. 

How could this proposed plan worsen the recession?

You cannot tax your way to prosperity.  Period.  Closing the carried interest ‘loophole,’ for example makes for good rhetoric but it just means that that money will flee the US and find a home somewhere else.  Capital flows to where it is treated best, so if you raise the tax rate on one class of people and they move the money out of the country then you are left with the spending mandated but without the revenue you thought you’d generate.

More spending, less taxes equals the burdens being placed on those left to pay the bills. They always sell this idea with every one of these bills and it never works out.

The best way to raise tax revenue is to lower taxes, remove the roadblocks to growth and allow the market to find new efficiencies to drive costs down, not subsidize prices, be they prescription drugs or anything else.

The White House is continuously saying that the US economy is good and that there is no recession; what is your prognosis with regard to this? What do the facts and numbers tell us?

If the economy is so good, why do we need this bill?  The answer is we don’t. So, the White House messaging is already confused.

The US needs a reorganization of how capital is handled domestically.  Recessions are a reflection of the need for that reorganization through the liquidation of uneconomic spending.

Spending growth is attenuating because high food and energy prices are squeezing household budgets.  As opposed to handing out free money printed out of thin air, creating a bigger debt burden for the future, they should be lifting the controls currently in place creating the shortages leading to higher prices.

What is the way out of this crisis for the US, and is the US government doing enough to tackle the problems?

The way out of this situation for the US is to raise the cost of capital, which the Fed is doing through raising interest rates and force fiscal discipline on Congress by curbing their ability to run deficits while simultaneously lowering taxes at all levels especially on small businesses and wealth preservation. 

This means an ideological shift away from the technocratic ideal that we can socially engineer a better society through the tax code.   We’ve tried this all across the West.  It has failed and led to where we are today.

The problem isn’t that the government isn’t doing enough it is that the government is doing orders of magnitude too much already.  The Democrats (and their international backers) understand that the mid-terms are a referendum on this idea and are trying to hold onto what they can by giving people free money.  Same as it ever was.

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