The Duran Podcast - Trouble ahead for Bidenomics

Episode Date: March 25, 2024

Trouble ahead for Bidenomics

All right, Alexander. Let's talk about the U.S. economy. Interesting statements from Janet Yellen the other day. Inflation is transitory. She's taken that one back. So that was quite an admission from Yelan. And some admissions from Biden during his state of the Union, which are pointing towards some trouble ahead for the U.S. economy. inflation looks set to to rise again and increase in taxes if Biden is to be re-elected. It looks like that's where things are heading towards. What are your thoughts? And an iron rule of politics, if people tell you that inflation is transitory, it means that they're worried about it. In other words, inflation is in fact coming back. And we're seeing more and more signs of this. Inflation in the U.S. is rising.

Obviously, there's the headline inflation that we get from the official numbers, but inflation for many consumer items is rising much faster. And I don't think this is controversial, you know, that the headline figures are suggesting. So inflation is rising. And when Janet Yellen tells us that it's transitory, just as happened, you know, if you remember back in 2021, 2021, 2022, you know, it all began then. well, if they're telling us that it's transitory, then you know that it's serious and it's going to get an awful lot worse. So that's the first thing to say. Now, about the US economy in general, I think it is clear that the Biden economy is a runaway train. The Biden people, ever since they were first, you know, first came into office, have been pushing down

the pedal on the fiscal accelerator. And this is what is giving the US these big GDP numbers. Now, we discussed in 2021. We were the first people to do so at the time, how that was going to result in higher inflation. And in 2022, sure enough, we got much higher inflation. I mean, it went up to, was it, 9% or something like that? It was very high.

And of course, their economic war against Russia played a role in making it even higher than it would otherwise have been. But then we saw things start to fall back, partly because the initial inflation surge, as things sometimes do, ebbed, partly because the Fed raised interest rates, partly because the... administration itself was pumping out oil from the US's Strategic Reserve and acted to bring down energy prices. But the effect of all of that is starting to wear off. The fiscal accelerator is still firmly being firmly pushed down and we're getting all this money boring out of the federal government. And that's why inflation is coming back and it is hurting living standards. But of course, in some ways, that's only a part of the problem, because even as inflation is coming, there's a growing sense, I think, that the US government is now seeing its budget

run out of control. In February, we had, I think, an unprecedented, situation in the United States where the government spent twice as much as it raised in taxes. That is a huge federal government deficit. Debt is now growing at a rate of $1 trillion every 100 days. And I think this is now, again, largely acknowledged. payment of interest on the accumulated debt, which is well over $30 trillion now, comes itself to $1 trillion a year. What is therefore starting to happen is you're getting into a situation where the government is borrowing, not just to meet its current costs, but to pay the interest on its own debt.

Not even the capital, but the interest on its own debt. Very dangerous situation for any government to find itself in. And all of this money that's been pouring out from the Treasury into the economy, it's goosing up the GDP figures but it's doing so or so one is starting to sense by facilitating a bubble part of it justify you know on AI and things of that kind whereas as far as I can understand it the actual real productive side of the economy manufacturing and the rest are either flat or in slow decline. So this is a, you know, a situation where we have the fiscal side of the economy getting completely out of control. Now, Yellen, who has some understanding of these things, I am sure in private, is warning Biden about all of these problems. And a part of Biden's state of the union address, which people overlooked, is that he was clearly, as far as I was

concerned, signaling that if elected, re-elected, the administration is going to increase taxes in order to try to bring this runaway deficit out of control. And of course, he cloaked it in populist language, talked about, you know, taxing the rich more, taxing the corporations more, closing the tax loopholes more. When politicians do that, what they're really telling you is that they're going to increase taxes because doing all of those things or some of those things is difficult. But ultimately, you only do them if you have real problems within your fiscal system, within your budget system.

And it's a clear signal to me, as clear a signal as that could possibly be the taxes in the United States are going to go up if Biden is reelected. I wonder if the Biden campaign, the Biden White House and the campaign, can keep this bubble from bursting until November 2024. This is the big unanswered question. And I think that you've seen the stress in the system grow continuously. There's been all kinds of accidents along the way. There's been apparently problems. You remember that a few months ago we were having problems in the banks, some of the secondary banks, were failing.

And they were all quietly, there was a lot of, apparently quite a lot of bailouts took place. They keep the whole thing going. They keep the can, they kick the can constantly down the road. But the problems are accumulating. If it all goes west, if it all goes south, rather, as we say, before the election, well, it will be pretty dramatic. And the usual pattern with these things is that you are able to keep them going through the spring and the summer, and then people come back in the early autumn, and that's when the problems really start. That was when the 1929 problems began to assert themselves in the autumn,

though it wasn't obvious immediately. and the same was true in 2008, that you could see the stresses accumulating throughout the spring and the summer. And then, as I said, it was around October that things began to get really serious. October surprise. It was a surprise, yeah.

Well, of course, if that happens. That's not going to be good for the Biden White House, yeah. Well, absolutely. If it takes that threat and it hits in October. Yeah. Because already the voters, the American public already see the economy as very, very weak. It's obviously something that Biden cannot run on.

Yes. You see, this is one of the most interesting facts about the Biden period because, you know, we've been through these sort of periods before. I mean, if you remember the Clinton, yes. There was a frankly fake boom at that time as well. It wasn't completely fake. I mean, there was quite a lot of growth at that time. But a lot of it eventually evolved into a bubble.

You know, the dot-com bubble. I'm sure you remember it. But people believed it that time. That there was this general mood of optimism. It helped Clinton, for example, through his impeachment. Because people felt very optimistic about the general state of the economy. even though in reality it was all smoking, a lot of it was smoking mirrors. This time, they're not fooled.

They have a much better sense that things are not really going well than I have to say many, many of the establishment economists do. The public feel this isn't real. you still find various economists, including a certain economist who writes quite a lot in some of the big newspapers in America, I'm not going to name it. Anyway, they don't see the problems which most people can see building up. Mind you, he didn't, as I remember, anticipate 2008. Doesn't have such a good track record either. Yeah, I wonder how, a final question, I wonder how all of this is going to affect the war funding.

You have 61 billion for Ukraine, 15 or 20 billion for Israel. You have another 10, 15 billion for Taiwan. This is not going to help Biden's cause in green lighting all of this money to go overseas. Well, you see, this is it. If the crisis happens before, if things start to fall apart, before that appropriation has been approved, I mean, it won't be approved. I mean, inconceivable that it would be approved in a situation of total budgetary crisis. But until that point, $61 billion, relative to all the other figures that, you know, you know, the, you know, a trillion dollars worth of debt every hundred days.

61 billion doesn't draw very much. It's the perception. It's the perception. It's exact. That is exactly correct. I mean, in amounts, it's, yeah, compared to a trillion, it's a cup of coffee. But it's, it's the perception of. Yes.

Yes. Of it, yeah. I mean, the other thing that is really extraordinary about all of that, this is that when it's all over, which it will be, it will be clear that all of this spending has actually produced very little. It's produced an awful lot of debt, lots of economic problems, but actual real productive investment in the economy, investment that will have a long-term return. I think we're going to find that he's had very little of that. Absolutely. All right. Anything else? Well, we need to keep an eye on this because this is going, I mean, if we have another

financial crisis coming. And, you know, I think people are starting to worry. The fact that inflation is ticking up is an indicator. And I suspect a lot of people are spooked about this. And by the way, the reason inflation is picking up again is because, there's just too much money sloshing around the system. It can't all be absorbed. It's going to the wrong places. And that makes it even, it makes the inflation even more sticky. So, you know, that's why inflation numbers are stubbornly high, despite the high interest rates.

Anyway, I think, I think that's made some people very nervous. And, of course, to repeat again, the real inflation that people actually feel, view is higher. All right. We will end it there. The durand.locals.com. We are on Rumble, odyssey, pitch,

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