U.S. Economy: The Domino Effect

U.S. Economy: The Domino Effect

The United States is going through a ringer, especially when it comes to the economy. Supply/demand shortages, government spending, inflation rates, interest rates, taxes, and other economic woes are hitting the American people. However, instead of connecting the dots with the Trump administration, Joe Biden separated everything, effectively stacking the Dominos.  

The Biden administration seems too eager to pass the blame to Russia or call the  “ultra-MAGA’ crowd the biggest threat to American Democracy. Although Biden claims that big government spending and policies are not to blame for the current economic crisis, they are. As a result, we are experiencing a Domino effect.

The First To Fall

When COVID-19 became a global pandemic, many nations tried to stop the spread of the disease through shutdowns. The United States was no exception. These shutdowns created a wrench in the supply and demand chain, resulting in damage on the industrial and individual levels. 

The shutdown and other preventive methods caused the flow of raw materials and goods to slow or stop. As a result, the ability to get these items at a stable price became impossible. Demand began to rise, causing the price of items to increase. The government tried to counter the disruption to the supply and demand chain through spending. This is where the dominos began to fall.

Government Spending 

The shutdown caused many citizens to lose their jobs or to be furloughed. As a result, many people were left in terrible financial situations. In order to counter this, the government spent $6 trillion on pandemic relief. $850 billion of that relief was given out to American citizens through three different stimulus checks. 

However, the amount of government spending that has occurred during the pandemic till today has been rapidly causing new economic hardships. The government printing and distributing money in excess quantities, has led to the price increases going out of control. Also, the spending did not aid the supply issue. Instead, it created more demand causing prices to increase as well. As a result, Inflation rates have hit a 40-year high with new records expected to be hit. 

Inflation and Interest Rates

If anyone thought that the United States could print and spend this much money without creating inflation, then they do not know how the economy works. Government spending has always had an effect on inflation. Spending is a key part of the contraction and expansion aspects of the inflation cycle. 

In addition to COVID relief, the government has been going on a spending spree. The result has caused the United States’ inflation to jump to a 40-year high of 7.9%. To try and slow things down, the Fed has increased the interest rates. So now the U.S. government will be paying more on its debt and we the people will of course be paying more on ours. 

This may slow down spending by consumers, but what if the government doesn’t stop overspending? $40 billion to Ukraine, anyone?

They Have No Answers

We like to point out that the Biden administration has no answers, however, that isn’t exactly true. They have answers, they’re just not the right ones. The biggest wrong move economically was killing U.S. energy production. This was done by design, of course, and really got the chips falling. Gas and energy price increases are leading the way to higher inflation with no gaps to stop it.

Are Things Going to Get Worse?

Inflation, government spending, and interest rate hikes haven't escaped Wall Street. The stock market just suffered an eight-week straight loss. This is the longest since 1932, and another Domino falls. 

Recent sales numbers from retail giants Walmart and Target showed consumer spending is slowing. Confidence is dropping and we can tell you that people are starting to hunker down. They have to. It certainly appears that things are going to get worse. Maybe much worse, so what can be done?

Wake Up, Smell the Roses

Maybe all we can do is pay attention and think positively. Much of the economy depends on consumer confidence, right? We can’t depend on Joe Biden’s administration to help us. We won’t get any help from the progressive socialist Democrats either. The help has to come from within the U.S. and from engaged citizens; Republicans, Democrats, and Independents. 

We won’t agree on everything, but we can agree that a healthy economy is the only solution to maintaining or gaining a better standard of living for everyone. Without that, we can forget about solving any “existential problems.”

Our voices and votes can tone down the hyperbole and political divisive rhetoric. Say what you think, but also listen. Hold corporations accountable but don’t hamstring them. Look at what people do and not just what they say.

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