By any measure, the American economy peaked in 2021 in late November to early December.  

“By any measure” includes the Dow Jones Industrial Average, the S&P 500, Nasdaq, and each individual’s own investment portfolios – whether 401ks, IRAs, or after-tax.

The decline after 2021 reached its bottom in October of 2022.  By October, Americans had lost more than 30% of their life savings.

Since that low point the recovery so far has been tentative, inconsistent, and fraught with danger, particularly due to the worst inflation since the “malaise” of Jimmy Carter’s Presidency in the late 1970s.

That similarity of inflation and, indeed, “malaise”, is not at all coincidental.

The key to understanding why that is true lies in understanding the term, “politics trumps economics”.  

“Economics” is simply the measure of the composite sum of what we all are doing:  whether as an individual, a family, or a business, we all try to make the most of what we have:  our skills, our finances, our brains, and our productivity, to be successful.  

“Politics” is what the government is doing, good or bad.  Interfering in the economy – your efforts and mine – and raising taxes or causing inflation is bad.  

Congress authorizes what the government can spend and what it can do, and pays for it by taxing the members of the economy – again, whether individual, family, or business.  The President and the members of the Executive Branch carry out the tasks authorized by Congress.

Congress can get the money it wants to spend via (1) taxation - i.e., taking money from each of us – or (2) inflation – spending more money than is taken in via taxes.  Inflation reduces the value of the money we each possess, taking away a little of its value without actually taking a little of our money.

The actions of both Jimmy Carter and Joe Biden resulted in the highest levels of inflation under any U.S. President in history.  

The consequence is easy for anyone to see.  Jimmy Carter spoke of a “malaise”.  Joe Biden, a master of spin, calls his actions “Bidenomics”.  

Biden’s first year in the Presidency (2021) rode inertia of the crest of the wave that resulted from President Trump’s more pro-freedom, pro-growth economic policies.  But during that time, Biden and the Congress were passing legislation to set their own plans in motion.

By October of 2021, the fallout from those plans were beginning to create impediments for the American economy – i.e., for each of us.  The stock market – and Americans’ savings – began to decline.

The first piece of Bidenomics was intended to create the appearance that the President was establishing so-called “relief measures” (a vague term with no significant results) and vaccination “efforts” against the COVID pandemic.  

Two companies developed vaccines.  Those vaccines were purchased by the Federal government and distributed at taxpayer expense, which was arguably fairly successful.

Some pieces of Bidenomics, were carryovers from President Trump’s COVID endemic-related actions.  

Biden’s American Rescue Plan Act of March 2021 was an extension of Trump’s CARES Act.  

Both Trump’s and Biden’s Acts returned money to taxpayers, at a cost of about $2 trillion each.  The die was cast:  less than a year apart, about $4 trillion of inflation-money (not received in taxes) was added to the U.S. economy.  The U.S. economy produces about $27 trillion of product annually; injecting that $4 trillion resulted in a 15%  (4/27th) increase in the money supply – and that 15% is very close to the total inflation rate that resulted.

Wage-earners were able to buy that much less with their take-home pay.

The value of money, like everything else, goes up and down according to supply and demand.  Make more money available and it simply takes more money to buy anything that is for sale.

As the saying goes, “There ain’t no such thing as a free lunch.”

It may take months or even several years for that money to be spent and for the impact to percolate throughout the economy – and everybody tries to avoid raising prices.  

But sooner or later, the costs of goods being purchased and the costs of paying employees by businesses has to be covered by the selling price (which, by the way, would also have to be true under Socialism).

Similarly, for an individual or a family, the costs of purchased goods has to be covered by the take-home pay.

Most wage-earners eventually receive some sort of raise to counter inflation, but that increase rarely matches the total rise in cost of living.  

It is not inaccurate to consider inflation to be a “wage-reduction” device.

On Twitter, Biden stated, ““Bidenomics is about growing the economy from the middle out and the bottom up, not the top down.  It’s an economic vision where we make smart investments in America, educate and empower American workers, and promote competition to lower costs and help small businesses.”

The reality of the impact of “Bidenomics” contradicts that statement.  Ask those at the bottom of the wage-earner scale – those with marginal wages, like the waiters and waitresses at your favorite restaurant, if you have any doubt.

And Biden’s quote shows that, like Jimmy Carter, Franklin Roosevelt, Socialists generally, and many others, Biden still does not understand that the “middle” and the “bottom” he refers to are paid as a result of the level of overall productivity of their employers – the “top” which he disparages.  

Regardless of what President Biden hopes or wants, there is no magic – only the reality of our well-being.  

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