Finance / Opinion / Politics

Biden and the Democrats are Courting an Economic Implosion and Social Explosion with their Spending

AMAC Exclusive by Daniel Roman

bidenAmerica’s economy is in serious danger of inflation fueled disaster, driven by the misguided, Keynesian policies of the Biden Administration. Prices for energy, transport, and construction are up, and electronics are nearly impossible to find, while the service sector is suffering a major labor shortage. All of this coexists with historic levels of unemployment. Yet rather than resolving these issues, the Biden Administration seems determined to pour more oil on the first, having passed a more than $2 trillion dollars in stimulus spending, pumping money into the economy at a time when savings are at an all-time high.

Even by the dubious standards of Keynesian economics, this stimulus was unnecessary. Americans have been trapped at home for almost a year, unable to travel, to eat out, or spend money on a host of activities. The problem with the economy was never a shortage of money, but a shortage of things to spend it on, and this was likely to be remedied as restrictions lifted with the vaccine program. By pumping more money in, Democrats and Biden caused the government to compete with otherwise more efficient private sector activity, contributing to the persistently high unemployment rates existing alongside an unprecedented labor shortage across the country.

The Biden Administration has failed to learn from this experience. Rather than backing off in the face of rising prices for gasoline and outright shortages in other areas of the economy, especially involving electronics, they are preparing a multi-trillion-dollar infrastructure project. There is a viable argument that the country needs infrastructure, but timing is everything, and the consequence of pumping vast sums of government money into infrastructure would be to further compete for capacity with businesses and communities emerging from COVID-19.

From an efficiency perspective the timing could not be worse. The government would end up paying vastly more for the same projects and services than it would three years ago or three years from now, in effect getting less for more, while also increasing costs on the private sector. The economy is already running at or near 100% capacity (businesses are struggling to hire and many raw materials are running short). Increasing the number of orders will not increase capacity. It will merely increase prices.

The result, as it has been throughout history, is likely to be felt most by those at the bottom and in the middle. Homeowners will be able to ride out the storm, but renters will face vastly increased costs, local governments will face increased expenses for maintenance, consumers will be unable to buy products, and commuters will face greater difficulty getting to work. Fewer services will be available due to increased labors shortages, while those that are available such as restaurants, food and electronics will be more expensive. And all of these factors will be felt strongest in urban areas.

All of this combines to create an alarming situation. Riots and unrest are not unlikely, as minority communities are faced with high employment and being priced out of their communities, while millennials and younger progressives bemoan rising costs of living. While conditions will likely inspire the left to redouble their attacks on capitalism, in fact it is the government’s spending and intervention driving the troubles. Nonetheless, we can expect more of the left-wing agenda Biden outlined in his campaign—perhaps an insistence on cancellation of student loans, rent forgiveness, and even further unemployment support. If the left’s hardcore base does not get what they want, we already know they may be prepared to threaten violence. The summer of 2020 may well be nothing compared to what is to come if indeed the Biden policies push the nation into an economic crisis.

Economic history is full of examples of this sort of megalomaniacal economic behavior—and of the disastrous consequences which followed hubris on the part of government leaders who believed they could force the laws of economics to bow before them. Although the most cited example may be programs undertaken during the Great Depression, one particularly vivid example—one that eventually led to serious geopolitical consequences—was what the Shah of Iran did to his nation’s economy in the 1970s.

Between 1965 and 1973, Iran experienced one of the fastest rates of growth in the world, with Gross Domestic Product increasing by an average of nearly 11% a year. Predictions were made that by the 1990s, Iran would overtake Japan and become the world’s second largest economy. Following the 1973 Arab-Israeli war, and the Arab oil boycott of the West which followed, Iran was even more flush with money. This, in a sense, was Iran’s undoing.

The Shah of Iran was a tragic figure, a man who loved his country, and seemed to have extensively studied the records of Louis XVI of France and Nicholas II of Russia, and determined to do the opposite. While they surrounded themselves with cronies, the Shah embraced technocrats. Whereas they embraced tradition, the Shah allied himself with what he saw as the forces of progress, launching a “White Revolution” to breakup landed estates and give equal rights to women. He was deeply committed to economic development. The Shah believed that a successful country was a rich one, and he was determined to turn Iran into a “great civilization.”

For this reason, the Shah decided to overrule the advice of his advisers that the Iranian economy was already growing at capacity, and responded to the influx of oil wealth by pumping the funds back into the economy. This came in the form of development projects and programs. The Shah, having seen how his economic policies had produced 11% growth, assumed that if he merely increased the spending on every existing project it would increase the returns, and quite literally added zeros to items in the budget.

The result was the opposite of what he hoped. Iran, like any country, had limited capacity in the economy. Highways and roads could only carry so much transport, and there was a limited amount of construction materials, steel and other goods. Any major public works or infrastructure products that the government launched competed with private sector activity for those scarce resources. While Iran had achieved success with a degree of public sector investment in the 1960s, all of the most worthwhile projects had already been funded, so the additional funding that the Shah poured in was motivated not by any productive value the projects might have, but by the Shah feeling the need to “spend” the money he had on hand from rising oil prices. The result was predictable.

The government spending drove up prices of raw materials, transport, and construction, causing mass inflation while also pricing private businesses out of the market. They could not compete with the Iranian government, flush with oil money, for scarce transport or construction, and the result was that it became impossible for any company to ship products. Shipments rotted in boxes for weeks or even months waiting to be unloaded as highways were backed up with traffic jams, and buildings were left uncompleted. All of this caused rising unemployment at the very same time prices were rising.

By overstimulating the economy in the 1970s, the Shah crashed it. The aftermath, as we well know, was mass protests by unemployed workers against a government that was unaccountable and seemingly incompetent. These protests were hijacked by radical Islamists, but they were inspired by high unemployment paired with high inflation, both caused entirely unnecessarily by the decisions of the government.

Are the Biden administration’s steps down the same road followed by Iran’s deposed leader deliberate? It is hard to say. But if Biden was pursuing policies designed to deliberately radicalize urban populations, they could not chose better ones than those they are pursuing, and which were so effective at radicalizing Iran’s urban population in the late 1970s.

It is not just America’s economy which is under threat by Biden’s economic policies—it’s the entire social fabric of society.

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Ron Howard
5 months ago

And if that was not bad enough, from what I read the infrastructure bill is filled with millions of dollars of non-infrastructure items. Like all of the other big spending bills by Biden and this Congress, full of special interest and other expenditures on things not associated with the bill. Democrats throughout history have bragged about signing the “biggest tax increases” in history so now they are spending every dollar they can, I guess so they can brag about signing the biggest tax bill in history to pay for it.

Dr.C
6 months ago

This is not an administration, but a Regime run by criminals who occupy the White House with the controlled automation called Joe Biden a man of depravity.
Socialism is like pornography, it gives the promise of paradise in its distraction when in reality it’s a worthless delusion.

David P Nelson
6 months ago

This destructive path that the far Left is traveling on has got to be altered – ASAP!

Ed J
6 months ago

Yep! President Joe DeMentia Bidense (our Commander and Grief and poster boy for Culpable Stupidity) will continue to perpetrate his grandiose socialist policies and we, the American people, will be the ones ending up paying for it all – through higher prices, stagnant or lower wages, virulent inflation (which will erode what little savings we have at the moment), and ultimately reduced opportunities to pursue the American dream. Welcome to the Demsheviks’ vision of Nirvana!

Socialism NEVER elevates anyone – it only serves to pull everyone (except the few elites) down to the level of the lowest common denominator, which is equatable to a state of misery and deprivation for all. All one has to do is look at Venezuela today and the Nirvana they are enjoying under Socialism. I do not want this sort of end game for America.

Ralph S Mills
6 months ago

Pharaoh Biden promised to raise our taxes. As a bonus… he is raising costs as well!

Ron Howard
5 months ago
Reply to  Ralph S Mills

Which will result in still higher taxes!

Lakelady
6 months ago

AND NOW Biden wants Congress to send 60+MILLION$$$$ to PALESTINE for RECOVERY damages to GAZA!!!! WHAT THE HELL????? We dont have enough votes to stop this in either house. Now, if joe wants to set up a collection for CONGESS, his WH staff, and all his appointees, then go ahead… see how much THAT gets you… you know, like ok folks, put YOUR money where your loud mouths are….????????????

honest doug
6 months ago

The ship of fools needs reminding of the classic definition of inflation: “too many dollars chasing too few goods”

PaulE
6 months ago
Reply to  honest doug

The ship of fools doesn’t care. They want the economy to crash. It helps expedite their plans.

Ed J
6 months ago
Reply to  honest doug

Bidense will NEVER get it! Why? Because the proper spelling of his surname is actually BiDENSE! Kinda explains it all.

Rik
6 months ago

There’s a reason that the Democratic Party has a JACKASS FOR A MASCOT!
That’s why I ALWAYS REFER TO HIM AS JACKASS JOE!!!

PaulE
6 months ago
Reply to  Rik

Hey Rik,

How are folks out there reacting to your idiot Governor going from crying poverty every other day to now saying California now has a $75 billion dollar surplus (thanks to the Dems bailing out the blue states) and that he wants to blow on yet another wave of useless, social welfare spending initiatives? Doesn’t sound like he is worried about that recall election anymore. Just like Cuomo here on the east coast. The latest poll, if it was accurate, gives Cuomo pretty much a lock on re-election, even after killing 15,000 seniors, multiple sex harassment claims, using state employees to work on his book and the rest of his fraud and graft.

Last edited 6 months ago by PaulE
Rik
6 months ago
Reply to  PaulE

Hi PaulE, plus our “wonderful” Governor Newsom has made it so that any independent contractor HAS to get a License costing $250 /year to earn a living. Many small and independent contractor businesses have already left California and thousands more of illegals are flooding into California where they know they are not going to be deported. It a definite cesspool and if it wasn’t for the weather, I too, would/will leave. I’ll soon be working the Recall of Los Angeles District Attorney George Gascon who is letting Child Molesters and other criminals out of prison and not prosecuting people who are right now being arrested and released. Today’s Democratic Party’s Progressively Communist Policies in Action!

PaulE
6 months ago
Reply to  Rik

You can’t eat the weather or pay your bills with the weather there Rik. Yes, California has some nice weather, but at some point all the other socialist nonsense being rammed down everyone’s throat out there has to out weigh the that lone benefit.

I heard about Gascon. He seems to definitely be in the mold of new style DA’s the left is promoting around the country. NYC and New Jersey have the same type now too. Cops arrest criminals, DA’s either refuse to charge or let them out without bail a few hours later. Pretty much release the criminals, no matter what they do and then turn around and prosecute the police for enforcing the law. So many of the cops are in a lose-lose proposition and are opting to either retire early or just ignore the crime for fear of being charged by progressive DA’s for doing their job.

The morons that keep voting Democrat don’t seem to be able to connect the dots and keep demanding more cops (even as they scream defund the police), but also don’t want the cops to actually do their jobs. They want the cops to protect them, while at the same time don’t want the police to use any sort of force, carry firearms, tasers or batons, protect themselves from personal injury or arrest the criminal if he is caught in the act and meets the “protected class criteria”.

Ron Howard
5 months ago
Reply to  Rik

Yes, Rik, and with all of the thousands of residents and businesses who have left California due to the high taxes and the politics, you can look forward to higher taxes on those of you who remain to make up for the tax loses. My son who live there was notified this week that he is terminated from his job of nearly 30 years due to Pepperdine’s policy of reorganizing to avoid the lay-off problems, then they will hire others to do the same job under a different title. This comes when the apartment he lives in was just sold out from under him.

Ed J
6 months ago
Reply to  Rik

It is rumored that the Demsheviks are going to reinvent their mascot. It will now become a jackass with two back ends! So now they will be able to kiss it coming and going. 

P.S. Also, with two back ends, America will henceforth be receiving twice the quantity of donkey biscuits as currently being dumped on the American people (as if the current tsunami hasn’t been enough already!)!

Ed J
6 months ago
Reply to  Rik

Labeling Ready-for-Eldercare Joe as “Jackass Joe” would seem to elevate this fool to a level of stature far, far above that to which he will ever attain. I am sure that in good faith you meant no insult or disrespect to the genuine four-legged jackasses (all of whom I suspect feel totally embarrassed that the Demsheviks have hijacked them as a mascot).

BAE
6 months ago

Joe Biden likes to spend other peoples money. It won’t affect him and his corrupt family. They’ll laugh all the way to the bank. The American tax payer will pay for all of his mistakes. Awful president and Harris might be even worse. Pelosi and Crying Chuck love him.

Shell
6 months ago

When a problem uses Cloward-Piven, or Socialism, Communism, Lies, and evil scenarios like belittling your opponent, using filth to inflate and infiltrate the field, when historically it has never worked so why would a reasonable, it somewhat, educated person use those failures?

Pride goeth before the fall. Too proud to change?

Wayne Peterkin
6 months ago

While this is true, its a whole lot worse than just spending. Every single policy they are pursuing is anti-American at its core. From foreign policy to race relations to economics to immigration to election reform to judicial reform I cannot point to a single policy intended to benefit our nation. Every single thing they are doing centers on keeping themselves in power regardless of the damage done to the American public. And a lot of dishonest or uneducated nitwits are supporting them because they don’t understand how they will be hurting themselves in the long run. If we can’t stop this we are permitting the destruction of America and leaving our grandkids in an impossible hole they will never climb out of.

PaulE
6 months ago
Reply to  Wayne Peterkin

The objective of the left is to completely dismantle all existing economic and societal structures that make up this country. Period. The destruction of peoples’ lives is considered acceptable collateral damage with no value to the left. That is historical fact. Then, once the system has been completely crushed, the left will impose the new order on the country and all references to what existed before will be removed and outlawed.

The grandkids you speak about will grow up in a world where grinding poverty and endless misery is considered the norm. They will exist only for the betterment of the government and only as long as they can provide that value. As soon as they cease being useful to the state, they will cease to be fed, clothed and sheltered by the government. The Ideas of “a better life” or a “brighter future” will be unknown, alien concepts to them. Their only thoughts will be how can they better serve the state, so the state will continue to allow them to live.

If the American people are unwilling to stand up and defend their rights and freedoms from those that are openly telling you they intend to take away all of them, then we will quickly lose all those rights and freedoms within the next few years.

Last edited 6 months ago by PaulE
Sheila
6 months ago
Reply to  PaulE

PaulE, This is what I am afraid of that If the American people are unwilling to stand up and defend their rights and freedoms from those who are in power, we will definitely lose all those rights and freedoms within the next few years. Even the Republicans Congress are not the doing anything as they just talk,but not taking action, and if they continued not doing anything, they won’t wins next year election. This is something to worry about. .

PaulE
6 months ago
Reply to  Sheila

Yes, everyone on our side thinks we will automatically win back control of one or both houses of Congress in 2022 and that is far from a certainty. The GOP leadership seems to just be mouthing a few words and doing little else of substance to counter the daily onslaught of “progressive” changes being pushed. Words alone don’t stop actions. Actions stop actions.

Ron Howard
5 months ago
Reply to  Sheila

I don’t agree that the Republicans in Congress are doing nothing, they could certainly do more, but remember that they are in the minority and it is harder to get things done.

Ron Howard
5 months ago
Reply to  PaulE

Thank goodness that many states, AGs, and state legislators or suing Biden, or passing state laws that refuse to enforce many bad federal laws, and demanding that some outrageous policies be reversed. That seems to be the most effective weapon against Biden and Congress right now.

Old Silk
6 months ago

Courting it and counting on it. That is why they put their election legislation first and foremost.

Chris
6 months ago

The article and the comments all agree that America is headed for economic trouble. I agree, but how do we prepare for this pending economic doom?

Carol
6 months ago

The destruction of society is exactly what these leftist clowns want! They are playing God and will lose! They think if they destroy America as it is, they can remake it to what they want! Never happens since MAN IS NOT GOD! There will be more violence when folks who have been coddled by the welfare system can’t get what they want! There is so much immaturity and selfishness running rampant in society between the politicians and their useful idiots that without a REAL leader, America is going to crash and burn! God have mercy on all of us!

Chuck
6 months ago

A bubble can expand only so far and it bursts. We are straining the bubble’s expansive qualities and it will burst. The result will make the 1970’s and the 2008 Great Recession look like prosperity.

Wayne Peterkin
6 months ago
Reply to  Chuck

I agree but you and I both know they will blame Trump when the collapse begins.

Chuck
6 months ago
Reply to  Wayne Peterkin

This is an automatic given.

Barb
6 months ago

The Socialist Democrats don’t care what happens in this country so long as it doesn’t directly affect them!

Art
6 months ago

WOW! I REALLY FEEL ENLIGHTENED! THE USEFUL IDIOTS EAT THIS GARBAGE 3 MEALS A DAY. ARE SOME OF US THAT BLIND THAT WE CAN NOT ACKNOWLEDGE WHAT IS HAPPENING???? POWER TO THE REAL PEOPLE. NOW!!!!!

Ruth Kidney
6 months ago

Biden and his cronies in power are the pawns of the chinese communist party and putin. Their goal is to destroy this nation so that they can rape our land. Why else would Biden accept a check from Putin’s mayor friend for millions of dollars and allow them to build a pipeline while cancelling ours? And why not require China to agree to the green new deal initiatives that he has pushed in our country? I fear for the future of this country. Once our leaders denounce Israel we are doomed because we will face God’s wrath.

J. Farley
6 months ago

They are spending like a drunken Democrat, I never say drunken Sailor, because my brother was a Sailor, and besides a Sailor spends his own money !!!

Steven
6 months ago

Daniel Roman must be the biggest optimist ever put on this planet. By making comments such as “The Biden administration has failed to learn from this experience.” Talking in regards to higher gas prices and shortages of building materials and electronics…For F sake, wake up!!! Anyone with half a brain knows that everything is being done for one single purpose, and that is to bring America to her knees. If the American people don’t wake up soon this country is lost forever. If you’re counting on the Republican leadership to do something, or being able to vote out the Dem’s in the next election, you’re sorely mistaken and have your head so far up…I’m wasting my time. May God help each and everyone of you.

Ron Howard
5 months ago
Reply to  Steven

We all have to do our part in doing what we can to fight back. We have to be positive and have hope. Without hope no effort is made to accomplish anything. If we don’t have hope we have given up. Giving up is not how you win a battle. Did our veterans give up? Hell no! When things looked hopeless to many of them they carried the fight on, and won. We are in a war now. And we have to win it one battle at a time. I for one think we will win back the House and hopefully the Senate. If we don’t, then we just have to fight longer and harder.

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