the bongino report

Gil Gutknecht: Befuddled and Bewildered by Inflation and the Economy

Like Harry Truman “all I know is what I read in the newspapers. “

Notwithstanding all the happy talk coming from our befuddled Secretary of the Treasury and her bewildered boss, the bulk of economic news is not good. Administration apologists in the media have almost lost the ability to spin. Even the smart guys on Wall Street finally started reading the writing on the wall. It doesn’t spell SOFT LANDING. 

The good news, thanks to the cashiering of our strategic petroleum reserves and softening demand, energy prices have come down. So inflation was slightly lower this month than last. Still near forty-year highs, but lower. The market cheered that news for about 24 hours then proceeded to drop like a rock on Thursday. 

Retail sales were down 0.6% in November. Even online sales were down. The housing market has slowed dramatically. According to the Fed survey, the New York and Philadelphia regions posted a manufacturing decline. New York alone was down -11.2. JP Morgan recently lowered its economic growth outlook for next year to an anemic 1%. Other economists think even that might be a bit too bullish. 

Back in the Jimmy Carter era, slow or negative economic growth combined with high inflation was called stagflation. Older folks had hoped we would never see that again. 

Heritage Foundation suggests that we may be in for an Unhappy New Year. Sighting the CBO’s much slower growth forecast, they warn of a rocky ’23. The nonpartisan Congressional Budget Office went further, saying that it’s “as likely as not that the economy will shrink.” Heritage reminds us that for a nation now saddled with over $30 trillion of debt, rising interest rates will put increasing pressure on the federal budget. 

The staggering costs of this administration’s dereliction of duty at our border have even the liberal Governor of California crying STOP! The flood of illegals is bankrupting his state. The ruse that these folks contribute far more than they cost us is not true. What a surprise!

Among the few things this administration does well is spending money that it does not have. They remain bewildered concerning the real cause of this inflation. Inflation that daily eats away at our standard of living. It hurts the poor and working-class far more than those limousine liberals. Families who live paycheck to paycheck. Sadly, the Left firmly believes that we can spend ourselves rich. 

Having already spent $3 trillion more than taken in, these folks press on. A $30 billion check for the proxy war here. Another $55 billion for Africa-there. Pretty soon you’re talking real money. There is an unending demand for more free money. Money that Washington does not have. With the tacit approval of a malleable (bipartisan) Congress, they continue to write checks that our grandchildren won’t be able to cover. 

Not unlike the Democrat Mega Donor Sam Bankman-Fried, they seem befuddled about where all that money went. What exactly did the shareholders/taxpayers get for all those billions? At least in the case of the disgraced CEO, we know that Democrats and a long list of liberal causes got hundreds of millions. We shouldn’t expect much of that money to be given back. 

Federal spending and printing continue unchecked. So the hole gets deeper. 

Perhaps the new Republican Congress can put a finger in the dike. They now represent our last best hope. Unfortunately, most of their leaders have shown little enthusiasm for stopping this insanity. The Federal Reserve has played the role of an enabler as well. The Fed Chair mumbles the words “fiscal restraint” occasionally. But like the cat chasing its tail, they continue selling off the accumulating debt while they print more fiat currency (which they rent back to the government). They have to know that when they do this those dollars will surely be worth less. 

Rather than honestly confronting the principal cause of our inflation (runaway spending) the Fed ratchets up the fed funds interest rate. The goal is to strangle the patient until the fever (inflation) subsides. Like a bad Doctor who treats the symptom instead of the root cause, this treatment may be worse than the disease. 

We’ve seen the damage that Leftist governments can do when they run out of other people’s money and control the printing press. Without intervention by the new Republican House, this spending addiction could become lethal. 


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