(Mises)—The Secretary of the Treasury and the Chair of the Council of Economic Advisers are the two principal economic advisors for any president. President Biden chose Janet Yellen as Secretary of the Treasury and Jared Bernstein as the Chair of his Council of Economic Advisers.
Stephanie Kelton asked Bernstein a basic question about Biden’s monetary and fiscal policies. Bernstein responded with a shocking statement.
“The US government can’t go bankrupt because we can print our own money”
The idea that the government can print its way out of any fiscal deficit is a path to the dark side of hyperinflation. Bernstein apparently embraces Modern Monetary Theory, a crackpot theory that no serious economist embraces. Kelton then asked Bernstein to explain why any government would borrow in a currency that it can simply print; his response was either cringeworthy or hilarious, depending upon your political leanings (click link here). Bernstein had no answer, he simply babbled for a minute.
The correct answer is that governments borrow money as a supposed fiscal stimulus. Additional government spending supposedly raises aggregate demand and decreases unemployment. However, additional government borrowing raises interest rates. Higher interest rates slow private investment, decrease exports, and increase imports. Higher interest rates thus counteract fiscal stimulus. Federal Reserve officials can try hold interest rates down by printing money, but this is inflationary.
Bernstein was not educated as an economist. However, Bernstein has worked as a key economic adviser for Biden for years now. The issue which Kelton asked Bernstein about is at the center of “Bidenomics”. It seems that on the job learning doesn’t always work.
Secretary Yellen gave a speech in Kentucky recently. Yellen announced that the Biden administration will implement what she refers to as Modern Supply Side Economics. This so called modern theory is really just a rehash of what economists refer to as “industrial policy”, mixed with investment in infrastructure. The traditional industrial policy favored by the Biden administration has a dismal track record globally.
Harvard Economist Dani Rodrik has developed a more nuanced and less ambitious case for industrial policy. Rodrik admits to past failures of most industrial policies, and recommends a more limited role for government in future industrial policies. Yellen is peddling the old discredited version of industrial policy as new supply side economics. This is nonsense, and she must know it.
Yellen also claims that “trickle down tax cuts” don’t fuel economic growth and only benefit the wealthy. Yellen is attacking Supply Side Economics, which economists have embraced for centuries. Statistics prove the economists’ version of Supply Side Economics. President Obama enacted his American Recovery and Reinvestment Act (ARRA) in 2009. ARRA included spending increases (favored by Democrats) and tax cuts (favored by Republicans). Economists have performed dozens of tests on ARRA. Economist Valerie Ramey published a review article on these studies. What are the results of these tests?
According to Demand Side Economics government spending increases grow the economy and reduce total unemployment through a “multiplier effect”. What this means is that each dollar of public spending increase leads to more than a dollar of increased GDP. Studies show that the spending multiplier for ARRA was between 0.6 and 1.0. Hence the alleged spending multiplier effect is nonexistent. Each additional dollar of federal spending resulted in less than a dollar of additional GDP- a fraction not a multiple. Studies also indicate that each dollar of reduced taxes produced a two to three dollar increase in GDP. Tax cuts produce a true multiplier effect, which works at least partly through the Supply Side incentives that don’t exist according to Yellen.
All economists know that supply side effects of tax cuts really exist, we just disagree over the strength of these effects. Yellen is playing like a trick here. Some Republican politicians have exaggerated supply side effects of tax cuts, by claiming that their tax cuts will produce overnight miracles. Harvard economist Martin Feldstein pointed out the difference between statistically proven Supply Side Economics and the disproven politicized version of Supply Side Economics decades ago. Yellen surely knows all of this. Yellen is guilty of using the Strawman Fallacy to dismiss a sound alternative to Biden’s absurd industrial policies.
Jared Bernstein is the chief economic adviser to the highest elected official in the U.S., yet he doesn’t understand economics. Bernstein could be excused for his ineptitude due to his lack of education in economics. Biden’s reliance on this incompetent and uneducated man is inexcusable. Janet Yellen is highly educated in economics. Hence, there is no excuse for her peddling such nonsense to the American public. People in the political party which demands greater governmental involvement in the economy should really be concerned with this lack of competence and integrity among Biden’s key economic advisers.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
