Buckle up, it’s gonna be a bumpy ride.
After a pandemic’s worth of profligate spending — and not much to show for it — the bill comes due.
And when Pelosi tries to claim it has nothing to do with Federal spending, you can remind her that Manchin doesn’t agree. This was precisely the outcome he feared when presented with Joe’s ‘Build Back Better’ legislation. Massive government spending makes the ‘money printer go brrrrr’, and just like that, the buying power of the dollar suddenly ain’t what she used to be.
Inflation is a tax on people who can least afford to pay it. People living on fixed incomes. People living on the margins with high levels of debt. Retired people living on a fixed income.
Suddenly that money they saved to live on won’t stretch nearly as far as it might have just a few years before.
What exactly IS inflation, and what can we do about it? Inflation, in its simplest terms, is described as being too many dollars chasing too few goods.
What can we do about it? Well, since the federal government is responsible for printing something like 80% of all existing dollars in the last two years alone, we can’t look for them to stop being profligate any time soon. Pelosi isn’t even willing to admit her role in causing the problem, how could she possibly be expected to solve it?
The other tool we have that can pump the brakes on the economy is Interest rates. The Fed can adjust interest rates to spur or cool the economy. Among other reasons, this tool was put in place to act as a brake on inflation.
For the first time in a while, the Fed just pulled the emergency brake. And they are showing signs of pulling it hard.
The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point (25 basis points) and projected its policy rate would hit a range between 1.75% and 2% by year’s end in a newly aggressive stance against inflation that will push borrowing costs to restrictive levels in 2023.
In a new policy statement marking the end of its full-on battle against the coronavirus pandemic, the U.S. central bank flagged the massive uncertainty the economy faces from the war in Ukraine and the ongoing health crisis, but still said “ongoing increases” in the target federal funds rate “will be appropriate” to curb the highest inflation in 40 years.
…The interest rate path shown in new projections by policymakers is tougher than expected, reflecting Fed concern about inflation that has moved faster and threatened to become more persistent than expected, and put at risk the central bank’s hope for an easy shift out of the emergency policies put in place to fight the fallout from the pandemic.
Even with the tougher rate increases now projected, inflation is expected to remain above the Fed’s 2% target, remaining at 4.1% through this year and dropping only to 2.3% through 2024. Economic growth is seen at 2.8% this year, a sharp drop from the 4.0% growth projected in December. — NewsMax
What does that do to the economy?
The Fed’s initial quarter-point rate hike Wednesday in its benchmark short-term rate won’t have much immediate impact on most Americans’ finances. But with inflation raging at four-decade highs, economists and investors expect the central bank to enact the fastest pace of rate hikes since 2005. That would mean higher borrowing rates well into the future.
On Wednesday, the Fed’s policymakers collectively signaled that they expect to boost their key rate up to seven times this year, raising its benchmark rate to between 1.75% and 2% by year’s end. The officials expect four additional hikes in 2023, which would leave their benchmark rate near 3%.
Chair Jerome Powell hopes that by making borrowing gradually more expensive, the Fed will succeed in cooling demand for homes, cars and other goods and services, thereby slowing inflation. — ABC
But something else happens when you make borrowing more difficult. It doesn’t just affect consumer spending habits.
It hits businesses, too. If a business was going to take out a loan to expand their company, make a new product line, or open the doors on a new project, they might think twice before pulling the trigger, because if they know what they are doing, the cost of carrying the loan goes into their profit and loss calculations.
One more thing.
The higher the Fed cranks up the interest rates on loans, the more interest Uncle Sam pays on the money they’ve borrowed to keep all of those projects Pelosi, Schumer, and Biden pushed through humming along.
As interest rates on U.S. Treasury securities rise, so too will the federal government’s borrowing costs. The United States has been able to borrow cheaply to respond to the pandemic because interest rates were historically low. However, as the Federal Reserve increases the federal funds rate, short-term rates on Treasury securities will rise as well — making some federal borrowing more expensive.
Last year, the Congressional Budget Office (CBO) projected that annual net interest costs would nearly triple over the 2022 – 2031 period, soaring from $306 billion to $910 billion and totaling $5.4 trillion over that period. However, inflation has been much higher than CBO’s projections and the Fed is raising interest rates earlier than the agency projected last year, so such costs may rise even faster than anticipated. For example, interest costs in 2021 were around $20 billion higher than the agency projected last year, and such costs through the first five months of this fiscal year are outpacing interest costs through the same period one year ago by $30 billion.
The growth in interest costs presents a significant challenge in the long-term as well. According to CBO’s latest projections, interest payments would total around $60 trillion over the next 30 years and would take up nearly one-half of all federal revenues by 2050. Interest costs would also become the largest “program” over the next few decades — surpassing all discretionary spending in 2043, Medicare in 2043, and Social Security in 2045. Peter G Peterson Foundation
In 20 years, current projects are that we will literally be paying half of every tax dollar the government takes in just to service our debts. And we won’t have enough for our programs.
Remember that Democrat ad about Paul Ryan pushing granny off the cliff? He was trying to save her. Democrats are doing the pushing.
And Pelosi STILL crows about pushing through pork-barrel bills worth a $Trillion at a time?
She’s literally robbing the next generation to push her agenda. And the left thinks we can somehow afford ‘free schools’, too?
Psalms of War: Prayers That Literally Kick Ass is a collection, from the book of Psalms, regarding how David rolled in prayer. I bet you haven’t heard these read, prayed, or sung in church against our formidable enemies — and therein lies the Church’s problem. We’re not using the spiritual weapons God gave us to waylay the powers of darkness. It might be time to dust them off and offer ‘em up if you’re truly concerned about the state of Christ’s Church and of our nation.
Also included in this book, Psalms of War, are reproductions of the author’s original art from his Biblical Badass Series of oil paintings.
This is a great gift for the prayer warriors. Real. Raw. Relevant.