Listen to My latest, April 29, 2022 Alternative Visions Radio Show during which I discuss the just-released preliminary US GDP figures for January-March quarter. (And tune in to my coming Alternative Visions radio show this friday, May 6, during which I’ll discuss the Federal Reserve’s rate hike announcement this wednesday and why it will accelerate the US recession already here.
The Fed has taken its 1981-82 recession play book off the shelf and has decided a sharp further GDP decline is needed to check escalating inflation. But will it? (Not really).
TO LISTEN GO TO:
SHOW ANNOUNCEMENT:
Dr. Rasmus discusses the recent announcement of US GDP for first quarter 2022 which shows a contraction of the US real economy already underway. The Federal Reserve’s plan to accelerate interest rate hikes starting this month and every Fed meeting this year thereafter, ensures the recession drift will continue and likely accelerate as well. The four components of US GDP—consumer spending, business investment, government spending and net exports (imports-exports) are reviewed as forces behind the GDP contraction. Rasmus discusses the supply side and corporate price gouging behind the current inflation, and how that is depressing consumer spending 70% of US economy + how slowing of economies in rest of world is depressing exports + how US shift to war spending at expense of social programs is further exacerbating the US economic contraction. As Covid impact has ebbed, the war in Ukraine further exacerbates supply drive inflation and in turn consumer demand. How big oil corps and other monopoly corporations in USA are gaming the inflation to generate super profits; what and why Biden administration is doing (and not doing). Rasmus further concludes the war in Ukraine will not be short but protracted, as US adopts a ‘Brezinski 2.0’ doctrine to debilitate Russia economically and militarily in Ukraine; why NATO will expand outside Europe; why the Ukraine war is an event similar to ‘Spain 1937’.
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 
THEFED SHOULD NOT RAISE INTEREST RATES The Federal Reserve Board (FRB & Fed) is a very inefficientand dangerous entity. Congress tasks the Fed with assisting the pace of theeconomy, maximizing employment and maintaining a stable dollar. The Federal Reserve System supervises andregulates banks to promote the safety and soundness of the bankingsystem to foster stability in financial markets to ensure compliance withapplicable laws and regulations. The current protocol used to accomplish its main tasks ofassisting the pace of the economy, maximizing employment and maintaining a stabledollar is by managing the money supply and adjusting interest rates. Historically, the Fed lowers interest rates to stimulatethe economy and raises rates toslow the economy. The purpose of slowing the economy is to mitigate inflationarypressures. We are, currently, involved in an economy that has beeninfested with inflationary pressures. These pressures have been fed by President Biden inhibiting ourproduction of domestic energy. Unfortunately,our Fourth Estate has not queried the Executive Branch to determine why he hastaken these actions. Upon assuming Office, President Biden issued variousExecutive Orders some which reduced our capacity to produce fossil fuel energy. Prior to his actions, this nation was energyindependent and were progressing to increase our production of fossilfuels. The price of crude ranged from$45 to $65 per barrel, thus averaging $55 per barrel.When our output was cut, the price of crude increased. The price of crude was $52.98 on January 19,2021. The price accelerated to $74.10 onJuly 12, 2021, and hit $88.15 on January 31, 2022. The average price of crude was greater than$95 for the past three months which has provided an additional $40 per barrelin excess of the $55 pricing which enabled Mr. Putin to better afford hisinsidious incursion into Ukraine. He hasan extra $220 million per day (5 ½ million barrels @ $40), augmenting Russia’s oilrevenue of $302 million per day (@ $55 per day). Without President Biden inhibiting ourfossil fuel production, Russia would have substantiallyless funds with which to process the “war”. As soon as Biden inhibited our output, Putin knew he would have thiswindfall of funds which was a piece of the puzzle he used to determine Russia’sactions against Ukraine. One mightassume that Biden’s XO’s benefitted Russia and damaged us. One might speculate that the Fourth Estatewould be inquisitive as to why he took those actions. The increase in crude pricing is the main cause of ourinflationary pressures. The cost of manufacturing,cost of filling our vehicles, cost of distributing product throughout thesystem, the cost increases to our food supply, etc. This appears to be damaging to We, thePeople. Again, one might think that thosecurious minds within the Fourth Estate would inquire as to the rationale forhis actions. The second cause of our inflationary pressures is that legislationwas passed to pay workers not to work, thus we were maintaining income flow toworkers while fewer goods and services were being offered to soak up thosefunds; increased or same demand with fewer goods and services stimulatesinflation. More questions for the FourthEstate. Now, the Fed enters the fray. The Fed, led by Chairperson Jerome Powell, ison a path to increase the short-term rates, federal funds and discount rate byabout 250 basis points over the next year or so @ 25 to 75 basis points permove. Further, the Fed will admit thatit may take 12 to 18 months to recognize the effects. The protocol appears to be a shotgunapproach, i.e., not very accurate. The Fed appears to be aquasi-criminal enterprise (please don’t let this scare you off) Have you noticed we almost always overeat @ Thanksgiving?It takes 10-12 minutes for the brain to sense “fullness”. Unfortunately, we continue to eat after we arefull but our brainenables us to eat another 10-12 minutes as wehaven’t realizedthat we were full, 10-12 minutes ago. The Fed tells us that rate increases may take12-18 months tobecome effective. Once the Fed senses “fullness”, it is2 or 3 rate increases beyond”fullness” which too many times hasstimulated a downturn. Thus the Fed, at best, must pause for the cause. The Fed has, also, indicated it wants toincrease rates so when a recessionhits, it can lower rates to stimulate; INSANITY;set the fire and then come to the rescue? A pyromaniac firefighter? Based upon the foregoing, let’s “think”. If we accept that our current malaise of inflation has been,mainly, caused by (unforced) higher energy costs and a “one-time” flood ofmoney into the system, while workers vacationed, the normal protocol ofincreasing rates to moderate the economy appears somewhat ignorant (perhaps insaneis a superior descriptor) especially since the economy shrank in the firstquarter. A better solution might be tostimulate a substantial increase in the production of oil and gas. All regulations and controls must be eliminated. Two to three million barrels a day should be releasedfrom the SPR. Crude prices should drop,significantly, causing Russia’s oil income to drop. Our domestic energy costswill be reduced and within 4 to 6 months, those reduced costs will affect our economy. Interest rates should not be increased by theFed. The results should enable oureconomy to eliminate a recession. If we don’t take those few actions and the Fed persistsin raising rates, we will, probably, be deep in a recession or worse. The higher rates will precipitate a reductionin real estate and our stock markets. Those reductions will inhibit our economy since, collectively, we will spendless because we will feel less wealthy. michael zittermanmikiesmoky@aol.comMay 4, 2022
A truly disturbing post. The suffering endured and will be endued by the world is a reflection of a triumphant gangster capitalism.. Biden’s singular achievement is that he is loathed by his own constituency as much as his opposition. One small note: I did appreciate the comment about students loans and the high interest rates which forces the young to “consolidate” their loans with private banks: I finally have it straight in my own head why the banking industry keeps some 40 million of our young people in perpetual debt.