The Great Recession resulted in a global economic decline in 2007. At the time, the International Monetary Fund labeled it the most severe economic meltdown since the Great Depression. In the U.S., it was triggered with the housing bubble burst in 2007. And like the Great Depression, nations around the world over-reacted. Many did more damage than good, which prolonged their recovery. When Bill Clinton declared homeownership a right, not a privilege, it ushered in an era of subprime mortgages. Granting mortgages to high-risk borrowers increased home prices and brought turmoil to financial markets. When these debtors defaulted on loans, banks went belly up and this caused the Great Recession. And we are burdened with an economy run by "government help" to this day. The recession renewed interest in Keynesian economics; governments can control free markets better than they can themselves. Instead of allowing for a natural market correction, the Central Bank invented funny money to put the economy on life support with low interest rates too long. When the sub-prime crisis caused financial markets to go into self-protect mode in 2008, the Fed over-primed the pump of the banking system. The Fed over-stepped its financial perimeter when it began paying interest on reserves. This fiscal chicanery converted the pool of bank reserves into interest-bearing security accounts. Instead of increasing lending, "banks decreased their lending." Throughout the Great Recession, and after it, government grew more dependent on the Federal Reserve and less on the free markets to stimulate the economy. Barack Obama solidified this by appointing liberal ally, economist Janet Yellen, president of the Federal Reserve in 2014. The U.S. Senate confirmed Yellen by 56-26, the lowest number of yes votes a Fed chair has ever received. During the Obama recovery, Yellen kept rates artificially low to help the ailing economy and to reflect better unemployment numbers and a dubiously improved stock market. This was a politically correct move for the left but it hindered across the board true market corrections. The Fed kept interest rates at an all time low, down 50% during Obama's reign. Like magic, that changed with the election of President Donald Trump and his two-year economic revival. The Fed raised rates four times in 2018 under Chairmen Jerome Powell, until the COVID-19 crisis hit. This proved that the Federal Reserve has more ability to control interest rates than any time in its 105-year history. The Fed did not lower rates until the pandemic. And two years after the global economy went into a deep, but very short recession, the consequences of the central bank's over-reaction resulted in record breaking inflation and labor shortages. Joe Biden's totally unnecessary stimulus spending has completely destroyed the economic recovery and has turned back the financial clock to 1970. When Joe Biden took office the global economy was in recovery and all he had to do was sit back and do nothing. But that was easier said than done since he had campaigned to undo everything that President Trump had done and reinvent America into a progressive wonderland. And he hired former chairwoman of the Fed, Janet Yellen as Secretary of the Treasury to make all this happen. Biden's approval rating is falling faster than Superman can dodge a speeding bullet. According to a recent Quinnipiac Poll, voters' number one problem with Biden is his economy. This comes as inflation has soared to a 39-year high and we have the largest labor shortage in U.S. history. His federal subsidies and spending have broken our supply chain and raised our energy prices 55%! Manuel Balmaseda, president of the National Association for Business Economics (NABE) said if the central bank does not raise rates ASAP, inflation will be worse than it was in 1970. The yearly rate of inflation, which was almost zero at year end 2020, has climbed almost 10% a month since then. Reacting to pressure from global economists, last week the Fed raised the interest rate .25% for the first time in three years. The Bank of England just delivered back-to-back hikes and The Bank of Canada is set to move next month. The European Central Bank will take action next month also. Economists at JP Morgan Chase & Co. estimate that, by April, rates will have gone up in countries that together produce about half of the world’s gross domestic product. They expect a new global average interest rate of about 2% at the end of this year. That is roughly the prepandemic level. World economists believe the global inflation triggered by zero interest rates poses a bigger threat than the pandemic ever did. Economists point to the Great Depression and the Great Recession as examples of how "too much" government interference in the economy hinders a natural correction. This week, the U.S. is expected to report a 9.3% inflation rate for February, the highest since 1970. Economists claim it took the Fed far too long to start raising rates. While the left defends Biden's economic plan, it has stalled the recovery with high prices, a labor shortage and supply problems. Media, economists and Americans were blinded to economic reality during the 2020 election. They fell for Biden's rhetoric to unite America and promote economic growth by spending. And this has been disastrous. Media and the left spent 2021 arguing that inflation is “transitory” and red flags about inflation was political posturing. Now that it might surpass the Carter years, the Fed is running scared. Jimmy Carter told America, "You just have to have faith things will improve." After four long years, America faced 10% inflation and 10% unemployment. Our foreign policy was a disaster, he allowed the growth of Islamic terrorism, federalized education, and left the American economy in a disaster. The Fed was formed to independently shepherd our money supply. Yet since the Recession of 2008, they have worked with government to advance federalism by making people dependent on government hand outs. When the Federal Reserve allowed inflation to run wild to satisfy political concerns about the economy, it reneged on its founding promise to safeguard our money supply. William Haupt III The Sun Bay Paper Page 24 Goodbye Easy Money, is it Back to the Real World? March 25, 2022 - March 31, 2022
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