Don’t worry, what you feel every day as you try to live your normal plebeian lives is all in your heads, not in your pocketbooks and retirement accounts – don’t believe your lying eyes.
That’s been the tune the Federal Reserve and Biden administration have been whistling since the beginning of President Biden’s term.
But as of last week, the Fed is changing up its usual song and dance. The Chairman of the Federal Reserve, Jerome Powell, dipped his toe into telling the truth for once and admitted that we “might” find ourselves in a recession.
So, while President Biden is trying to sell the American people on how great the economy is and how we should thank him for his hard work by giving him another four years, let’s take a look at what the Fed said last week.
Last week the Fed announced its tenth consecutive interest rate hike, with Chairman Powell dropping this bomb:
“It’s possible that we will have what I hope would be a mild recession.”
Of course, he said that after bumbling through this mealy-mouthed statement:
“The case of avoiding a recession is, in my view, more likely than that of having a recession. But I don’t rule that out, either.”
You may be thinking that it’s no big deal, but again – think of how often President Biden or some other joker is on TV talking about how great the economy is and how well their multi-trillion spending bills have done for the economy.
In contrast, an admission like this from the Fed Chairman is, as Joe Biden once said, a BFD.
Joel Griffith of the Heritage Foundation called the Fed out, stating:
“The Federal Reserve has been an abject failure, particularly over the last few years. What we need is for the Fed to actually be honest with the public, admit that they made a mistake in printing these trillions of dollars, and point out that Congress has been overspending and Congress has been demanding that they print more money.”
That would require Chairman Powell to state something with any confidence and surety, which is just not his natural state of being.
Chairman Powell sure knows how to instill confidence; he added last week that the recent massive bank failures shouldn’t cause alarm:
“Conditions in the sector have broadly improved since early March, and the U.S. banking system is sound and resilient.”
Sure, three U.S banks have collapsed in as many months, but Jerome says the system is ‘sound and resilient,’ right? While what the Chairman said remains to be seen, we know that getting a loan has gotten more challenging for everyone.
The Chairman added this nugget that is really the rub of it all for the average American in this instance:
“These tighter conditions are likely to weigh on economic activity, hiring and inflation. The extent of these effects remain uncertain.”
You don’t need a crystal ball to foresee the effects of banks reining in lines of credit. Unfortunately, that means it’ll be more challenging for Americans to get car loans, personal loans, and lines of credit, both personal and for their small businesses, and all of that impacts the overall economic health of this country.
After all, in a country that doesn’t save anything, credit is a lifeblood.
The American Bankers Association (ABA) credit index plummeted to its lowest point since the beginning of the pandemic.
The ABA announced that this trend:
“…indicates broad-based expectations for weaker credit market conditions over the next six months among bank economists, and banks are likely to grow more cautious about extending credit.”
But is Uncle Joe worried? No, and according to him, neither should you!
President Biden is set to release a new campaign ad focusing on all the good he’s done for the economy.
In the ad, President Biden states:
“Folks, my economic plan is about investing in places and people that have been forgotten. … It’s about the dignity of work.”
Mr. Biden adds:
“We’re building an economy from the bottom up and the middle out where no one’s going to be left behind.”
Unless, of course, you’ve been doing all the right things, not expecting a handout from your government.
Case in point, Biden’s new rule just took effect, raising the mortgage fees for borrowers with good credit to benefit higher-risk borrowers.
Allow me to illustrate. Say you are someone like me looking to buy their first house.
You’ve paid your bills on time every time, saved up money, been a responsible adult with a credit score over 800, and could put a down payment on a home. Now I will pay about $40 extra a month if I get a mortgage over $400,000 (which is guaranteed for the part of the country I live in) so that those with bad credit can pay lower fees.
Now $40 seems like a little, but over a 30-year mortgage, that equates to an extra $14,400 I get to pay so that others who didn’t do all the right things get to pay less. Do you know what that’s called? Redistribution of wealth and supremely unfair.
While Mr. Powell and Mr. Biden want to continue to lie to you and tell you that everything is great and everything will be just fine, I will always tell you the truth. Everything is not great, and everything will not be just fine – but you already know that.
Everything is more expensive, houses are harder to sell, homes are harder to buy, cars are harder to buy, small businesses are harder to operate, and life is harder to live. We can either continue to believe the lie and live the truth – or we can demand change at the ballot box.
I’ll take a page from Powell’s book and offer this weak prediction – we will conceivably vote out Sleepy Joe and hopefully usher in a new administration, or we might continue on this path for four more years.
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