Proposed National Rent Controls

Economically speaking, in a free market unencumbered by heavy government control, payments by tenants must be just enough to keep those apartments on the market. If government dictated rent controls force the rental prices down, apartments will start disappearing from the market.

New York has continuously legislated rent controls in its rental housing since World War II to protect consumers from high rents. Basic analysis of supply and demand shows that both groups, renters, and landlords, are actually worse off.

New York has always had abnormally low vacancy rates. Why? The rent control price, below the free-market price causes a shortage of apartments and few relinquish their apartments. The demand is much higher, but the supply is lower.

Under rent control, a black market is created in which bribes are demanded and given to advance one’s name on a wait list or the prospective renter must buy worthless furniture at inflated prices. Prospective renters engage in endless searches to find a rent-controlled apartment, and normal landlord services are generally non-existent.

Why do rent controls in New York persist then?

1.      People do not understand what problems rent controls create.

2.      Landlords are politically unpopular and considered evil.

3.      Not everyone is hurt by rent controls and those who benefit fight very hard politically to maintain rent controls; some pay a fraction of what their apartments would fetch on the free market.

Economically speaking, a price ceiling (rent control) creates a class of people who benefit from such government regulation. Once established, rent controls cannot be easily eliminated.

Under the pretext of affordable housing, the Biden-Harris administration announced recently, “new actions to protect renters and promote rental affordability.” Most agree that it is a form of national rent control.

The Federal Housing Finance Agency (FHFA) announced it will launch a new public process to examine proposed actions promoting renter protections and limits on egregious rent increases for future investments. The language is vague and it does not define what constitutes “egregious” rent increases.

FACT SHEET:  Biden-Harris Administration Announces New Actions to Protect Renters and Promote Rental Affordability - The White House

According to Pew Research, 36% of the 122.8 million households (data obtained from the 2019 Census Bureau estimates) were renters. Certain demographics (young people, minorities, and low-income households) are more likely to rent and thus are affected more by the escalating rental prices which reflect the Biden administration’s inflationary economy.

Landlords are corporations and individuals who own just one or two units or a house. Only one-fifth of rental properties are owned by a for-profit business. One in ten rentals are owned by individuals with one or two properties, according to the 2018 census data.

Although unpopular with the public, landlords must meet their mortgage payments, property taxes, and repair bills when the renter fails to pay their due rent for months, destroys the property, or makes changes to the rented property without permission from the owner.

Pew Research published data on who rents property in the U.S., based on 2018 Census data.

-          58% of black households

-          52% Hispanic households

-          27.9% Caucasians households

-          40% Asian households

Rental income was $353.7 billion in 2018. Half of individual landlords reported net income in 2018 and half reported losses. Who rents and who owns in the U.S. | Pew Research Center

Biden’s rent control decree is certainly ill-advised as the issues associated with Americans falling behind on rent, evictions, and inflationary prices are the very result of his economic policies which started on day one of his presidency and the many executive orders issued which aimed to destroy the fossil fuel industry to the benefit of the renewable energy industry, the industry promoted by the global warming alarmists.

Rent control is banned in at least 30 states in the U.S. for obvious reasons - the results of rent control in the past have been an economic disaster except for those paying cheap rent.

Tom Cranmer stated, “In New York City, rent control made many owners of rent-controlled apartments abandon their buildings or burn them down. If you have toured Harlem and the Bronx, you probably saw the devastation. Drug dealers and addicts took the buildings over.” Other landlords chose to turn their apartments into office space, thus exacerbating the shortage of rent-controlled apartments. https://ipropertymanagement.com/laws/rent-control

The late Swedish professor of economics at Stockholm University, Carl Assar Lindbeck, famously wrote, “Rent control appears to be the most efficient technique presently known to destroy a city – except for bombing!”

Milton Friedman participated in 1945-46 in a San Francisco historic case study of unworkable rent controls. The common criticism among economists has been that rent control/restriction/regulation causes more harm in the economy by “perpetuating shortages, encouraging immobility, swamping consumer preferences, fostering dilapidation of housing stocks, eroding production incentives, and distorting land-use patterns and the allocation of scarce resources.”

Verdict on Rent Control — Institute of Economic Affairs (iea.org.uk)

A few years ago, Fairfax County government in Virginia tried to impose rent-controlled slum buildings under the guise of “affordable housing,” to be owned by foolish investors. Residents of single-family homes where these slum buildings would have been inserted, turned out in droves to oppose the plan, and it was quietly dropped.

Landlords in Florida tried to stop rent control initiative in 2022. Landlords try to stop rent control initiative in Florida - Washington Times

Rent controls prompted landlords to turn their rentals into Airbnb and Vrbo short-term home-sharing in the vacation housing market. Untold landlords were lucky and sold their properties before the pandemic hit because were tired of being cheated out of rent by dishonest tenants.

With the pandemic moratoriums by the CDC, tenants did not have to pay rent. Some landlords, dependent on rental income for their survival, had not been paid rent in 16 months, and were unable to recover losses as the renters left in the middle of the night, destination unknown, and stealing all appliances. https://www.npr.org/2021/10/22/1046154251/they-refused-to-pay-rent-and-stole-the-fridge-landlords-deal-with-pandemic-squat

The White House announced in its recent executive action, among others, the Renters Bill of Rights, the creation of tenant background checks, algorithms, tenant screenings, and applicant’s source of income as a factor into housing decisions.

“But it gets much worse. Biden's minions describe in vague language how the Federal Housing Finance Agency will be looking for new ways to ‘limit egregious rent increases’ on properties backed by Freddie Mac and Fannie Mae. If the mortgage of your rental property ends up in the hands of one of those quasi-government enterprises, you might soon find yourself subjected to a national rent control policy.” If that happens, the rent may not cover the mortgage on the rental property. https://www.washingtonexaminer.com/opinion/editorials/biden-push-for-national-rent-control-will-turn-would-be-landlords-into-airbnb-hosts

Rent control may seem like a good and humanitarian idea to help those who live on a limited income, but, in general, it creates a host of economic problems which harm the population at large. Billions that we send foolishly every year to other countries or trillions that we spend on senseless wars, could be better spent at home to defray the costs of rental for Americans, making a better life for American families, not for the millions of economic migrants who cross our borders illegally every day.

Worrisome Predictions for 2023

Roman street vendor in Pompeii

In our western, vastly declining world, it is depressing and scary to make predictions for 2023 because we never know what other variables may intervene that may skew our reasonable forecasts based on current facts.

Several podcasters have made projections recently as we approach the end of 2022.  Some of the predictions are based on common sense, available data, economic trends that don’t seem to add up, others can be found in plain sight, and others are based on events that are unfolding as we speak.

Several medical doctors have predicted that vaccine deaths will accelerate, and infertility and stillbirths will “explode” around the world. This is certainly based on statistical data coming from various countries that have reported a drastic decrease in births, including South Korea and death statistics. Whether there is a correlation between Covid-19 vaccinations, increased death rates, and infertility or stillbirths, that remains to be studied over time.

Larry Scott Spiegelman, MD., OBGYN in South Florida said that studies on infertility looked at sperm counts before and after vaccination and found absolutely no change. “And to date nobody has shown any signs of infertility as a result of the vaccine up to 42 days after receiving a full dose.”  What about after 42 days? The Truth About COVID-19 Vaccines and Infertility | Resource | Baptist Health South Florida

Following the dictates of the Paris accord, It is not difficult to see that Europe is committing government-sanctioned societal suicide by destroying the fossil fuel industry that provides them with the energy necessary to run a developed economy.  They are also destroying fertilizers and the farmers’ ability to grow food.

The climate change globalists consider domesticated animals too flatulent and, to reduce the methane gas, humans should kill off as many farm animals as possible and eat fake meat or insects.

Crop failures and food scarcity are on the horizon when all fertilizer producers, including those in Ukraine, are taken out of production.

The Russian-Ukrainian war added more fuel (no pun intended) to the European fire of destruction of the fossil fuel industry, oil, and gas.

BASF, one of the largest conglomerates in Germany, is moving its operations permanently to China where energy is cheaper and plentiful. https://www.ft.com/content/f6d2fe70-16fb-4d81-a26a-3afb93e0bf57

The nuclear industry and the hydroelectric power generation are also taking a hit, replaced by wind and solar energy generation which does not even come close to providing the Europeans and other developed nations with what they need in terms of industrial and home energy.

Inflation will accelerate, a no brainer, based on the expensive energy and shortages of so many goods and services and the inability to produce and deliver goods across the world in a timely fashion.

Money, including the U.S. dollar and the petrodollar, will be replaced by government-mandated digital currency which will control where you spend your money, how much, whether you are a compliant-citizen, and your social score is good enough.  

You will be allotted gas credits each month, based on how far you are allowed to travel in your current car which may or may not be electric but it will have a kill-switch; how much money you can spend on medicines, which doctors you may see, whether you will be allowed into a hospital or not, which schools you may attend, and where you can work.

You will be taxed at higher and higher rates, whatever the government and their “banksters” will decide, and you will be allowed so much for food per day, based on caloric intake permitted by your job. Rationing of money, goods, and services will be controlled by government with their fingers on your digital currency.

The escalating inflation will trigger more government bailouts/handouts for collapsing industries like the Teamsters Union. Biden used $36 billion from the American Rescue Plan, the $1.9 trillion corona virus relief package signed into law in 2021 and gave it to the Teamsters Union to prevent severe cuts to the retirement incomes of 350,000 Teamster workers and retirees, a very convenient bailout for his supporters harmed by the very inflation Joe Biden’s policies have created. President Biden releasing $36 billion to aid pensions of union workers (cnbc.com)

More fuel scarcity will be caused by Joe Biden’s policies and the climate change industry which will demand climate lockdowns based on consumer behavior and social scores.

There will be more population revolts across the globe against governments that have stolen elections like in Brazil, angry that gasoline and natural gas are expensive and in short supply on purpose. Revolts will also flare up more against new pandemic-induced lockdowns.

There will be more pushbacks against social platforms like Twitter and Meta who still suspend access and the freedom of speech of conservatives and libertarians.

Twitter employees, behaving like the immature and entitled children that they are, have suspended President Trump, the most powerful president in the world, from their social platform, but allowed the Ayatollah on Twitter.

What would have happened if Iran had attacked the U.S. and President Trump would not have been able to communicate with the American people on our own social platforms? Have these Twitter employees, behaving like their office is a day care, gym, coffee shop, yoga meditation, and sandwich bistro, thought about the countrywide consequences of their hatred for Trump?

People are going to continue home schooling, as the quality of education in the U.S. is getting worse, and the transgender revolution is destroying the family and morals.

As inflation spikes and food shortages will become more common, people will do more home gardening, bartering for food, swapping seeds, swapping services, and building more community gardens than are currently in use.

Mike Adams predicts that the dollar might be replaced with Goldbacks and junk silver. Goldbacks are notes which contain a certain minimum of gold foil imbedded into the currency which will not have a face value and are issued with different state names on it. https://www.apmex.com/product/204989/1-utah-goldback-aurum-gold-foil-note-24k?msclkid=914e821026ae143e3f06e18a35151466&utm_source=bing&utm_medium=cpc&utam_campaign=CPA%20-%20Gold&utm_term=gold%20backs&utm_content=Goldbacks

Junk silver represents coins circulating before 1965 which contain 90% silver. Their value is based on the content of metal and not on the collectability or condition. They have value but collectors are not interested in them as coins.

Finally, another worrisome prediction involves the scarcity and distribution of medicines and medical equipment, which will affect the overall health and survivability of the population in general.

 

Inflation and Recession

Economically speaking, the aggregate demand for the U.S. economy represents the quantity of domestic products in general that are demanded at each possible value of the price level. If there is too much money being printed and in circulation, an increase in the aggregate demand pushes the price level up. If the aggregate demand continues to increase month after month, the economy will suffer from inflation – a sustained increase in the general price level.

When production falls and people lose jobs, two consecutive quarters to be exact, the economy experiences a recession.

The mainstream media pundits, who are not economists, but communication or English majors, are twisting themselves into pretzels, trying to redefine the term recession to spare embarrassment to their favorite Democrat president, Joe Biden, and his disastrous economic policies. They are counting on most Americans, with or without a college degree, not knowing basics of Macroeconomics.

If recessions are deep and sustained, they turn into depressions. Here are events in economic history that had affected American families deeply:

-          the depression of the 1890s after the rapid industrialization and railroad prosperity

-          the panic of 1907

-          the postwar depression following WWI

-          the Great Depression of the 1930s

-          the postwar recession following WWII

-          the 1974-75 recession with serious stagflation in the U.S.

-          the 1982-83 recession

-          the 1990-91 recession 

-          current inflation and recession under President Joe Biden

The economy also experienced dramatic deflations, sustained decreases in the general price level, such as the post-Civil War deflation, in the 1870s, the 1880s, 1921-1922, and 1929-1933.

The decline in economic activity during the Great Depression was the most severe in our economic history until the lockdowns of Covid-19 in 2020 from which world economies are still struggling to recover from due to the disastrous government interference in the free markets.

The Great Depression taught us that recessions and inflations take a long time to self-correct, and the right combination of economic policies, fiscal and monetary, must be adopted by governments. Are these economic policies successful? Not all the time.

To power large economies, crude oil and coal are necessary for energy and economic growth, not the unreliable green energy, solar and wind. Governments are expected to manage their economies so that “recessions do not turn into depressions and depressions will not last as long as the Great Depression.”

When rapid inflation occurs while the economy is growing slowly (“stagnating”), or in a recession, then we experience stagflation such as that experienced in the 1970s in the U.S.

The Federal Reserve, which is neither federal nor a reserve, but a private corporation since 1913, controls monetary policy, money stock and interest rates. When a competent person is at the helm of the twelve regions’ federal reserve banks, the Federal Reserve (Fed) can take actions to influence aggregate demand by changing interest rates up or down, making borrowing more expensive or cheaper, or by altering the money stock (supply). The Fed engages in buying and selling of securities and the printing of new fiat (Latin for “let it be”) money not backed by any goods or services, to control interest rates and the money supply.

Can the government stabilize the economy with its fiscal policies (federal taxation) or even manage it correctly? As history shows, the answer is no. One of the reasons is the out of control spending that Congress engages in which requires more money that we do not have enough of from taxation, money which then must be printed by the Federal Reserve’s printing presses or borrowed from countries like China.

Printing so much money without the backing of goods and services devalues the currency, i.e., the dollar. During the American Revolution, one dollar was worth 2 ½ cents. The Bureau of Engraving and Printing runs the printing presses since 1862 and produces dollars (“greenbacks”), using the same magnetic ink and special cotton (75%) and linen (25%) paper made by Crane and Company since 1879.

So, is inflation bad for everyone? It is if you look at it as unlawful taxation forced upon all Americans because they must pay so much more for their food, gasoline, medical care, travel, entertainment, housing, energy, etc. It is worse for the elderly and people living on fixed incomes who do not qualify for or are too proud to ask for welfare.

Debtors can come ahead in an inflationary environment. Earning $100 you borrowed two years ago becomes easier. What you repay in real terms is much less than the $100 because the money you use to repay the lender will not buy now what it would have bought two years ago.

 

Why is Gas so High?

For those Americans who are foolishly claiming that the skyrocketing price of oil is Putin's fault, here is some news for you - it is entirely the Biden administration's fault. When he took office, gasoline was $1.69 a gallon in my town, it is now $4.55 per gallon while Diesel is $5.55 per gallon. We need plenty of affordable gasoline and Diesel to run our complex and very large economy.

He closed oil leases, fracking, offshore drilling, and the XL pipeline which was delivering gas from Canada. He did this on day one and the price of gas started to escalate immediately. Crude oil is being transported by rail (powered with electricity created with Diesel and coal) instead of the much cheaper pipelines which crisscross our country from Alberta, Canada and other places.

It was Biden's plan all along to destroy the fossil fuel industry in order to replace it with the pie-in-the-sky green energy delivered by expensive, inadequate, and insufficient solar and wind power.

The U.S. became overnight an oil importer again instead of an oil exporter as it had been under the Trump administration.

OPEC took advantage of this situation of a weak and partisan president and refused to increase production, thus further escalating the price of crude oil per barrel.

Speculators entered the fray and affected the futures price as well on the Chicago Board of Trade. This often happens when the political climate is poor, people fear their incompetent government, and the future looks bleak.

The fact that Democrats and some Republicans have voted to print dollars without any backing of goods and services, creating high inflation, highest in forty years, and then spending trillions of dollars we don't have, like drunken sailors, has devalued our U.S. dollar which is the currency in which crude oil is priced and quoted around the globe.

Supply and demand for crude oil, gas, and Diesel are also out of whack due to the economic effects of the lockdowns and other labor and economic decisions made by U.S. corrupt politicians, further exacerbating the price increases.

One caller to the WMAL station in Washington, D.C. area, stated on Friday that she has 7 children and must fill up the van with gasoline every four days. Each time it cost $100. This translates into $750 a month just for gasoline. Middle class Americans must decide whether they eat, drive their cars, or pay their mortgages/rent.

This terrible economy is entirely Biden's fault and the fault of those who voted for him and thus for the destruction of our economy.

Your unwise vote is putting most of the middle class in a poor house filled with shortages and high inflation. The economic and energy situations are quite dire.

 

Liberals Call Inflation Scaremongering

Invest in inflation. It’s the only thing going up. – Will Rogers

World War II ration card

The left is trying to justify the escalation of inflation as “Inflation isn’t inexorably a bad thing. In fact, it used to be considered good.” This is another overt attempt to habituate American consumers to soaring prices and to a new low standard of living and to shortages food, goods, and services, a diminished quality of life. What scaremongering about inflation gets wrong - The Washington Post

Inflation represents economically a rapid rise in prices caused by a range of factors. The rate of inflation is calculated by averaging the percentage growth rate of the prices of a selected sample of commodities, traditionally called a “basket of goods.”

There is not much good about inflation but plenty of bad: financial costs and a social cost. Even Keynesian economists recognize that inflation is damaging to the economy in general and to society.

Bondholders, for example, are exposed to losses from inflation. If the overall price level rises, the purchasing power of $1,000 for example, at bond maturity, diminishes, making bond investment an uncertain proposition.

Rising inflation makes it risky to enter any long-term contracts. Lending and borrowing money are also a big gamble – neither lenders nor borrowers would be eager to enter such long-term contracts. But investment becomes impossible without long-term loans. This results in a stagnant economy. A stagnant economy with high inflation then experiences stagflation.

Inflation causes consumers to change their behavior and no longer shop where they used to, they look for bargains elsewhere. Businesses engage in similar practices, they start shopping around for cheaper suppliers; businesses experience rising costs as well, which then slows down the efficiency of the economy.

Low inflation does not necessarily lead to high inflation in theory. In practice, we have seen what happened with hyperinflation in Zimbabwe, in Venezuela more recently, and in the Weimar Republic. There are pictures from that period of a man pushing a wheelbarrow of currency (Deutsche Marks) to buy a loaf of bread and of children building a pyramid of cash during the hyperinflation of the 1920s because it was just as cheap as using sticks or other materials.

In 1989 an article described how Nicaraguans stopped using piggy banks to save coins because due to the 161% inflation for a two-week period – a “penny saved is a penny spent.” Even offering 70% interest rate per month for saving accounts at banks did not persuade Nicaraguans to save money, they spent it as soon as they got it before more inflation deteriorated its value. (New York Times, June 22, 1989, p. 2)

A wise sage, Yogi Berra, allegedly said long ago, “A nickel ain’t worth a dime anymore.”

Indexing (adjusting monetary payments to the reported inflation rate) “seeks to reduce the social costs of inflation” for two reasons: 1) to reduce the capricious redistribution of income caused by inflation; and 2) to reduce the blow caused by our tax system which levies taxes on nominal interest (no adjustments are made for the decline in the purchasing power of money) and nominal capital gains (the difference between what an investor pays for an asset and what it sells it for, again, not taking into account the loss of purchasing power of money).

Inflation strips the purchasing power of wages. Seldom do wages rise faster than inflation but they do occasionally. Keynesian economists believe that in the long run “wages tend to outstrip prices if new capital equipment and innovation increase output per worker.”  Democrats, however, have been telling us since Obama that we must get used to “the new norm” of a lesser standard of living, a low growth economy, and a diminished country.

Inflation has been measured with the traditional basket of goods, food (at home, cereals, bakery products, meat, poultry, fish and eggs, dairy products, fruits and vegetables, other foods, away from home, alcoholic beverages), housing (shelter including rent, homeowner costs, fuel, fuel oil, coal and bottled gas, piped gas, and electricity), clothing (men’s women’s, boys’, girls’, footwear), transportation (private and public), medical care (hospital stays), entertainment (ticket prices), other goods and personal care services (shampoos, toothpaste, soap).

The Consumer Price Index (CPI) is used to make cost of living adjustments to wages and pensions each year. However, seldom do cost of living increases match the actual inflation rate.

The CPI market basket was altered in 1986 to reflect higher spending on housing and food eaten away from home. During the Obama administration, the way inflation has been calculated, “core inflation,” has omitted prices for groceries and gasoline, a move that makes inflation rate appear lower than it is.

The excuse for this omission was that food and gasoline prices are “sensitive to external shocks.” The price of gasoline and food are often the result of fiscal and monetary policies (money printing ad nauseam) by administrations in charge, both Republican and Democrat.

The escalating prices of food and the disruption in the supply chain world-wide has been the result of the pandemic created by globalists with a gain-of-function Corona virus which caused unnecessary deaths from purposeful lack of proper medical treatment and bankruptcies of millions of small, medium, and large businesses across the globe. Americans were also paid by a Democrat regime to stay home, leaving millions of jobs available and unfilled.

The fact that globalists are trying to destroy the fossil fuel industry is no longer a conspiracy theory as President Biden has closed the XL Keystone pipeline on the first day of his presidency, sending oil prices into shock, doubling gasoline prices at the pump, and changing the American status under President Trump from an oil exporting country to an oil importing country again dependent on the OPEC cartel and its oil production manipulation.

The calculation of CPI understates inflation by “excluding housing prices” but not rent and “hiding enormous increases in health care, schools, prescriptions, and higher education.” … What scaremongering about inflation gets wrong - The Washington Post

The Bureau of Labor Statistics uses the Laspeyres formula on:

-          Selected shelter services (housing at school, excluding board)

-          Selected utilities and government fees (electricity, residential water and sewage maintenance, utility (piped gas service, state motor vehicle registration and license fees)

-          Selected medical care services (prescription drugs, physicians’ services, hospital services, dental services, services by other medical professionals, and nursing homes and adult day care) Calculation : Handbook of Methods: U.S. Bureau of Labor Statistics (bls.gov)

The CPI, if used correctly, is a prime indicator of inflation and recession. It reflects economic trends but influences them as well.

When inflation becomes galloping inflation as it did at the turn of the twentieth century, one mark in 1918, at the time of the Armistice, was worth 726 million marks in late 1923. Germans burned their marks as it was cheaper than buying wood for their stoves.

Inflation is an ancient problem. When Emperor Valerian was captured by barbarians in 259 A.D., Romans rushed to turn their money into goods, thus creating a rate of inflation at 1,000 percent over 17 years (too much money chasing too few goods).

Emperor Diocletian tried to curb inflation by passing an edict which fixed maximum prices (price fixing) on 1,000 goods, food, raw materials, textiles, wages, and transportation. It was an utter failure even though the punishment for violating his edict was death.

This is nothing new as our Federal Reserve System (the Fed), in control of our monetary policy (money stock and interest rates) is printing too much money to help pay our Democrat government’s bloated spending and debt to support their globalist mantra, Build Back Better. It should be more aptly renamed, Build Back Broke.

The Biden regime claims that inflation is 7 percent - the highest it has been since 1982, but is it only 7 percent? How accurate is this CPI? Go to the grocery store and the gas station and you decide.

Inflation and the Emperor Who Planted Cabbages

Invest in inflation. It’s the only thing going up. – Will Rogers

As Americans are struggling with inflation to pay their bills, buy food, gasoline, and other necessities such as medications and rent, few have the knowledge to point to the culprits of such accelerated overall price increases:

-          - the inept government run by Democrats at the federal level

-          -  the production and supply chain disruption, bankruptcies, forced unemployment, and generous welfare to stay home, all caused by the continuous Democrat lockdowns and political fear posturing over a flu virus

-          - Joe Biden’s disastrous reversal of anything relating to fossil fuel production which escalated gas prices and made America once again dependent on foreign oil supply

-          - the Green New Deal which is destroying the economy

-          - Congress’ out of control spending of trillions of dollars printed ad nauseam, with no  backing up of goods or services

Inflation is an ancient enemy, with its cousin, stagflation, inflation while the economy is stagnating. Inflation measures via the consumer price index (CPI) the rising prices of goods and services which leads to a decrease in the purchasing power of the dollar. The same dollar used to buy a basket of goods today will buy a smaller basket due to rising prices.

The consumer price index (CPI) calculated by the Bureau of Labor Statistics (BLS) uses a weighted average of various goods and services Americans buy, i.e., food, shelter, transportation, doctors, dentists, medicines, and is differently gauged for rural v. urban inhabitants.

The method does not accurately reflect price increases as Americans use some services more than others, and housing costs, healthcare, and education vary from region to region. The CPI calculation methodology has changed more than twenty times and is still not an accurate measure of inflation.

What causes inflation?

-          Consumer demand for goods is much larger than supply, pushing prices of supply available up – see the case of new cars, the supply is much lower due to an alleged microchip shortage, therefore dealers add an average of $5,000 to the price of new cars

-          Increase in supply of money and credit to consumers – the government spending and printing money more freely

-          Price of goods increase because of higher production costs due to higher price of raw materials and higher employee wages

-          Wage push inflation – people expect inflation rates to continue (Federal Reserve target of keeping inflation at 2 percent rate per year) so employers increase wages, followed by increased consumption rates, which pushes prices of goods and services up.

-          Most economists agree that one compelling cause of inflation is the money supply that expands too rapidly, i.e., printing too much money.

The buying power of the dollar declines rapidly during high inflation. A classic example of galloping inflation is the German mark. In 1918 at the Armistice, one mark bought the same amount of goods and services as 726 million marks in 1923, just five years later. Burning paper money was cheaper than buying firewood.

Inflation is not bad for debtors; if you earn $1,000 you may have borrowed five years ago, is much easier. What you pay back the lender, the $1,000 buys less than it did when you borrowed it.

There was a time when breaking the law and causing inflation resulted in the ultimate punishment – death. To be more specific, Roman Emperor Diocletian, to curb rising inflation, devised a set of regulations in 301 A.D. Anyone caught defying his edict was killed.

Emperor Diocletian listed 1,000 items with fixed prices that could not exceed a certain maximum price, i.e., food, raw materials textiles, wages, and transportation. Anyone caught charging more for his listed items or trying to sell their wares on the black market for higher prices would be summarily executed without any benefit of a trial.

How bad was this inflation that Emperor Diocletian was trying to shrink? According to historians, the inflation rate was 1,000 percent during a period of 17 years. Reducing money printing was one way to deal with inflation. The government of that time tried to deal with the escalating inflation by debasing the currency so that instead of coins minted from precious metals, coinage was made mostly of copper.

But, debasing the currency, making it inferior in metal quality was a mistake, it did not go unnoticed to merchants who began to demand higher prices for the goods they sold and to citizens who demanded more wages for their work, resulting in more inflation.

But what caused this galloping inflation to being with? A half century of political turmoil, instability, non-stop warfare with the barbarians, the capture of the previous emperor, Valerian, by the barbarians in 259 A.D. Speculators caused a financial crash in which people hurriedly turned their available cash into goods.

Diocletian’s government failed to put blame on its shortcomings in dealing with “speculators who gambled on grain futures.” It is, however, written in the preamble of Diocletian’s edict, that those responsible were “men who have nothing better to do than carve up for their own advantage the benefits sent by the gods … men who are themselves swimming in a wealth that would satisfy a whole people, who think only of their gain and their percentage.”

Diocletian, a man of low birth, was proclaimed Emperor at the age of thirty-nine by his troops. He found out painfully that he could not reduce inflation by legislation – people, who saw their money devalued again, rushed to stockpile all the goods they could find and afford before their money lost value even more.

The black market flourished, one of the unintended consequences of bad price and income government policies. Emperor Diocletian managed to keep the empire together for a while and was one of the few leaders of that time able to retire and to eventually die in his own bed, a rare feat for emperors. At his villa in Salona, the modern Yugoslav town of Split, he grew cabbages. When approached to return to the life of command, he is alleged to have said, “if you could only see my cabbages, which I planted with my own hands….”

People in our modern economy hurry at times to exchange their available cash for goods they hoard during unstable times of fear and shaky economy caused by terrible government leadership.

Yogi Berra is famously alleged to have said, “A nickel ain’t worth a dime anymore.” Inflation does that to currencies. Of course, you could use the barter system and exchange goods for goods. The colonists used bullets and gunpowder as a medium of exchange and one town famously made money out of rectangles of wood. Colonists also cut up coins to make change, making a half coin worth four bits and a quarter coin two bits.

Cash will eventually become obsolete, replaced by chipped cards, and controlled entirely by government via technology. We are unsure how they would devalue balances to express inflation, but we are certain that they will immediately collect all taxes owed, and unless we do as they say, our electronic balances will be inaccessible to us.

Financial Outcomes of Lockdowns

Our fifty states are interconnected through trade and travel and states that did not enforce lockdowns are still affected by states that chose to shut down completely. Blue states, poorly managed to begin with and tightly locked down, are clamoring for a piece of the huge financial rescue coming from Washington.

This welfare is enabled by the Treasury’s money printing without any backing of goods and services faster than paper can be supplied thus contributing to the rising inflation, inflation partially hidden by the elimination of fuel and food from the proverbial basket of goods that determines each month the rise and fall of prices.

In addition, the disastrous executive orders passed in the first 100 days of the new presidency have affected our economy quite negatively, coupled with the out-of-control spending, much of it totally unrelated to the pandemic effects. Temporary and permanent effects of the lockdown have disrupted the economy and bankrupted many small businesses and larger ones that were already struggling before the “pandemic” hit.

If data is compiled and reported correctly, it is obvious how GDP has been affected by lockdowns in terms of loss of consumption, investment, government spending, and trade with other countries.

We had a relatively large working population “pre-pandemic,” now Americans are being paid more to stay home while employers are struggling to find people willing to work in service sectors.

We had, at one time, the most productive workers in the world. The U.S. economy used to make at least $40,000 worth of goods and services for every living American and over $80,000 for every working American. (William J. Baumol and Alan S. Blinder, Economics, 2007)

To find out what the total output of the economy is, you must look at the gross domestic product (GDP) which is comprised of consumption (the largest component), investment (I), government spending (G) and next exports (X-IM, exports minus imports). Government buys goods and services from private businesses amounting to about 18 percent of GDP, it does not produce goods, but it provides services. Two-thirds of GDP is consumption.

When you look at the GDP number for 2020, you can measure the size of the economy, what it produced in final goods and services that year. The real GDP shows adjustment to the economy in the purchasing power of money by correcting for inflation (increase in prices of goods and services every American buys). As you can plainly see in grocery stores and at the gas pumps, these two important elements for every household have skyrocketed in prices. Yet they are no longer included in the basket of goods used to measures inflation.

Economic data hides the human factors that cause immense suffering in a terrible economy marked by a terrible GDP.

Take the world-wide Great Depression of the 1930s. The U.S. GDP dropped 30 percent, business investment was almost non-existent, and the unemployment rate grew from 3 percent in 1929 to 25 percent in 1933. In the labor force, one person in four was jobless. And the government was not handing out unemployment and stimulus checks. Soup lines, closed factories, people begging, and homeless were at an all-time high.

NPR reported that GDP shrank at the annual rate of 32.9% in the second quarter of 2020, “the sharpest economic contraction in modern American history,” as reported by the Commerce Department. GDP Drops At 32.9% Rate, The Worst U.S. Contraction Ever : Coronavirus Updates : NPR

The estimated real GDP for the first quarter in 2021 by the Bureau of Economic Analysis is an increase of 6.4 percent. This figure reflects some economic recovery, reopening “establishments,” and government assistance payments, such as direct economic impact payments, expanded unemployment benefits, and Paycheck Protection Program loans, distributed to households and businesses through the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act.

“The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2021 because the impacts are generally embedded in source data and cannot be separately identified.”  Gross Domestic Product, First Quarter 2021 (Advance Estimate) | U.S. Bureau of Economic Analysis (BEA)

But how does one correctly estimate and quantify the loss of economic welfare on a societal level which impacts the economy?

-          Suspended or permanently lost freedoms for almost 15 months now

-          Permanent or temporary effects on mental health

-          Loss of economic opportunities due to the lockdowns

-          Loss of investment in human capital due to closed schools (students learned precious little in public schools or in college for over a year now)

-          Personal and professional loss resulting from inability to travel for business or leisure

-          Educational, friendship, and family losses due to lockdowns

-          Children being out of school and not in contact with outside humans

-          Adults being out of the labor force and not in contact with colleagues

-          Mental and physical uncertainty

-          Loss from proper medical care when care was virtual and inadequate

-          Loss from ability to go to hospitals due to fear of contagion

-          Loss from death because of other neglected serious medical problems

-          Severe loss from lack of socialization of people of all ages

-          Loss of our humanity and identity due to masking everywhere

-          Social distancing caused more than just reduced economic activity, it profoundly affected many individuals

-          Loss of entrepreneurship (some was replaced by a robust mushrooming of production of personalized masks and shields)

-          Loss of innovation

-          Small business formation collapsed except those supporting the lockdowns and mask wearing (door delivery, curb delivery, contactless credit card use, fashionable masking accessories and gloves)

-          The disappearance of buffets; new and permanent sanitation rules in retail and food processing and serving

-          Losses from wedding venues, birthday, and other parties

-          Banned activities such as going to church and everything related to it are not counted in GDP as a loss

-          Playing sports and attending professional and amateur games damaged economic activity in concessions and booster club activities/fund raising

-          The huge cost resulting from the lost value of living due to lockdowns, of seeing and associating with family

-          The loss of leisure time, i.e., traveling abroad, going on a cruise, on vacation, to a wedding, to a graduation, birthday, etc.

-          Loss of mental health, disability, suicides from lockdowns, drug overdoses, increased drug use and dependency, child abuse, elder abuse, and spousal abuse.

In his book, Economics in One Virus, Ryan A. Bourne wrote that “a third to a half of even the near-term decline in early phases of the pandemic was purely due to the lockdowns, as opposed to panicked changes in behavior from risk-averse consumers and workers.” (Cato Institute, 2021, p. 79)

Bourne wrote that there was a decline in vaccines for other child diseases, cancellation of elective surgeries by hospitals that potentially made a person’s health worse and increase in nursing home deaths that were not related to Covid.

The Covid-19 lockdowns in various states have had and are still having an economic impact that may or may not be correctly and fully quantifiable.  Bourne wrote, “Mercatus Center economists James Broughel and Michael Kotrous conclude that the initial lockdown measures probably cost somewhere between $255 and $464 billion in lost output (1.2 to 2.2 percent of 2019 GDP).”

Economic activity is much easier to calculate but how do you quantify the loss from schooling alone, what economists call “human capital accumulation?” And how does one quantify all the other intangible losses? What kind of subjective yard stick can one possibly use?

A lot of money has been created and a small part was distributed to the population in the form of various payments, stimulus checks, unemployment, and extended unemployment checks, etc. The money created did not go to economic growth or investment as people either were not allowed to work, their employers went bankrupt, the jobs went away, few new jobs and businesses were created, and many chose to stay home as the government’s weekly welfare checks was more than they were making while working. So, the increase in the money supply then caused inflation.

Investments were made heavily in the real estate market and construction market as people were fleeing mismanaged and locked down blue states. Housing prices and construction materials, especially lumber, have skyrocketed.

Consumption goods prices increased as well as retailers were unable to get enough merchandise stock in the brick-and-mortar stores and consumers turned to Amazon online and to other giant retailers that could remain open to the detriment of mom-and-pop stores that were not allowed to stay open.

The excessive money creation means that we have too much money chasing too few goods, inflation is high, and people want to invest in tangible goods such as real estate and precious metals, hence their prices are going up.

The lockdowns were exaggerated responses to a mismanaged health crisis and a rush to vaccines, but it was mostly a money supply-created crisis in order to generate the precise outcome we are facing today – high unemployment, high inflation, more government dependency, huge government spending (on political pet projects domestically and internationally), high gas prices and less mobility, high energy, less access to proper medical care, forcing solar and wind generated energy to fully replace fossil fuels, some of the many items on the agenda of the Great Reset/Build Back Better. The long-term global effects of the “new normal,” caused by the flu virus and by the subsequent opportunistic response to it, are not going to be pretty.