Wishful Thinking

Financial advisers are falling over themselves to roll out the bullish case for the stock market. Perhaps the Fed will get scared and resume pumping the stock market. Perhaps the Fed will engineer a “soft landing”. Perhaps the economy will grow fast enough to avoid a recession. Perhaps a recession will abolish inflation. The first is possible. The others are not.

Perhaps the reality is that we are facing a perfect storm. I’ve written about some of the issues here and specifically about energy policy here. 

Perhaps most important but unmentioned is the impact of the Biden administration’s spendthrift and socialist policies. This is an administration that is completely dominated by wishful thinking. That it can print and spend money without concern for the effects of excessive debt on growth, or the impact of inflation on households with little margin for error. That it can grow an economy already short of labor by spending money. That the US can support a level of military spending which exceeds the total military spend of the rest of the world. That pandering to racial and transgender political correctness is more important than taking care of basic necessities such as food and energy. That opening the borders to crowds of uneducated and unskilled refugees fleeing socialist regimes will not overload the US social safety net.  That the US can afford to export democracy when there is precious little left at home.

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