Dan Celia, President and CEO of Financial Issues
In a speech to the World Economic Forum last week, U.S. Treasury Secretary Janet Yellen pitched a rebranding of the Biden-run economic agenda as a “modern supply-side” economy. This curveball claim from Yellen, as baseless and disingenuous as it is, will still have some swinging for the fence.
Yellen stated that their “new approach is far more promising than the old supply-side economics, which I see as having been a failed strategy for increasing growth.” What she failed to be clear about is that in her version of supply-side economics, the supply comes from the government, requiring the government to print more money and forging the country into deeper debt.
Yellen and her colleagues have for years argued against supply-side economics. One of their arguments that I have agreed with is that increasing supply does not necessarily mean you will increase demand. Without demand, all the supply in the world is irrelevant.
A case in point is former Federal Reserve Chair Ben Bernanke who for years attempted to create demand with an overabundance of money flow and low interest rates. It didn’t work. Business owners were smart enough to see that it didn’t make sense to borrow money, no matter how low the rates, if there was no demand. We find ourselves in the same place today with consumers who are hunkered down as they look at the big picture of our economy.
According to Yellen, her “modern” supply-side economics “seeks to spur economic growth by both boosting labor supply and raising productivity.” If that were true that might be helpful, but history and their ill-formed plans reveal an agenda that is obstinately anti-productivity.
President Obama broke the record for being the first president in history to preside over less than 2% productivity for more than 3 years – and he did so for his entire 8 years in office. Bernanke faithfully manipulated those numbers in an effort to conceal the truth, but productivity is hard to fake.
Now the Federal Reserve is claiming 6% GDP growth in our economy. However, if you look at the numbers released by the Federal Reserve on Friday, it’s difficult to find the growth. A careful look at the numbers actually shows no growth at all.
Like China, this administration believes they can say whatever they want, regardless of facts, and people will believe them. It’s impossible to have a 6% GDP growth rate without correlating numbers in sectors like consumer spending, manufacturing, and productivity. If this GDP rate was real, we would be seeing the ISM service sector index, manufacturing index, consumer spending, and hires up considerably, with job openings and quits down considerably. Considering the lack of these contributing factors, we are dealing with either a severe mathematical error or a full out lie.
Will these smoke and mirrors analytics continue to fool Wall Street? Will Americans swing at Janet Yellen’s rebranded curveball, forfeiting even more power to our government? Is this the “new normal” we will all accept, in which facts and truth are meaningless? I hope not.