Welcome to Macro Economics in action

Its an exciting world today in terms of economic policy in action. Under Biden we saw him trying to jump start the economy after the Covid shutdown with massive spending bills.

Keynesian economics predicted we would have runaway inflation which we did and is still high. Now if you are a student of economics you know that GDP is made up of 4 numbers.  

Increased Government spending to stimulate the economy which Biden happily did.  Decreased taxes which Biden didn’t want to do. Deficit borrowing which Biden did to the max. Last Targeted fiscal measures which he tried to do but failed to address the trade imbalance.

Because of the election cycle Biden wanted to show a growing GDP before the next rounds of Presidential Elections so he started government hiring on a massive scale to bring up GDP and deficit spending on a massive scale.

He was going to pay it down by letting the tax cuts expire. We now see Trump trying to rein in the massive spending by cutting Government programs. We see him cutting federal employees to also cut government spending.

We see him increasing tariffs by 10 to 25%.  This is also classical Keynesian. He is increasing taxes to reduce consumer spending (indirectly) and he is moving the U.S, from a net importer to a net exporter.

These actions will bring the economy into a recession by the end of the summer, it will drive out inflation and clear the decks for fiscal stimulus so that the economy will be booming come 18 months from now.

Currently he can’t move as fast as he wants because the courts are blocking a lot of cost cuts and layoffs. If the Democrats decide to block the continuing budget resolution.

They will play right into Trumps plan because now he will have the power of no budget to cut all the programs and personal he wants without the courts blocking it. His defense is the congress didn’t want the money spent.

It’s going to be an interesting ride whichever way it goes. So hang on tight and enjoy the roller coaster.

If you have struggled with this question and others then go to Patterson2Y2R,com/blog should be a place you should visit to share your stories and challenges.

I have an ear that would love to hear your stories. Let’s taste the real meaning of life. I am still working on my course with the goal of launching a starter course, and I will keep you abreast as to how the process goes.

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