Aug 19, 2021
Summary:
Michael Busler, Professor of Finance at Stockton University, gives
us a crash course on the current economic situation in the United
States—probing into some of the root causes of different problems
and changes we are seeing today. We dive into inflation that has
worsened due to disruptions in the supply chain as well as health
circumstances over the last year and a half. Michael explains,
however, that there are a number of other causes for inflation. If
the government returns to some of the basic principles our nation
was founded upon, perhaps we can re-create the economic prosperity
we were historically known for.
Highlights:
-On the good side, the economy is growing very well, and is
somewhat dependent upon the virus
-The problem at hand is inflation - prices are up about 5% over the
span of a year
-Inflation is caused by disruptions in the supply chain
-Business has not caught up with the supply yet and this is why
prices are rising
-Some say as soon as things open up fully, supply will increase and
inflation will diminish
-There are, however, other causes for inflation such as fossil
fuels
-The federal reserve has increased the money supply by over 20% in
the last year and they are keeping interest rates near zero
-The federal government spent $3 trillion more than they took in as
revenue last year as well as this year (government deficit
spending)
-Companies that are re-opening are trying to get workers to come
back, but many of them are making more on unemployment. Thus,
businesses are pushed to raise wages which drives up labor costs
astronomically
-Wages going up pushes prices up
-Will the federal reserve be able to raise its interest rates?
-The stock market is doing so well because corporate profits are up
due to remote working
-Companies need capital so that business can expand and we avoid
stagflation
-We don’t want attempts to reduce inflation to bring about a
recession
-If we go back to some of the basic principles of the United
States, our economy could prosper like it once did
-Four basic principles: individual freedom, individual
responsibility, low rates of taxation, limited role for
government
-The current administration is contradicting these principles; the
government wants to take care of everyone and encourage social
responsibility. The government is not motivated by profit, so costs
go up
Useful Links:
Financial Survival Network
Michael Busler Twitter
Funding Democracy, the economics of
freedom