Biden Cannot Print His Way to True Wealth
Hey DEFI TIMES community,
The Joe Biden administration is preparing a new $6 trillion budget. The plan was announced one week ago, and the New York Times reported the following:
President Biden will propose a $6 trillion budget on Friday that would take the United States to its highest sustained levels of federal spending since World War II, while running deficits above $1.3 trillion throughout the next decade.
The New York Times then continued to report that the new budget should help more Americans attain the comforts of middle-class life and stimulate the US economy to better compete in the global economy. Apparently, the Biden administration believes that the economy of the future will be a race to reduce climate change.
That’s all fun and games. However, as you continue to read the New York Times article, you stumble on this paragraph:
The levels of taxation and spending in Mr. Biden’s plans would expand the federal fiscal footprint to levels rarely seen in the postwar era, to fund investments that his administration says are crucial to keeping America competitive. That includes money for roads, water pipes, broadband internet, electric vehicle charging stations and advanced manufacturing research. It also envisions funding for affordable child care, universal prekindergarten, a national paid leave program and a host of other initiatives. Spending on national defense would also grow, though it would decline as a share of the economy.
The Biden administration is basically borrowing historic amounts of debt and raising taxes to insane levels in order to fund public goods - with the promise to help more Americans living a middle-class life.
Sure, that’s a nice effort. However, the problem here is that you cannot print your way to prosperity. The more money you print the more the gap between rich and poor increases. While funding public goods like child care and kindergarten might sound great at first glance, it is completely counterproductive in the long term.
The middle class might profit in the short term - having access to cheaper child care, kindergarten, and other initiatives does increase their quality of life; however, in the long term, they can only lose compared to wealthy people holding assets in their portfolio.
It’s very simple: Printing money → inflation → asset prices rise
This is not a sustainable solution. The Biden administration is making trade-offs to avoid short-term problems. Savers are getting diluted in the long term.
The middle-class WILL LOSE once again…
Biden cannot print his way to true wealth.
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