Ep. 1422 - The Biden Economy Hits The Skids

Episode Summary

Executive Summary: The episode argues that Biden-era stimulus and Fed money creation overheated the economy, fueling inflation, market declines, and a shift toward tighter monetary policy. It criticizes Biden’s planned crypto regulation as a control tactic and attacks his commitment to nominate a Black woman to the Supreme Court as identity-based affirmative action. The show frames both moves as examples of government overreach and political panic.

Main Topics: Inflation, stimulus, and the Fed’s rate-hike pivot (Priority: 5/5): The host argues that pandemic stimulus, easy money, and Fed asset purchases created inflation, shortages, and now market selloffs as rate hikes loom. Market volatility and investor behavior (Priority: 5/5): Stocks, bonds, and crypto are described as reversing pandemic-era trends, with investors shifting toward safer assets like dividend stocks, gold ETFs, and put options. GDP growth vs. real economic health (Priority: 4/5): The episode contrasts strong headline GDP growth with weak underlying demand, inventory restocking, shrinking real disposable income, and inflation eroding gains. Cryptocurrency and government control (Priority: 5/5): The host presents crypto as a hedge against monetary manipulation and says Biden’s regulatory push is really about centralized control and limiting financial freedom. Paul Krugman and the crypto backlash (Priority: 3/5): Krugman’s comparison of crypto to subprime mortgages is rejected as intellectually inconsistent and politically motivated, especially in the host’s view. Biden’s Supreme Court pick and identity politics (Priority: 5/5): Biden’s pledge to nominate the first Black woman to the Supreme Court is framed as explicit race- and sex-based selection, not merit-based judging. Democratic electoral strategy and political self-harm (Priority: 3/5): The episode claims Democrats are undermining turnout and credibility in Georgia while trying to censor critics and manage narratives.

Key Arguments: The Fed and Biden administration over-stimulated the economy, creating inflation, supply shortages, and asset bubbles that are now reversing. Higher interest rates and the end of stimulus are driving a broad market selloff, especially in high-flying pandemic stocks and crypto. Headline GDP growth is misleading because much of it came from inventory rebuilding and spending down savings, not durable private-sector expansion. Crypto serves as a decentralized, scarce store of value and payment system that is attractive precisely because it is not controlled by central banks. The Biden administration’s crypto regulation push is portrayed as an attempt to preserve government monetary control and accelerate a future central bank digital currency. Biden’s explicit promise to nominate a Black woman is characterized as race- and sex-based affirmative action incompatible with meritocratic judicial selection. Media criticism of Republican objections is framed as spin, because Biden himself made identity the selection criterion. Paul Krugman’s critique of crypto is dismissed as inconsistent, especially given his past tolerance of government-backed distortions like subprime lending. The administration’s messaging on voting rights, COVID misinformation, and regulation is presented as evidence that Democrats are trying to control institutions rather than persuade the public.

Data Points: S&P 500 drop in January: 6% to 15% - Major U.S. stock indices were said to have fallen this much through Thursday in January. High-flying pandemic stocks decline: around 2-3 times as much as the broad market - Moderna, Peloton, and Netflix were highlighted as especially hard hit. VIX change: almost doubled this year - Wall Street’s fear gauge surged amid market turbulence. GDP growth, Q4 2021: 6.9% annual rate - The U.S. economy expanded rapidly in the fourth quarter. GDP growth, full year 2021: 5.7% - Fastest annual growth since the 1980s, according to the Bureau of Economic Analysis. Inflation, consumer price index: 7% - Cited as the main reason the public viewed the economy negatively. Fed preferred inflation measure, Q4: 6.5% annual rate - Personal consumption expenditures inflation accelerated from the prior quarter. Inventory contribution to GDP: 4.9 percentage points - A major share of Q4 GDP growth came from restocking shelves rather than sales. Consumer spending contribution to GDP: 2.25 percentage points - Much of it came from spending down accumulated savings. Personal savings rate: 7.4% - Down from 9.5% in the third quarter. Real disposable income, Q4: down 5.8% - After inflation, household income fell sharply in the fourth quarter. Real disposable income, Q3: down 4.3% - A prior-quarter decline used to show weakening household finances. Jobs recovered vs. pre-pandemic: about 84% - The host noted the labor market had not fully recovered all lost jobs. Crypto market cap loss: around $1.3 trillion - Used to describe the recent crash in digital assets. Crypto market value peak: almost $3 trillion - Combined market value had reached this level by last fall. Bitcoin price decline: almost halfway down from November peak - Used to show the scale of the crypto correction. Georgia governor poll: Brian Kemp +7 over Stacey Abrams - Referenced as evidence of Democratic weakness ahead of the 2022 elections. Georgia Senate poll: Herschel Walker +3 over Raphael Warnock - Used to argue Democrats were in trouble in Georgia. Trump endorsement effect in Georgia: 21% more attractive; 49% less attractive - Cited from polling to show Trump’s mixed influence on candidates. Black voters in Georgia saying voting is difficult: 45% - Compared to 7% in 2020, used to suggest turnout effects from voting-rights messaging. Black voters in Georgia saying voting was difficult in 2020: 7% - Used as a contrast to the 2022 poll result.

Pivotal Quotes: "Inflation, as Milton Friedman once said, is anywhere and everywhere a monetary phenomenon." — Ben Shapiro: Used to argue that inflation is caused by Federal Reserve and government money creation. "The person I will nominate will be someone with extraordinary qualifications, character, experience, and integrity. And that person will be the first black woman ever nominated to the United States Supreme Court." — Joe Biden: Biden’s statement defining the criteria for the Supreme Court nomination. "This is why the Biden administration in the middle of economic turmoil is now talking about heavy regulations on crypto because what they don't want is a parallel shadow economy arising that they cannot control." — Ben Shapiro: Central claim that crypto regulation is about state control rather than security.

Implications: Listeners are urged to expect more market volatility, continued inflation pressure, tighter regulation of crypto, and intense partisan conflict over courts and culture. The episode predicts these policies will weaken confidence in both markets and institutions.