“Joe Biden’s ‘war economy’ policies are a radical break with the status quo.” Telegraph

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"Bidenomics is a heady brew. The Democrats’ $7.9 trillion blast of extra spending is a step beyond Roosevelt’s New Deal. It mimics the Keynesian expansion of the Second World War and consciously aims to run the economy at red-hot speeds of growth.

If enacted in full, it is large enough to lift the US economy out of the zero-rate deflationary trap of the last decade and entirely reshape the social and financial landscape.

The stimulus will be corralled inside the closed US economy by Joe Biden’s protectionist “Buy America” policies, his industrial strategy, and his carbon border tax (i.e. disguised tariffs against China). This limits leakage.

It is a laboratory of sorts for a post-globalisation experiment in what used to be called “reflation in one country” – before the free flow of goods and capital emasculated sovereign governments.

“It’s quite likely that, just as in World War II, when we push down on the economic accelerator, we will find that we have been running on one cylinder up until now,” said the Roosevelt Institute, now advisors to the Biden campaign.

This is why Moody’s Analytics estimates that Bidenomics accompanied by a Democrat clean sweep of Congress would lift American GDP by an extra 4.8pc, add an extra seven million jobs, and raise per capita income by an extra $4,800 over the next four years, compared to a clean sweep by Donald Trump. Economic growth would rocket to 7.7pc in 2022."  Telegraph

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Evans-Pritchard, the author of this piece baldly declares that the Trump tax cut failed to stimulate economic growth and that a clean sweep by the Democrats in November would lead  to massive GDP growth and a reduction in present economic inequalities in American society.
 
I will be very interested in your comments.  pl 
 

https://www.telegraph.co.uk/business/2020/10/06/joe-bidens-war-economy-policies-radical-break-status-quo/

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27 Responses to “Joe Biden’s ‘war economy’ policies are a radical break with the status quo.” Telegraph

  1. Avatar Fred says:

    That’s a fine read Col. Thank goodness that after 47 years as a politician, including 8 years as VP – during which TARP did what? – Biden finally has a plan to Tax and Spend that beats all the Tax and Spend plans that went before this one.
    Just what is this getting spent on – the same things Obama-Biden promised, “green” (the color of money) energy, solar charging stations and 1.5 million energy efficient homes (didn’t the Housing bubble cause a little economic problem?), ‘educaiton’! I wonder if that includes teaching us all critical race theory? and “infrastructure”. And here I thought broken records were out of style.
    Where’s the money coming from? According to Oxfordeconomics, which the Guardian links to, Biden’s raising taxes, but it won’t lower consumer spending:
    “…. we estimate an overall multiplier of 0.25 for the individual provisions in Biden’s tax package. So, for every dollar of tax increase, households would reduce their spending by 25 cents. As such, while the proposal would generate a substantial revenue inflow, we don’tbelieve it would significantly constrain consumer spending.”
    So what is the decline in corporate spending if you raise corporate taxes? The economists at Oxfordeconomics conveniently left that out, nor did they eplicitly tell you that a decade of tax revenue will still leave you with 60 years of tax burden from Joe’s spending.
    “On the corporate tax front, the most significant revenue raisers are:•A 7ppt increase in the statutory corporate tax rate to 28%, which would raise $1.3tn over 10years.•An increase in taxes on foreign earnings.•A 15% minimum tax on global book income.•The elimination of several real estate investment tax preferences.” (Oooh look, Trump’s screwed! Yeah! I wonder how all those REITs look with that?)
    Another unasked question: Who is going to do all that economy stimulating work if there is a national lockdown due to Covid?

  2. Avatar GEORGE CHAMBERLAIN says:

    what’s new?
    “LaRouche’s comments were prompted by an article published in the Telegraph on May 19 by British intelligence stringer Ambrose Evans-Pritchard, whose experience in orchestrating U.S. impeachment drives for the British goes back to his attacks on President Bill Clinton. Evans-Pritchard, on the eve of Trump’s first trip abroad as President, is spreading the black propaganda line that Trump might already be incapacitated, in much the same way as President Richard Nixon was incapacitated by then-Defense Secretary James Schlesinger, who “instructed U.S. military officials to ignore any order from the Oval Office to use nuclear weapons.”
    Evans-Pritchard asserts that the key to overthrowing Trump is to pull Republican support away from him, which he admits is still strong. But what happens next? He quotes Sir Jeremy Greenstock, former British UN ambassador and now chairman at Gatehouse Advisory Partners: “America can be very powerful if it decides to act hard. Xi Jinping and Putin will probably wait and see whether Trump self-destructs.” Evans-Pritchard then raises the question: How will Trump behave “when the special prosecutor [Robert Mueller] starts to let rip with a volley of subpoenas.”

  3. Avatar Leith says:

    I like the idea of a Carbon Border Tax. Or at least the one proposed by the EU, as I have not seen Biden’s proposal. It has never made sense to me that we import from countries with low environmental standards when our own manufacturers are handicapped.
    But unless Biden can carry Democratic Senatorial challengers against GOP incumbents it ain’t gonna happen. It will be stalled in the Senate. There is no way McConnell will even allow it on the Senate floor.

  4. This thinking has been wrong, repeatedly so, for the last 10 years. The idea that there is just one more pedal to push down to jumpstart the economy belies the truth that we have experienced the most accommodative and expansive monetary policy on a global level in modern times.
    Aside from the lack of efficacy, which I may look to discuss at length later on, there is another striking thing about this plan, and that is how it will be paid for. The reason is not the traditional “where will the money come from” I know where it will come from, cheap US debt, but it tells us two key things. The first is that the functional ideas of Modern Monetary Theory (MMT) that you can basically just issue debt and have your central bank both monetize it and keep the interest payments low and use that to fund largely unlimited government spending have for the most part been endorsed by those on the left as a mechanism to deliver on their grand plans. The second thing that is striking though is what they want to spend the money on, which is military spending and infrastructure and not healthcare and a green new deal. This calls into question what alignment there is on the cadres of the left or the possibility that starting with infrastructure is a way to run cover to expand these fantasy economics to social projects without reorienting the economy towards their achievement.

  5. Avatar Veg says:

    Evans-Pritchard’s talents are wasted on economic commentary. He writes well, but in the breathless tones of a failed thriller writer. His entire worldview is based on the notion that it is always two minutes to midnight. It’s a shame that they put all of his stuff behind a paywall.
    Maybe if Biden’s plan is approved we will finally see the inflation that Wall Street and its media minions have been whining about for the past forty years.
    I have no doubt that the collapsing pocket that is Conservative Inc will luxuriate back on the familiar loser’s ground of “fiscal responsibility.”
    Biden’s plan, such as it is, simply marries the essence of Trump’s nationalist policies with Great Society spending levels. Like so much of his platform, it is designed to keep the progressives on the plantation until Nov 3 and not one minute beyond.

  6. Avatar Deap says:

    Sure it will. The devil is in the details. When has any Democrat economic plan ever produced intended results. First they have to confess what went wrong with their trillion dollar “War on Poverty” that now requires another trillion to pretend to clean up that grotesquely distorted mess.
    Until they confess to their sins of the past, they are doomed to repeat them. How are they going to remedy their decades of teacher union K1-2 fail turning out entire generations of dysfunctional illiterates who are somehow going to be absorbed into this dynamite economy.
    They are sitting in the back room smoking dope and spinning tales. What I hear is wealth confiscation and/or turning on the printing presses. Time for a good recap of Obama’s initial “Green Jobs Revolution” from his first term – who did those promise work out and why are we having to undo the piles of excrement Biden First Term left behind.
    I have a bad case of deja vu When in fact the Trump Tweaking was paying long term dividends, until the deep state hijacked covid to destroy any possible Trump bragging rights. Never forget Nancy Pelosi tearing up Trump’s SOTU address and declaring they were all lies — and then carrying out her covid porn agenda to make sure she was proven correct.
    Remember the three generation rule – all revolutionary and planned economies always fail by the third generation. Soviet Union, Margaret Thatcher’s warning, Cuba, etc ……if all the wealth in the world was redistributed, it would be back in similar hands three generations later. Societies always stratify, even since the Sumerians.
    America is unique primarily because of the mobility it offers between the strata by its relatively free market system. Don’t mess with it. Democrat’s heavy handed planned utopia is a nightmare.

  7. Avatar j. casey says:

    “Bidenomics” is comedy gold, man. Here’s another one: President “Printing Press” Harris.

  8. Avatar A. Pols says:

    Yup, and I’ve got some ocean front property in Arizona for sale. Sounds very hopey changey to me.

  9. Avatar Diana Croissant says:

    I am no economist. However, I am not in debt. I am not wealthy, but I have all I need and want. I’ve worked very hard during my life and enjoyed my jobs because they were suited to my training and kislls. My retirement funds keep me comfortable. My two sons are doing well in our current economy. That’s, of course, a self-centered view of the situation.
    But, with that in mind, I say this: “beware of Greeks bearing gifts.” (I know Biden is not Greek, but I hope you get my point.)
    I am also remembering the Obama administration. I may receive only an Obama phone and an EBT card.

  10. Avatar blue peacock says:

    Ambrose Evans-Pritchard is generally a very astute writer. However, on economics and national fiscal policies and central banking he has bought into the Davos sophistry that defies common sense for over a decade.
    An example of this sophistry is this line from the passage in your post – “..lift the US economy out of the zero-rate deflationary trap of the last decade…”. Ask an average American if they’ve seen any price deflation in their rents or house prices, their kid’s tuition, their health care premiums, their cost of pharmaceuticals, the cost of tacos at their neighborhood taqueria, the cost of getting their shirt cleaned, over the past decade and they’ll laugh at you. The cost of living of average Americans have risen and that is the real living experience. But of course if you’re Ben Bernanke or Mario Draghi or Jerome Powell or Ms. Lagarde then we are in a “deflationary trap” and they should print more and more money that gets shipped first to their friends on Wall St. The Party of Davos as Jack called it.
    Under the government enforced lockdown, how many trillions has the US federal government under the Trump administration borrowed from future generations in the first and now the second stimulus waiting for approval? How many trillions did Jerome Powell print up and send to his friends at Blackrock and Citadel?
    GDP is a useless indicator IMO. Digging trenches and filling them up will raise GDP. A very important indicator however is productivity growth. That has been lagging for many years. Another are median household income & wealth, which has also been lagging. What we’ve seen in the US is a dramatic increase in wealth inequality between the top 0.1% vs the bottom 80% over the past 50 years and this curve continues to accelerate – second order derivative!! The second is the level of systemic debt across all sectors – individuals, corporate and government at all levels that has continuously risen over 50 years increasing systemic leverage to a point larger than during the civil war and WW II. This has occurred under both parties and the Trump presidency has actually increased it despite the rhetoric. Compare the Balance of Trade relative to the soundbites.
    https://d3fy651gv2fhd3.cloudfront.net/embed/?s=ustbtot&v=202010061328V20200908&d1=20101009&h=300&w=600
    A systematic restructuring of our economy away from financialization, away from bailouts of the oligarchy, away from unprecedented market concentration, away from untrammeled credit expansion to back previous credit losses and having a monetary authority with a singular focus on sound money is what’s necessary. But that’s not gonna happen under either Trump or Biden as it will gore the ox of the Party of Davos whose interests is what both sides primarily cater to. More debt-fueled government spending always ends up as socialism for the oligarchy which is exactly what we’ve had for decades. It is an economic truism that as productivity of debt continually declines, economic productivity also declines. That’s the trap we are in!

  11. Avatar LondonBob says:

    Been very happy with my gold investments these past two years and will stick with them thanks, Biden would supercharge them.
    Longer term I am looking to have most of my money in Asia, Russian oil companies also seem to like drilling for oil, rather than desperately trying to be anything else than producing oil like BP and the rest. Demographics are dire for most of the West and the US is likely to continue transitioning in to a Latin American style country. People have been well conditioned in to not talking about such things but no point talking about the increasing economic dysfunction without talking about the underlying cause. A massive increase in immigration will lead to a surge in inequality, anemic economic growth, fiscal deficits and a decline in gdp per capita.
    Time to start think about investments the way a well to do Latin would.

  12. Avatar BillWade says:

    Well, Biden has to get elected first, we’ll see. Carbon taxes, hmmm – another way to destroy the middle-class?
    Something to think about is the European Central Bank, they are a meeting late this month with “experts” to determine if they will go to a digital currency. The ECB might then decide the “experts” are right and go full digital on Jan 1st, 2021. We might see a whole lot of Euro money coming into the USA, hope so. However, the Federal Reserve has not been printing any new bank notes so you’ll have trouble finding crisp bills for Christmas gifts.

  13. Avatar Oilman2 says:

    IMO, based on the debt current and future we are loading on the backs of our children, it matters not a whit which of the paths are chosen. Both will end in destruction of said debt by some method – because you can only load so much on horseback and still ride. As we stand now, we are walking alongside a swaybacked packhorse already. Closing off the country, where the only growth has been in the services sector for decades, makes sense in what universe?
    Raise taxes? They have only ever increased in my lifetime, my fathers and his. At what point does the Boston Tea Party repeat? From where I sit, everything either party does is only adding fuel to a coming conflagration, as nothing is actually paid for – a ledger entry is aggregated and we march on. The piper will get paid, as he has the children…

  14. Avatar tedrichard says:

    1.socialism and keynesian economics as a viable theory dead dead right now….today and politicians know it
    2. central banks are trapped at zero bound interest rates with no way under heretofore main stream economic theories to stimulate their respective economies
    3. politicians are largely dumb as a bag of hammers with not a shred of understanding what to do other than to listen to think tanks warmed over rehashed ideas that have not worked in the past and won’t now.
    4. what biden is proposing is MMT with communist thomas piketty theory disguised as classical keynesian nonsense being sold to a public almost as dumb as those doing the selling
    5. in order to make this works they will have to institute guranteed basic income for the umpteen millions of people who will NEVER work again under this policy of bullshit
    6. and lastly to ensure NO ONE can escape this trap which will evolve into an UGLY neo feudalism for 99% of the populace this team of genuinely EVIL people will have to CANCEL ALL paper money FORCING everyone to have a bank account for using digital money THE ONLY money that can exist if this comes to pass. banks loves this as it gives them a cut of all the action
    7.as a result taxes will be anything they want and YOU have no escape or recourse whatsoever
    8. say the wrong thing, think the wrong thing and your economic life under digital money will be cancelled placing you into destitution and death
    9. this is a recipe for slavery on a gigantic scale ensuring the 1/10 of 1% can rule without disturbance forever
    10 revolution will be the only option at that point and since the police and military will continue to be paid by the state it will be bloody
    let see you pl print this

  15. Avatar Deap says:

    On the other hand, if this scheme promises to bring back the Jimmy Carter 14% interest rates on CD’s for us retired folks, I say bring it on. Everyone else will just have to deal with the economic rubble later on their own.
    I just need another good 15 years or so myself. In other words, never believe old people when it comes to managing the US economy- our goals are selfish and very short term. So like, what’s in this for meeeeeee?

  16. Avatar Deap says:

    Biden must have listened to AOC for this fiscal policy advice. Bring back chicken coops and victory gardens, and turn in your scrap metal because we are WAR.

  17. Avatar Bobo says:

    What in God’s name is Biden having a Brit pushing his economic plan. We all know they embellish everything which then falls apart into pieces. Yes, Fred I remember those +14% interest rates I paid on my mortgage and still kick myself for not taking the 100k down payment and putting it into a 14% 30 year CD and renting. But then we all have those memories. Sure would not want my grandchildren paying those rates on a 500k mortgage as it would kill the real estate business and this country.
    Sleepy Joe will be ready for the assisted living center by year two and we would be stuck with Checkbook Harris, UGH. Vote for the Bullcrapper that gets things done.

  18. Avatar Les Priest says:

    Ahem; This has been done before: After Hitler was elected in 1933; He slammed the borders shut to money transfer, then started building the autobahn. It worked, Germany came out of the slump. Of course, Hitler then moved on to building planes & tanks. Also, Modern Monetary theory says you can run the printing presses & print money like mad, as long as that paper is going into a real, working economy, it gets recycled. That does not describe the current ‘developed world’ economy; the FIRE economy (finance, insurance, real estate) has eaten it’s own tail. When all the other assets have jacked up half way to the moon, there will be another gold rush (same as 1930s) & my shack in northern BC will shake with all the helicopters flying around to work up new gold mines.

  19. Avatar English Outsider says:

    Candidate Donald Trump’s 2016 programme was clear. Bring industry back home. Ditto the troops. Ensure an adequate defence. Drain the swamp.
    Looked good. I hadn’t realised that his main achievement would be somewhat simpler. Stay functioning in office in the face of the most dangerous series of attacks on an American President that can have been seen since the early nineteenth century.
    So clearly he’s going to need another term in office to get on with all the things he should have been able to get on with in the first.
    Candidate Joe Biden was, I thought at first, stealing part of the Trump 2016 programme. Bring industry back home. Turns out not – as far as I can see America will remain the most heavily industrialised country going. But, as in my own country, much of the industry will still be abroad. With the jobs.
    As with my own country Biden’s America will be environmentally virtuous. It’ll hit some good targets. It’ll not use as much fossil fuel. Yesterday’s heavy polluters – the coal mines and steel mills – won’t pollute any more.
    Fake. Again as with my own country the dirty industries we still rely on will still be roaring full steam ahead. Coal will still be mined. Steel will still be produced. But elsewhere.
    So Candidate Joe Biden will not be the man to put that part of the Trump 2016 programme into action. He’ll be the man who continues with the fake environmentalism we’ve already seen so much of. Naturally, if the heavy industry is outsourced so is our pollution. Doesn’t look that clever a trick to me, even if it fools the eco-warriors.

  20. Avatar eakens says:

    Wake me up when somebody elects to get rid of the Federal Reserve and limit fractional reserve banking. Until then, wealth inequality will continue to grow and grow.

  21. Avatar Babak makkinejad says:

    tedrichard
    I think that socialism and keynesian assume a healthy industrial economy, and not one afflicted with the cancer-like growth of the financial sector.
    Socialist or Keynesian economic policies in a de-industrial or non-industrial society only shuffle around poverty.

  22. Avatar Deap says:

    Just read Goldman Sachs loves this full “blue wave” takeover since few of their clients pay taxes in the US anyway, so Biden tax increases on US taxpayers that in turn stimulate the global economy sounds really good to them. Who knew?

  23. Avatar guidoamm says:

    Sir,
    Nobody ever stops to think why a sovereign state should borrow its currency from a third party; i.e. the central bank.
    What is the point to have a third party create the lifeblood of a nation? If needed, Treasury could do the same.
    So, until and unless someone will question the utility and desirability for a central bank, nothing will change.
    Too, if we place an arbitrary time time line starting from the end of WWII, every incumbent government has run perpetual fiscal deficits. Not occasional deficits, but perpetual.
    Perpetual deficits are compensated with debt. Debt is supported by fiscal revenues. Fiscal revenue is brought in through legislation.
    Over the past 80 years, legislation has become gradually more labyrinthine thus more stifling.
    Adding more complexity to an already complex system, will do nothing to raise GDP. Certainly not in the numbers bandied about by Moody’s. Besides, Moody’s track record is less than optimal.
    The only way jobs could be brought back to the West is by a significant reduction in legislation thus costs of doing business.
    But that is arithmetically impossible. This is not a right/left assessment. This is an arithmetical assessment.
    As a reminder.
    80% of the global population lives in a radius of 5000Km from Shenzen in China.
    The bulk of global industrial capacity is located in the same geographic area.
    All the West has to show after 80 years of presumed progress is:
    Crushing legislation which raises barriers to entry in business.
    Bankrupt institutions.
    Ageing population.
    Un-payable debt.
    Biden’s plan is pie in the sky. Trump plan is pie in the sky.
    Unless someone is able/willing to tackle the above, electing one or the other makes no difference.

  24. Avatar guidoamm says:

    All that said, I am acutely aware that Trump is the closest thing we could hope for to actually unravelling the entire corrupt system.
    The fact that he is despised by so many on both sides of the isle can only be a good thing.
    The rage of the machine is a thing to behold.

  25. Avatar fakebot says:

    Those figures of 4% GDP growth eventually reaching 8% were touted by Trump for his economic plans in 2016. Even these ideas share some resemblance to those plans. The tariffs on China specifically and an economic focus restored to American made goods are all things Trump said and has since tried to do. The only difference is the government spending. Trump wouldn’t have the government be the economic driver, he’d place the emphasis on creating conditions for American companies to invest towards economic growth rather than leaving the bulk of that investment in the hands of the government. Trump’s approach is more sound and responsible.

  26. Avatar Richard Ong says:

    All we need to do is press down on the “economic accelerator.” If only Trump had known about it our troubles would be over.

  27. Avatar Richard Ong says:

    @Babak makkinejad:
    That’s an excellent point. FDR’s lunatic statism was imposed on a basically healthy economic system. The postwar recession evaporated in the face of government non-intervention and even the excesses later and Hoover’s foolish interventions did not materially damage the underlying productive structure. Too, many more people lived on the farm.
    The reality 90 years on is that debt is sky high and debt service is the monster under the bed who must not be provoked by higher interest rates. Low rates, however, have facilitated massive fiscal excess and monetary recklessness punishing savers, driving them into risk-on investments to find some return on savings and to try to stay ahead of or even with inflation. Cheap money has stimulated more marginal investment and massive deficits have meant investments driven by political considerations. Think stock buybacks (massive) and Solyndra. Women have been driven into the workforce just to pay the taxes (plus childcare) to which add the burden of massive student debt and higher taxes, esp. employment taxes. Plus soaring health care insurance costs and job theft, wage suppression, and welfare cost of massive third-world, illegal immigration and massive job loss from malevolent off-shoring. Plus massive regulation and “climate change” dishonesty.
    We aren’t in Kansas any more.

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