“On the Holmes Front,” with Frank Holmes
While the whole world is watching bombs drop on Ukraine, the U.S. economy may be blowing up—and more and more economists are making dire predictions about what’s coming in the three remaining years of the Biden administration.
Too many economists say we could be poised for a full-scale, economy-wide recession.
All the factors are in place… and if you know history, or have a few years of experience and a good memory, you already recognize them.
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Inflation is at the highest point in 40 years. Biden rewarded Americans for not working—with fat unemployment checks and “tax credits” for people who don’t pay taxes—so much that Americans walked out of their jobs en masse. Cargo ships are so heavy with goods they can’t deliver they’re bobbing up and down in the Pacific Ocean.
Store shelves are empty, cashiers’ jobs are vacant, and the dollar is losing value. Those are the building blocks for recession—and it gets worse.
The Federal Reserve, which Ron Paul has warned about for 50 years, has been juicing the economy by keeping interest rates at near-zero for almost 30 years… but all that’s about to come to an end.
The Fed has moved to raise rates—which makes it harder for people to borrow money. That means businesses, especially Mom-and-Pop stores, may find it harder to get the money they need to keep going. (But don’t worry: Big Business will be fine.) And it means Americans who live on consumer debt won’t be able to get personal loans and will have to cut back or declare bankruptcy.
If you look at the last time America had huge inflation and the Federal Reserve raised rates, it was 1982. The Fed, under chairman Paul Volcker, gave us the worst recession since the Great Depression.
So, how do things look today under President Biden?
Economic conditions today are “unusually murky,” wrote Ryan Sweet of Moody’s Analytics, one of the top financial forecasting firms in the world. “There are also reasons to worry that a recession isn’t far off,” he said in mid-February. “The odds of something going wrong are high.”
He’s not alone. “Recession risks later this year and into next are now uncomfortably high,” said Moody’s Analytics Chief Economist Mark Zandi.
Zandi, who analyzes the economy for a living, says bad things are coming. Zandi says the Russian war—which Biden’s actions did nothing to prevent—was the last straw.
“Landing the economic plane on the tarmac was already going to be difficult for the Fed because of the pandemic and high inflation, but Russia’s invasion makes it more likely the economic plane hits the tarmac hard or even crashes,” he added.
What are the odds of a real recession breaking out soon? If you were in Las Vegas, you’d put your money on it.
“The odds of a recession by the end of 2023 at over 50%,” Forbes Magazine reports Lawrence Lindsey, a former governor of the Federal Reserve under George W. Bush, told it.
You might be tempted to wave off Lindsey, because he’s a Republican—but warning about a coming economic downturn is a bipartisan fear.
Forbes reports, “Ex-Treasury Secretary Lawrence Summers, meanwhile, put the chances of a near-term recession—within the next 30 months—at above 50% because ‘the Fed has allowed itself to get far further behind the curve’ in battling inflation.”
Who’s this other Lawrence, Lawrence Summers? You may have seen his signature on one of your dollar bills; he was Treasury Secretary from 1999 to 2001…under President Bill Clinton. He’s an Ivy League Democrat and as far from a conservative as you can get. But Democrat Summers and Republican Lindsey agree: The best thing you can do with your money is bet a recession is coming—and soon. But how soon?
In the “next six months, (Federal Reserve interest) rates shock morphs into recession shock,” wrote Chief Investment Strategist at Bank of America Michael Hartnett.
If you’re looking at this picture, you want to plan your investment strategy accordingly…and be ready for the economic and investment options that open up once the recession hits. That’s how billionaires like George Soros and Warren Buffet make and maintain their fortunes.
And you’ll want to look for the opportunities to help and serve your fellow American citizens, who didn’t plan the same way, if the economy tanks.
Barack Obama once joked, “Don’t underestimate Joe’s ability to f— things up.” It looks like the economy is about to prove Obama was finally right about something.
Frank Holmes is a veteran journalist and an outspoken conservative that talks about the news that was in his weekly article, “On The Holmes Front.”