What he is talking about is Demand side economics, or Keynesian Economics. Named for Economist John Maynard Keynes, who developed his economic theories during the Great Depression of the 1930s, the chief underpinning of this theory is that the demand for goods and services drives economic activity. Keynes believed that unemployment is the result of inadequate demand for goods and services. To solve this, he believed that governments should increase spending to spur economic activity by artificially creating demand.

The problem with this is that low demand causes a matching reduction in production. If a government tries to spur demand artificially by putting money into the economy, the increased demand in the face of reduced supply sees more money chasing a limited supply, which is a key driver for inflation.

Especially since he is providing the increased spending through application of Modern Monetary Theory. Modern Monetary Theory (MMT). says that government spending can be financed by printing money rather than borrowing. Biden is doing both.

The US government has increased our debt by $1 trillion in the past 57 days. Our debt today stands at $32.8 trillion, and on June 27, it was $31.8 trillion. At the same time, the M2 money supply has increased from $20.5 trillion in the summer of 2021 to $20.9 trillion today.

So we have large scale government spending coupled with an increase in circulating money supply.

That’s Bidenomics.

Biden and the rest of the Keynesians are wrong- demand isn’t the problem. Demand remains strong, as evidence from the credit sector indicates that credit card debt is skyrocketing.

According to recent data from Credit Karma, Gen Z and millennials have experienced a significant increase in credit card debt in the second quarter of 2023. Average credit card debt for Gen Z now exceeds $3,300 — a 4.2% rise — while millennials hiked up credit card debt by 2.5% to an average of nearly $7,000.

This marks the first time since 2001 in which credit card debt didn’t fall in the first quarter. In fact, the only times card debt didn’t fall in the first quarter of the year since the New York Fed report began were 2000 and 2001. Every year since, card debt fell at least a little bit — until this year.

The money in circulation (M1) has decreased from $19.4 trillion to $18.5 trillion, so overall savings are increasing while credit card debt is rising. So the overall savings of Americans is increasing while at the same time credit card balances of GenZ and Millennials is increasing to record levels. This indicates that people born before 1981 are beginning to sit on bank accounts, while those born after 1981 are continuing to spend using credit cards.

So what will happen as a result? Rising interest rates, coupled with increasing credit card balances, will cause increasing credit card defaults and banks tightening up their exposure to risk. We are seeing that already, as numbers from the Fed indicate.

According to the most recent delinquency data from the Fed, the 30-day delinquency rate (or the percentage of total outstanding credit card balances currently at least 30 days overdue) rose from 2.25% to 2.43% in the first quarter of 2023. That’s the sixth straight quarter of increases, keeping rates above 2% for the third straight quarter.

That’s Bidenomics.

Categories: economics


Boneman · August 7, 2023 at 6:41 am

It’s like a juggler…. that juggles three balls at once… then four… then five… then six… ad infinitum. Eventually all the balls end up on the floor.

    It's just Boris · August 7, 2023 at 8:22 am

    Plus, the balls are hand grenades, the juggler makes sure they land in the audience when he’s losing them, and the juggler doesn’t have to clean up the mess afterwards.

Anonymous · August 7, 2023 at 9:43 am

Modern Monetary Theory (MMT) says that government spending can be financed by printing money rather than borrowing

Santa Claus Theory says that Christmas presents come from a magic toy workshop at the North Pole, but kids figure out their parents are the actual providers. Suppose you’re on Gilligan’s Island, and suppose you declare palm tree fronds to be currency. Are you better off? Any issuance of currency which is not directly exchangeable for a valuable material item is counterfeiting. This includes fractional reserve. Currency issuance is a tax on people who save in dollars, typically the middle class. Congress spends the new currency on pork, typically making war, which enriches people who save by holding defense company stocks, typically the rich.

T Town · August 7, 2023 at 4:04 pm

The problem with nearly all of the economists is that they fail to recognize that the economy is directly tied to the price of oil and natural gas now. Besides the obvious fact that oil is used to produce gasoline and diesel which is needed to move products to market, as well as being used in machinery needed for farming, mining, etc. Plus, petroleum products are used in the manufacture of plastics and a whole slew of other things. Natural gas is used in the generation of electricity, plus the manufacture of fertilizer, among other things. The list of things that are directly, or indirectly, tied to the cost of petroleum products and natural gas is staggering;
Yet you rarely see anybody point out the fact that inflation can be tied back to the price of oil and natural gas.

anonymous coward · August 7, 2023 at 8:33 pm

“neither a borrower nor a lender be” Good advice for people and governments.

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