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Sunday, August 11, 2024

If Kamala wins

 Well if Kamala wins, what does one do?  Here's how inflation happened and that provides the key.  Inflation is too much money chasing too few goods.  The entire supply of dollars in circulation in 2021 was $15.4T.  But Biden, Harris and Democratic Congress passed $8T of spending in deficit.  They had to create money to that amount.  So now the Money Supply has risen to $23T and there is too much money chasing about the same amount of goods (well plus 7%--GDP growth).  And they have said that it is up to the Fed to correct inflation.  

   That is shirking a lot of responsibility!  Congress should cut spending to a balance.  If they would do this, the Fed would see how serious they are about ending inflation and would respond by favorably lowering interest rates.  That would stimulate growth which is required to correct the bloated money supply. Not much likelihood of this happening. 

But the Executive branch should lower regulations which will also help growth.  Not much likelihood of that either.  And they should press Congress to lower taxes.  That is unlikely too.  

So it looks like it is up to the Fed.  What tools will they use? They hold a record amount of funds ready to purchase bonds--called QE, quantitative easing.  When they purchase bonds, that cash paid goes mostly into the stock market as investors re-invest. That is normally inflationary, so it will only occur when a recession happens.  We are likely entering a recession already.  The Fed can't lower interest rates to fight recession while raising interest to fight inflation. Can't do both. But they can do QE, which makes the market go higher and pleases investors while doing nothing for the working peole.

So if you have investment money, wait for the recession to occur and provide stock bargains.  They cash in your  bonds.  It's depressing when you realize this only helps your situation, not the country's but this is how you game the Democrats. 

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