FedEx CEO says he expects the economy to enter a ‘worldwide recession’PUBLISHED THU, SEP 15 20226:38 PM EDTUPDATED THU, SEP 15 20228:25 PM EDTKrystal Hur
FedEx CEO Raj Subramaniam told CNBC’s Jim Cramer on Thursday that he believes a recession is impending for the global economy.
The CEO’s pessimism came after FedEx missed estimates on revenue and earnings in its first quarter.
As we have been telling you for months (years, actually), Jerome Powell will fail to stop inflation and instead will cause a recession or depression. There are two reasons.
He has no idea what causes and what cures inflations, and
He doesn’t have the tools, even if he knows.
So, today he, in essence, is using a chainsaw to slice the wedding cake and applying leeches to cure anemia. And then, when the chainsaw and the leeches make things worse, what will Powell do? He will use a bigger chainsaw and apply more leeches.
As I predicted, his interest rate increases have failed to end inflation. So, what will he do? He will raise interest rates again and again, of course. (The definition of insanity is doing the same thing repeatedly and expecting a different result.)
He refuses to learn from failure.
The primary reason why prices — any prices — rise is scarcity. It would be quite rare for overall prices to increase because consumers suddenly have more money in their pockets and spend more on everything.
When something prevents the supply of any one product (other than oil) from growing, we have an increase in that product’s price. (Oil is a special case because it has universal use.) To cause inflation — a general rise in prices — a general restriction in supply is required.
And that general supply restriction was provided by COVID., which caused so many supply disruptions that recovery is difficult. And to some degree, the pandemic still is with us.
Our recovery from covid is delayed COVID partly because the GOP didn’t want us to recover. They denied the need for masking, and vaxing, so they continued to spread the disease.
They wanted to be able to complain about Biden and the Dems.
Not that the Dems are entirely innocent. They still join the GOP in promulgating the false notion that federal deficit spending causes inflation.
Not only does federal deficit spending not cause inflation, but targeted deficit spending, to acquire and distribute scarce goods and services is the only government solution to inflation.
Powell thinks consumer demand is causing inflation. He wants to force consumers to demand less by making borrowing more expensive. But demand less what? Should we demand less oil? Less food? Less housing? Fewer cars?
If he fails to quell demand, which is likely, inflation will continue. If he succeeds in reducing demand, we will have a recession, for that is precisely what a recession is: Lack of demand.
In short, Powell is trying to fight inflation by causing a recession. Stagflation next? Then depression?
Inflations are caused by shortages. PERIOD. The only way to cure inflation is to remedy the shortages.
Today, we face many shortages ranging from oil to food, computer chips, lumber, paper, and the entire supply chain, including shipping containers, port facilities, and labor.
Some of the foods in short supply (and therefore experiencing price increases) are meat, poultry, dairy, eggs, and many vegetables. Will interest rate increases cure those shortages? Of course not.
Will interest rate increases cure the oil, food, computer chip, lumber, paper, supply chain, shipping container, port facility, and labor shortages?
The whole Powell concept is based on ignorance.
Interest rate increases will exacerbate shortages by making production more difficult. Businesses will be less likely to borrow for upgrading machinery or hiring more and better quality labor.
As a result, production will not grow sufficiently, which means more shortages.
It will be the “leeches-to-cure-anemia” situation, where the supposed solution makes the problem even worse.
Eventually, inflation will end, but not because of Powell (who will claim credit). Inflation will end because businesses will catch up and begin to produce more, sell more, and ship more.
Meanwhile, we’ll have to suffer through sky-high interest rates, continual nonsense from Congress and Powell, ever more inflation, and excuses for cutting benefits to the not-rich. (There still will be plenty of tax benefits for the rich. Deficit worries don’t apply to them.)
Recessions (vertical gray bars) follow reductions in federal deficit growth (red) and are cured by increased federal deficit growth.There is no relationship between federal deficit growth and inflation (blue). Peaks and valleys do not come close to matching.
The GOP is hopeless. It has become a nut factory. But, perhaps I will live to see the day when the Dems begin to admit that federal deficits are beneficial because they add growth and scarcity-fighting dollars — i.e., inflation-fighting dollars– to the economy.
Congress does the bidding of the very rich, who want the wealth Gap to grow. The pols promulgate the Big Lie that federal finances are like personal finances, where debt is a burden. But debt is not a burden on the federal government.
This gives Congress the excuse to cut deficit spending.
So, we will continue to lurch from one recession to the next, with the occasional depression thrown in for flavor.
And as for the public ever understanding, don’t make me laugh. Seventy million people saw what Trump did for 4 years, then voted for him. That tells you all you need to know about the public’s intelligence.
Come to think of it, the insanity of providing the same truths time and again and expecting a different result applies to me, too. I’ve been ready to quit for several years, but then I think of the world my grandchildren will endure, and hope springs eternal.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
Background The federal government, being Monetarily Sovereign, neither needs nor even uses tax dollars. The Treasury destroys all the dollars it receives. It creates new dollars, ad hoc, each time it pays for anything.
Even if the federal government collected zero dollars in taxes, it easily could fund comprehensive Medicare for every man, woman, and child in America.
The sole purposes of federal taxes are:
To control the economy by taxing what the government wishes to discourage and by giving tax break to what the government wishes to encourage.
To assure demand for the U.S. dollar by requiring that dollars be used for paying taxes.
To help the rich, who control America, get richer, that is, widen the Gap between them and the rest of us. This is accomplished by pretending the federal government can’t afford to fund such benefits as Social Security, Medicare, poverty aids, etc.
Because the federal government does not fund Medicare for All, most businesses pay for some part of a private healthcare insurance policy.
This gives the business great power, not only over your working day, and not only over your salary, but even over your health, just by the terms of the policies they provide.
The latest evidence of that power relates to religion. Businesses, more and more, are able to exercise religious bigotry, and the right-wing courts love it.
The federal government encourages charitable giving by providing tax deductions. According to the Internal Revenue Service, a charity involves these activities:
The exempt purposes set forth in Internal Revenue Code section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the prevention of cruelty to children or animals.
The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
All but oneof the above are for the benefit of the general public. That one is religion.
Religion is not charity in the true sense of the word “charity.” When you make a contribution to your religion, it’s tax deductible. But that gift goes to your own — what shall we call it — club, sect, group, creed, cult, faction, team, clan, clique, party, etc.
If, for instance, you happen to be a Catholic Republican who belongs to a country club and has season tickets for the Cubs, your gift to your Church is deductible, but your gift to the GOP, your country club, and the Cubs are not.
a regular congregation and regular religious services, and
an organization or ordained ministers.
The IRS doesn’t say who or what you must worship.
Based on that logic, I could start a group called, “MAGAs for Trump.”
From what I can tell, MAGAs are more worshipful of Trump than of any other “god,” I should be able to give tax-deductible gifts to the group.
And for sure, many football fans worship their team with much greater fervor than any god. So football tickets should be tax deductible.
Religion is something invented not by any supreme, magical entities in the sky but rather, by people.
Every culture down through the centuries seems to have invented religions. That is why there are, and have been, hundreds or even thousands of religions. Sun gods, moon gods, river gods, we have gods by the trainload.
And no god is better or worse or more realistic than any other god.
The Romans and Greeks had many religons. Currently, we have such religions as Confucianism, Shinto, and Taoism. There are Japanese religions, Chinese, Korean, Mongolian, and Vietnamese religions.
We have invented Buddhism, Neo-Buddhism, Hinduism, Jainism, Sikhism, Baháʼí, dozens of types of Christianity, Druze, Islam of various types, Khawarij, and Judaism of various types. And did I mention Mandaeism and Yazdânism?
Each little tribe hidden in the jungles of Africa and South America has its own religions. And by IRS definition, contributions to any of them would be tax deductible.
But why?
Why does the federal government wish to encourage these clubs, sects, groups, etc? Few of them are charities in the true sense of the word.
Most religions are nothing more than political groups hawking their gods, no different from the Dems and the GOP, selling their candidates.
The only thing that differentiates religions from Trump’s GOP is that religions are devoted to preaching myths. Hmmm. On second thought, maybe Trump’s GOP is a religion.
Judaism teaches that there are eight levels of charity. Look it up. The highest level is helping someone stand on their own gwo feet so they won’t need charity. The lowest level is to give unwillingly.
The other six levels involve different degrees of anonymity for the giver and for the recipient. For example, giving under the condition your gift will be announced to the world is a much lower level than giving anonymously.
But every level of charity involves giving to someone else, not to yourself. No level of charity involves giving to your own group, cult, clan, etc.
I’ll interrupt this discourse by saying I have no objection to charitable tax deductions. In fact, I consider all federal tax deductions to be economically beneficial.
The federal government has no need for your tax dollars so, in that sense, all deductions are good deductions. They all add stimulus dollars to the economy.
But if the primary purpose of federal taxes is to control the economy, I suggest that tax-deductible giving to religions is wrong.
It’s economically wrong because religions (most of them) are no different from advertising agencies or political parties.. They do everything agencies and political parties do and more. Religions often combine book and media publishing, radio stations, TV stations, real estate holdings, and speaking into massive income.
But unlike secular publishers, broadcasters, real estate holders, and speakers, religions can receive tax-deductible contributions, giving them a huge economic advantage.
It’s legally wrong because giving preferential treatment to religious donations violates the Constitution’s establishment clause.
But most importantly, and ironically, it’s morally wrong because too many religions have a terrible moral history of murder, torture, various forms of corruption, and above all, bigotry.
And here is the latest immoral example to come to my notice.
From Slate Magazine, Mark Joseph Stern, USING GOD TO DENY BASIC HEALTH CARE
Placing a boss’s claims of religious objections ahead of access to lifesaving medication is “morally and intellectually repulsive,” said Mark Joseph Stern.
But a federal judge’s ruling last week that the government can’t require employers to cover PrEP antiretroviral drugs, which prevent HIV, could portend something far worse: bans on mandates for “almost any preventative care.”
A group of Texas plaintiffs argued that the Affordable Care Act’s rules made the complicit in potential “homosexual behavior,” drug use, and extramarital sex, violating their religious beliefs.
District Judge Reed O’Connor, known for trying to strike down the entire ACA in 2018, endorsed that argument.
But he also went further and ruled that the government agencies that decide on ACE requirements for preventative care lack the authority to create such policy.
The decision will be appealed. But it can give the Supreme Court’s conservative supermajority “the opportunity it craves” to hobble these agencies.
All sorts of treatments — HIV tests, breast cancer screening, heart medication — could be next.
That would “shred the ACA,” and cause “grievous harm to millions of Americans.”
For example, if you are gay, and your boss’s religion bans gay sex, your company’s health insurance policy could refuse to cover any disease that came from your gay partner –not just AIDS but any disease.
You go to the hospital for monkeypox? Your company insurance won’t cover it because you caught it from your gay partner, and your boss’s religion doesn’t recognize gay couplings.
And how far is this from denying insurance for someone of a different religion? After all, Muslims don’t recognize Hindus.
The Catholic hospital won’t accept you because you’re Hindu? The baker won’t bake your cake because you’re living together without official marriage? Here it comes.
THE BOTTOM LINE
Tax deductible gifts to religions cost the federal government money, just as Medicare for All would cost the government money.
Both those costs are economically beneficial because they leave money in the economy rather than taking money from the economy and giving it to the federal government, which destroys it.
Having the federal government pay for health care insurance is economically wiser than having businesses or individuals pay. When the government pays, it pumps growth dollars into the economy.
Further, the absence of comprehensive Medicare for All incentivizes businesses to pay for healthcare insurance, which gives them “moral” and religious power over employees.
We are seeing the return of government-backed bigotry disguised as “freedom of religion.”
Stated simply, the Big Lie in economics is: “Federal taxes fund federal spending.” Suckers believe it.
The Big Truth in economics is: Federal taxes don’t fund a damn thing. In fact, they are destroyed upon receipt at the Treasury.
No federal tax dollars are spent. The federal government creates new dollars, ad hoc, to pay all its bills.
The federal government never can run short of dollars. It has infinite dollars. Even if the federal government didn’t collect a penny in taxes, it could continue to spend, forever.
From the TV show 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.
To the federal government, which created the first US dollars from thin air, dollars are not physical things. They simply are numbers on balance sheets, and the government controls the balance sheets.
The government can put any numbers it wishes on those balance sheets. In short:
The government never can run short of numbers
The government never can run short of laws.
The government never can run short of dollars.
If you sent $100 trillion dollars to the federal government, it wouldn’t help to pay for anything, not even one little bit.
In the letter, dated Monday, the governors wrote that they “fundamentally oppose (Biden’s) plan to force American taxpayers to pay off the student loan debt of an elite few.”
Calm down, fellow taxpayers; we won’t pay anyof that student loan debt.
So why does the GOP claim it? Because they want you to help them widen the Gap between the rich and the rest of us
Note the words “elite few” in their letter? That’s part of the GOP con job. The party that gave a giant tax break to the rich wants you to believe they are all for the poor.
No, they don’t want the poor and middle classes to be able to afford college at all. They want the only people to afford college to be the “elite few.”
They create a phony culture war to make you believe the federal government can’t afford to pay for your benefits.
The rich falsely claim Social Security is going broke; Medicare is growing broke; the government can’t afford food stamps and other anti-poverty measures — and it’s all crap to widen the Gap.
Why widen the Gap? Because it’s the Gap that makes the rich rich. Without the Gap, no one would be rich, and the wider the Gap, the richer they are. Widening the Gap is a way for the rich to become richer.
The Republicans, including Texas Gov. Greg Abbott and Florida Gov. Ron DeSantis, also claimed that Biden’s plan would harm low-income families – writing, “hourly workers will pay off the master’s and doctorate degrees of high salaried lawyers, doctors, and professors. … Simply put, your plan rewards the rich and punishes the poor.”
What an ironic sham. Essentially, they say, “Federal aid to the middle and poor harms the middle and poor.” And people believe it!!
White House spokesperson Abdullah Hasan said, “These same Republican governors didn’t seem to object when their Republican colleagues in Congress passed a $2 trillion tax giveaway for the rich or had hundreds of thousands of dollars of their own small business loans forgiven.”
“While Republican elected officials try to keep working middle-class Americans in mountains of debt, President Biden is committed to delivering relief to the borrowers who need it most,” Hasan wrote in an email sent to USA TODAY Wednesday afternoon.
Hasan is absolutely correct. But so long as people believe the Big Lie that federal finances are like state and local government finances, and specifically, that federal taxes fund federal spending, the BIG LIE will continue to be told.
Federal taxes have three purposes:
To help control the economy by discouraging what the government wishes to limit and by encouraging what the government wishes to increase.
To provide demand value to the US dollar by required taxes to be paid with dollars.
And the most important one: To help the rich become richer by providing tax breaks available only to the rich. (which is how billionaire Donald Trump paid less taxes than you did.)
Hey, it works. The rich keep getting richer, and the suckers keep voting against federal spending that would help them.
Inflation is a general increase in the prices of goods and services. But what factors determine prices?
Economic growth: To lower prices, cut business costs. Recession: To lower prices cut business profits.
Sellers determine prices by answering the question, “What price would provide the most long-term profit?”
If pricing aims to maximize long-term profit, how is profit determined?
Profit is the difference between income and costs. The two ways to increase profit are to increase dollar sales and/or to decrease costs.This is all quite basic.
Pricing is constrained by costs, competitors, customers, and/or laws.
Costs generally set the lower boundary for pricing, as businesses only temporarily can allow costs to exceed total income.
The old joke, “We lose money on every sale, but make it up in volume” is just that. A joke, at least in the long term.
Competitors, customers, and/or laws set the upper boundary for pricing. Sellers set prices between the lower and upper boundaries by estimating where long-term profits are maximized.
Generally, sellers don’t cut costs just to be nice guys. Their sole purpose is to maximize long-term profits. If long-term profits were not a goal, sellers would have no motivation to cut costs.
This is all basic economics 101, yet economists seem to have forgotten that inflation is price increases and recession is economic growth decreases, and the two are unrelated. The opposite of inflation is not recession. The opposite of inflation is deflation.
You can have price increases with growth decreases, and that’s called “stagflation (stagnation and inflation).
And that is what the Fed and Congress are creating: Stagflation.
There are two ways to cut prices:
Cut business profits, which causes a recession, or
Cut business costs which encourages economic growth.
The best way to fight inflation, i.e. to cut prices, is to cut costs because higher costs lead to higher prices. An important component of most business costs is the cost of labor.
What if I told you there is a simple way to cut the cost of labor without cutting the number of employees or cutting pay scales?
Well, there is, and it is dead simple: Eliminate the FICA tax and provide free, comprehensive Medicare for All.
FICA costs employers 15,3% of all salaries under $143,000. This means, that for every salaried employee you, as the employer, pay as much as $22 thousand dollars per employee to the federal government. Those are dollars that come directly out of your profits.
They are non-productive dollars that must be made up with higher prices. They are inflation dollars.
And don’t think the employees pay any those dollars. If you, the employer, told your employees they no longer would have FICA deducted from their paychecks, you could lower gross salaries and still leave them with the same net salaries.
Employers pay the full 15.3% to the government.
As for health care, why has this become a financial burden for businesses? Why does your business pay for any part of health care insurance when the federal government can provide it? Those are lost, non-productive dollars.
And no, federal taxpayers do not fund federal spending. The government could provide Social Security and Medicare to every man, woman, and child in America without collecting a single dollar in taxes.
The federal government cannot run short of dollars. Not ever. Being Monetarily Sovereign, it has the unlimited ability to create U.S. dollars. It neither needs nor uses tax dollars.
The federal government’s trillions of tax dollars extracted from the economy are lost forever. Unlike state and local tax dollars, federal tax dollars are not recirculatedback into the economy. They are destroyed upon receipt.
The federal government always has infinite dollars, and adding tax dollars to that does not change how many dollars the federal government has.
IN SUMMARY
Inflation is a general increase in prices.
This increase always is caused by shortages of key goods and services, not by so-called “excessive government spending.”.
The Fed increases interest rates to ease those shortages by reducing demand, but reduced demand is the definition of recession. Thus, the Fed tries to cure higher prices by causing a recession.
The non-recession way to reduce higher prices is to reduce shortages and business costs.
Shortages can be reduced by more federal spending to acquire or encourage the production and distribution of scarce goods and services.
Business costs can be reduced by reducing employment and business taxes. When a business pays less in taxes, its prices can be lowered while generating the same desired long-term profits.
The instant solution to inflation is to eliminate FICA taxes and to provide free Medicare to every man, woman, and child. This will reduce business costs, allowing businesses to lower prices.
The long-term solution to inflation is for the federal government to address shortages by investing in the production and distribution of scarce items: Renewable and nuclear energy, shipping (roads, ships, railroads, airplanes), food, water, computer chips, lumber, and lower federal taxes on businesses and individuals below the upper-income group.
Federal taxes and interest rate increases are recessionary and do not prevent inflation.
Based on the Fed’s reliance on interest rate increases to combat inflation, I predict we will have a long period of stagflation until business profits increase sufficiently to cause business growth.