Recession: Not If, But When

Raj Subramaniam | FedEx
Raj Subramaniam

FedEx CEO says he expects the economy to enter a ‘worldwide recession’
Krystal 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.

  1. He has no idea what causes and what cures inflations, and
  2. 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 Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell


A quick quiz to see whether you are smarter than Fed Chairman Jerome Powell

Here is a quick quiz. Learn whether you are smarter than Federal Reserve Chairman Jerome Powell.


We currently suffer from inflation, “a general increase in prices.”  The Fed’s task is to bring inflation down while not causing a recession, i.e. “an economic decline during which trade and industrial activity are reduced.”

Prices have increased for food, oil, cars and motorcycles, shipping,  labor, and household goods that use paper or cotton, such as diapers, incontinence supplies, sanitary napkins and tampons, and toilet paper, and labor.


A. There is a shortage of food. The price of food has gone up. The solution should be either to:

  1. Force people to eat less, or to
  2. Help farmers grow more.

B. There is a shortage of oil. The price of oil has gone up. The solution should be either to:

  1. Force people to drive less and to heat their homes less, or to
  2. Help refineries produce more oil and help increase the availability of renewable energy.

C. There is a shortage of cars and motorcycles. The price of cars and motorcycles has gone up. The solution should be to:

  1. Force people to buy fewer cars and motorcycles, or to
  2. Help car manufacturers produce more cars and motorcycles.

D. There is a shortage of shipping ability (the “supply chain”). The price of shipping has gone up. The solution should be to:

  1. Force manufacturers and sellers to ship less, or to
  2. Help manufacturers and sellers to ship more.

E. There is a shortage of lumber. The price of lumber has gone up. The solution should be to:

  1. Force builders to build fewer homes and buildings, or to
  2. Help lumber growers grow more and/or help builders find substitutes for lumber.

F. There is a shortage of computer chips. The price of everything that uses computer chips has gone up. The solution should be to:

  1. Force manufacturers use fewer chips, or to
  2. Help computer chip manufacturers produce more chips

G. There is a shortage of household goods needing raw paper or cotton: diapers, incontinence supplies, sanitary napkins and tampons, and toilet paper. The solution should be to:

  1. Make people use fewer diapers, fewer incontinence supplies, fewer sanitary napkins and tampons, and less toilet paper, or to
  2. Help manufacturers produce more diapers, incontinence supplies, sanitary napkins and tampons, and more toilet paper.

H. There is a shortage of labor. The price of labor has gone up. The solution should be to:

  1. Force labor to accept lower wages, or to
  2. Help employers pay higher wages so more people will want to work.


If you think that in all cases, answer #2 is the correct way to cure inflation without causing a recession, you are correct. Congratulations, you are smarter than Fed Chairman Jerome Powell.

Incredibly, Powell thinks the answers all should be #1.

He says the economy is “overheated” (whatever that means), and the solution to inflation without a recession is to “cool” the economy (whatever that means).

So he raises interest rates and takes dollars from the economy.

By his actions, he is trying to force people to eat less, drive less, heat their homes less, ship less, build and buy fewer homes and buildings, buy less of everything that uses computer chips, use fewer tampons and less toilet paper, and work for lower wages,.

And these are the so-called “solutions” from Chairman Powell and his acolytes.

Really? Yes, really, That is exactly what “cooling the economy” means.

We know that Chairman Powell has dozens (hundreds?) of economists working for him, and we assume at least some of those economists see their own data, which we will share with you here:

This image has an empty alt attribute; its file name is image-1.png
Federal deficit spending growth (blue line) and recessions (vertical gray bars)

Every recession begins after a period of reduced federal deficit spending growth. Every recession is cured by a period of increased federal deficit spending growth.

Chairman Powell wishes to reduce federal deficit spending growth. What does history say about that?

If Chairman Powell truly wants to prevent a recession, he should recommend that Congress and the President spend to help cure the abovementioned shortages. The very last thing Powell ever should do is make curing the shortages more difficult.

All of the #2 answers require increased deficit spending by the federal government

For some unknown reason, Chairman Powell seems to believe that federal deficit spending causes inflation. We have no idea how he developed that belief since it is exactly opposite to his own statistics:

Here is the Federal Reserve graph comparing deficit spending with inflation:

Federal deficit spending (blue line) vs inflation (red line).

If federal deficit spending (blue line) caused inflation (red line), we would expect the blue and red lines to be essentially parallel. But that is nothing like what Chairman Powell’s own data show us.

According to the Fed’s data, federal deficit spending and inflation mostly move in opposite directions. Surely, nothing says that federal deficit spending causes inflation or “overheats” the economy.

The notion that “too much” federal deficit spending causes inflation is a myth, an illusion caused by the reaction of some governments to inflation.

Example: The notorious Zimbabwe hyperinflation was created when the government took farmland from farmers and gave it to people who didn’t know how to farm. The predictable result: A food shortage. The price of food skyrocketed.

Rather than spend to help farm owners grow more food, the government simply printed currency in higher denominations. This did nothing to cure the food shortage and its resultant inflation, but it created the illusion that currency printing caused the inflation.

All hyperinflations in history have followed the same scenario: Shortages cause higher prices; the government prints currency rather than curing the shortages.

Deficit spending to increase supplies of goods and services, instead of merely printing currency, is the way to cure inflation without causing a recession. Deficit spending prevents recessions and grows the economy, which is exactly what it did during the COVID crisis.

Were it not for federal deficit spending, we would have had a COVID depression in 2020 and 2021.

Today, the federal government should increase deficit spending to prevent recession, while using those additional dollars to encourage more farming, oil and gas drilling and refining, renewable energy production, sales of cars and motorcycles, home building, lumber growing and harvesting, and lumber-substitute development, computer chip manufacturing, and more people to join the workforce.

The latter can be accomplished by ending the FICA tax and raising the minimum standard deduction. Additionally, the federal government should fund Medicare for All, which would reduce employment costs for employees and employers.

Further, because the U.S. federal government is Monetarily Sovereign, deficit spending is not “paid for” by federal taxes. The U.S. federal government pays for all its spending by creating new dollars, ad hoc.

Even if the federal government collected $0 in taxes, it could continue to deficit spend, forever. (A little secret: The federal government destroys all the tax dollars it receives, creating new dollars as needed.)

The purpose of federal taxing is not to provide the government with the dollars it spends, but rather to control the economy by taxing what the government wishes to discourage, and by giving tax breaks to what it wishes to encourage.

In the unlikely event that America can escape inflation without suffering a recession, it will not be because of what Chairman Powell is doing. It will be despite what Chairman Powell is doing.

Fasten your seat belts. Powell doesn’t know what he is doing.

[No rational person would take dollars from the economy and give them to
a federal government that has the infinite ability to create dollars.]

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell



The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

  1. Eliminate FICA
  2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
  3. Social Security for all
  4. Free education (including post-grad) for everyone
  5. Salary for attending school
  6. Eliminate federal taxes on business
  7. Increase the standard income tax deduction, annually. 
  8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
  9. Federal ownership of all banks
  10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.