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Since the second installment (10 Jan 2024), Mr. Ramaswamy has left the Republican presidential campaign following the caucus in Iowa.  Mr. Trump won that election decisively: trump at 51%; DeSantis at21%; Haley at 19%, Ramaswamy at 8% and Hutchinson at 1%. Mr. Ramaswamy’s exit leaves Governor Nikki Haley and Governor Ron DeSantis as the main rivals to Mr. Trump, followed by Governor Asa Hutchinson.

This third installment discusses the Democratic Party’s approach to the economy during the campaign.

Congress gave the Federal Reserve (the U. S. central bank) three objectives when setting monetary policy: a) low inflation; b) low unemployment; and c) high economic growth.  Every rational economist knows that any two of these (if the Federal Reserve is both honest and lucky) can be achieved only by sacrificing the other one, as detailed elsewhere [1].  In practice, the Federal Reserve is doing well if it accomplishes one objective and part of a second.  These are the three common metrics by which the economy is characterized, and are therefore the three main economic political talking points.

3.1        Inflation

The spending polices and high deficits since 2021 have led to a large increase in monetary inflation, as reflected in the Consumer Price Index (CPI). Figure 3.1-1 shows the official statistics:

Figure 3.1-1: Inflation Data per CPI, 2017-2023

The annual inflation rate (last column) averaged about 2% during Mr. Trump’s term, but the spending under Mr. Biden caused it to increase to 7% in 2021.  The highest monthly rate during Mr. Trump’s term was 2.9% in the summer of 2018; it increased to 9.1% under Mr. Biden in Jun 2022.  This doesn’t look good, but Democrats will adopt the tactic of confusing the public by making inflation appear beneficial.  It is likely that the inflation created by the Biden administration (and Congress) will have been suppressed by the Federal Reserve down to about 3% annual by the Nov 2024 election.  (It was accomplished by increasing interest rates, which flowed down to increasing mortgage rates.)  The Democrats will claim that Biden “tamed inflation”, thus falsely implying that inflation was high under Trump.  The Democrats will also point to the stock market averages.  The Dow Jones Industrials closed at 30,306 on 31 Dec 2020; it closed at 37,689 on 29 Dec 2023; an increase of 24.4% relative to 2020. The S&P 500 closed at 3,756 on 31 Dec 2020 and at 4,769 on 29 Dec 2023, an increase of 27% relative to 2020.   What the Democrats won’t say is that stock prices follow a similar trend to other prices: they sometimes increase during an inflationary period, as is the case here.  They won’t mention that both indices fell dramatically in 2022.  Mr. Biden will have no difficulty ordering the Bureau of Labor Statistics to modify the composition of the Consumer Price Index to make it look like the overall cost of living is falling.  The Democrats will point to increasing family income, conveniently ignoring the fact that wages generally increase during an inflationary period, and that many people have had to take second jobs to make ends meet.

3.2        Unemployment

Figure 3.2-1 shows the national unemployment rate (%) for the Trump and Biden periods.  Notice that the unemployment rate was about 5.1% at the beginning of Trump’s term, and had declined to about 3.4% in Dec 2019, just prior to the onset of China’s gift to the world, the Wuhan virus.

Figure 3.2-1: Unemployment Rate, 2017-2023

Notice also the large spike in the unemployment rate in the summer of 2020, when the Governors of many States (especially in Democratic ones) imposed lockdowns on their respective populations.  As the Wuhan virus faded and the Democrats were forced to give up their arbitrary powers, many of those who became unemployed in 2020 have now found other jobs.  The Democrats will claim that the Biden administration’s policies have “brought America back from the Trump-induced economic depression” conveniently ignoring that it was done mostly by Democrat Governors.  The Democrats will cite the continuously lowering unemployment rate between 2021 and 2024, conveniently ignoring: a) most of the jobs that were created during the Biden administration simply replaced those lost during the Wuhan pandemic; b) many people have to work two jobs to get by due to the monetary inflation caused by the increased spending by Congress as promoted by Mr. Biden; and c) many of the new jobs are low-wage part-time work.  No one in the mainstream media will take the time to analyze the data to inform their viewers of the actual state of unemployment (i.e., what kind of jobs, seasonal or not, part-time or not, government or private sector, etc.).  It is highly likely that the fastest growing employment segment during the Biden administration is in government jobs. 

3.3        Growth

Growth is measured by the U. S. Bureau of Economic Statistics as the Gross Domestic Product (GDP).  Figure 3.3-1 shows the GDP, along with the M2 money supply and the velocity of money [2].  The GDP values are not the GDP for each quarter; they are estimates of the annual GDP issued each quarter.  For example, the total GDP was $25,462.7 B for the entire year 2022; the chart shows just under $25,000 in the first quarter of 2022 (i.e., the estimated annual value based on data in the first quarter of 2022).  The M2 money supply is a metric issued by the Federal Reserve; it is approximately the total supply of money exclusive of large time deposits [3].  The velocity of money is defined as the nominal GDP divided by the M2 money stock.  It has for the past two decades declined from about 2 to about 1.5.  A rapid decline in the money velocity indicates a rapid increase in the money supply; and values less than about 1.4 indicate that money supply is growing at rates in excess of historical norms.

Figure 3.3-1: GDP, Money Supply, and Velocity of Money, 2017-2023

It is obvious from Figure 3.3-1 that economic growth was stable between 2017 and 2019: the velocity of money was within historical norms at 1.45 or so; and the rate of GDP was increasing slightly faster than the rate of M2 money supply.  Then in 2020, the Wuhan virus led Congress and the Trump administration to inject a large amount of new money into the system (via the CARES Act), corresponding to a rapid decline in the velocity of money.  By the beginning of 2021, the GDP was back where it was at the beginning of 2020 after suffering a large decline in the summer of 2020 due to the economic lockdowns imposed in many places. Congress and the Biden administration continued to increase the money supply until mid-2022, when it began to decline.  Meanwhile the velocity of money remained below normal and the GDP increased steadily between 2021 and 2023.  The increase in the GDP is a symptom of monetary inflation, due primarily to the increase in the money supply (recall that V = GDP/M2).  The Democrats will use this data to make two false claims.  First, that GDP was stagnant during the last year of the Trump administration because of his favor-the-rich policies, ignoring the fact that it was due to an incorrect lockdown response to the Wuhan virus.  Second, they will claim that GDP increased only 14.2% during Trump’s four years (i.e., from $19.2 T to $22.0 T) due to his faulty economic policy; but increased by 25.3% (i.e., from $22.0 T to $27.6 T) in only three years under Biden due to his great policies.  The numbers are correct; the falsehood lies in the fact the growth in GDP under Biden is due to the increase of the money supply that led to inflation, which led to higher prices, and the resulting increase in the cost of living (cf. CPI per Figure 3.1-1).

Figure 3.3-1 shows one other thing of importance; namely the decline in the money supply after mid-2022.  This may indicate a deflationary trend, which was one of the reasons the recession of 1929 became the Great Depression of the 1930’s [4].  It is well known that prices tend to lead wages; in other words, price effects are felt before wage adjustments occur.  In an inflationary trend (where the money supply is increasing), prices go up faster than wages.  That is bad for wage-earners because their current wages do not buy as much until they get a raise later.  The situation is similar for a deflationary trend (when the money supply is decreasing).  Prices lead wages; thus prices will fall faster while wages remain stable.  That seems to be a good trend, but it can operate only temporarily.  The reason is: as prices fall and wages remain stable, businesses that are labor-intensive will see a decline in profits, which will force them to lay off workers.  Thus a deflationary cycle will generally lead to higher unemployment (the central problem of the 1930’s).

3.4        Summary

As you can see, the Democrats have plenty of false notions of economics but plenty of statistics to make their policy appear beneficial.  The Democrats will say it; the mainstream media, academia, Hollywood, and the social media empires will continuously chant it, and the federal bureaucracy (including the Federal Reserve) will confirm it.  The people will believe it and vote accordingly … unless the Republicans find a backbone and figure out how to counter this Marxist propaganda.

References

1.  Edward D. Duvall, The Control and Manipulation of Money, Queen Creek, AZ: Fremont Valley Books, 2023, pp. 80, 81, 162-168, 395-414.  It is available as a free pdf at:

https://www.fremontvalleybooks.com/__static/7457d05ab6706b24586b35d20beb2bea/thecontrolandmanipulationofmoney_-2-ndedition.pdf?dl=1

It is available in print at:

https://www.barnesandnoble.com/w/the-control-and-manipulation-of-money-edward-d-duvall/1143739227

2. The source data for Figure 3.3-1 is as follows:

a. GDP: Vintage History of Quarterly Gross Domestic Product (GDP) and Gross Domestic Income (GDI) Estimates; Bureau of Economic Analysis, https://www.bea.gov/data/gdp/gross-domestic-product; then select “Previously Published Estimates”, this provides file gdp-gdi-vintage-history.xlsx; I have used the 28 Dec 2023 revised estimates.

b. Velocity of Money: Federal Reserve at https://fred.stlouisfed.org, Velocity of M2 Money Stock, series M2V, file = M2V.xls

c. M2 Money Stock: Federal Reserve at https://fred.stlouisfed.org/series/M2SL

3. op. cit., Duvall, p. 601

4. op. cit., Duvall, pp. 439-441

Since the first installment (2 Jan 2024), Governor Chris Christie has abandoned his attempt to secure the Republican nomination.  I had thought he would continue the campaign, since he is a favorite of the mainstream media.  That exit leaves Governor Nikki Haley and Governor Ron DeSantis as the main rivals to Mr. Trump, followed by Mr. Ramaswamy and Governor Hutchinson. 

In this second installment, the issue of illegal immigration is considered.

2          Illegal Immigration

Between Jan 2021 and Nov 2024, the Biden administration will have allowed about 17,000,000 illegal immigrants to enter the U. S.  They are in three categories: a) 12,000,000 known immigrants making an illegal/absurd claim of asylum; b) 2,500,000 will have entered as “known got-aways”, i.e., people the Border Patrol discovered but were unable to apprehend; and c) an additional estimated 2,500,000 “unknown got-aways” i.e., those who evaded detection by the Border Patrol altogether. Most of these illegal aliens are from Central America, but there are some from most nations.  It is well known that the Biden administration has secretly engaged in human trafficking by transporting these illegal aliens to States outside the border States of California, Arizona, New Mexico, and Texas.  It is no secret that nearly all of these illegal immigrants represent a drain on the resources of the various places they go to: free housing, free health care, free education, etc. It is no secret that even the few that work do not pay taxes.  The general public is not happy about any of this.  But, the Democratic Party does not care; its objective is to create tens of millions of new Democratic voters (as citizens or not, doesn’t matter).  The mayors of the Democrat “sanctuary cities” are now complaining; not because the illegal aliens are flooding the nation, but because the federal government has not paid those cities to house, educate, and feed the illegal aliens.

It is no secret that the long-term goal of this policy is to create new Democrat voters out of thin air by eventually declaring universal amnesty and granting them citizenship.  It is also possible that this policy was implemented deliberately to provide a strategic advantage to some foreign nation (since President Biden took money from many of them).  One thing is certain: this policy of letting millions of people into America based on a false claim of “asylum” is willful and deliberate.  It is possible that the Biden administration will slow the flow of immigrants in the few months leading up to the election in order to fool the American voter into believing that the policy will be different if Biden is re-elected.  Don’t be fooled: this policy of illegal immigration is part and parcel of the Democrats Party’s grand strategy to gain and hold absolute power permanently.

The Democratic Party’s official positions on illegal immigration during the election season are simple: a) “we’re a nation of immigrants”; b) immigration is necessary because the economy is so good that Americans can’t fill all the open jobs; c) immigration is necessary because the evil sinister white people destroyed the environments of the immigrants’ home countries; and d) Republicans are racist.  These claims will be supplemented by pictures of the most destitute people in the Central American countries: small children starving with no shoes, old men begging on the streets, etc. The captions to those pictures will be: “We owe these poor defenseless men, women, and children an opportunity; that’s who we are as Americans”.  The Democrats are likely to use pictures of the Germans during World War II loading Jews onto trains to the concentration camps, and then claiming “this is what the Republicans want to do to women and children simply looking for a better life”.  Anyone who talks about national sovereignty, or the rule of law, or the Constitution, or the proper procedures for legal immigration will be demonized as cold, heartless Ebenezer Scrooges devoted to the propagation of hunger, ignorance, and racism.  The Democrats will say it; the mainstream media, academia, Hollywood, and the social media empires will continuously chant it, and the federal bureaucracy will confirm it.  The people will believe it and vote accordingly … unless the Republicans find a backbone and figure out how to counter this Marxist propaganda.

History shows that revolutions are most successful when the target society has these problems: a) a decline in the public moral values that once was its strength; b) chaos stimulated by hatred; c) confusion caused by false data; d) the society split into warring factions; e) a convenient, visible target to blame for the current problems; and f) an immediate proximate cause that convinces the public that the revolutionaries have the solution.  The 2024 election will be another step in promoting these, same as all the others since the first truly “revolutionary” election of 1992. It was in that year that the Democratic Party first put into action its long-term goal of reducing America to a third-rate socialist nation ruled by oligarchs and their cronies.  It was during the Clinton administration that the mainstream media became a subsidiary of the Democratic Party and the federal bureaucracy began to work against the liberties of the people.  As the late Peter Jennings (1938-2005) once observed, the mainstream media had replaced news reporting with advocacy.

Here is my opinion on how the Democrats win big in Nov 2024, despite current polls showing that the American people are angry at the Biden administration and local Democratic governments for their failures, corruption, and general incompetence.  This is likely to be a coat-tails election; the winning Presidential candidate will induce many victories for those in their party throughout the down-ticket offices, possibly including local offices.  Here is my assessment of how the Democrats will operate during this election cycle, and how they win big unless the Republicans and Independents adopt a new way of campaigning. This first essay addresses the respective presidential candidates promoted by the respective parties.

1          The Presidential Candidates

1.1        Democrat Presidential Candidate

It appears at this point that President Biden will run for re-election along with Vice President Kamala Harris, despite their current unpopularity.  Actually it doesn’t matter who the Democrats nominate for President. They have several strong candidates to replace Biden, should that become politically necessary or advantageous, since Biden can be replaced by the Democratic Party “super delegates” at their Convention under the Democratic Party’s current nominating rules.  If so, the most likely replacements are California Governor Gavin Newsom, Michigan Governor Gretchen Whitmer, New Jersey Governor Phil Murphy, and New York Governor Kathy Hochul.  All are known socialists; all have a proven track record of abuse of power during the Wuhan virus pandemic; all have a proven track record of incompetence; and all have been recently re-elected.  The second-tier replacements are probably former Secretary of State Hillary Clinton, former First Lady Michelle Obama, and current Vice President Kamala Harris.  All seven are carbon copies of Obama and Biden; there will not be a single policy change should any of them replace Biden as the Presidential candidate.  Biden is therefore eminently expendable; but whether he will actually be replaced at the Democratic Convention depends on events as yet unforeseen.  I suspect the Democratic Party elite would prefer to promote a candidate by which they can pretend a total separation from Biden.  That would exclude the last two; but never count out a Clinton when it comes to grasping for power.  President Biden is certainly in no legal trouble: he and the mainstream media will continue to cover for him no matter what evidence of bribery, tax evasion, and influence-selling crimes are uncovered. As for his son Hunter Biden, White House Press Secretary Karine Jean-Pierre recently stated that the President will not pardon his son.  That is correct, most likely because either: a) Joe Biden has already pardoned Hunter and his associates (and himself); he simply hasn’t made it public yet; or b) there is plenty of time to issue the pardons after the election when Jean-Pierre’s comments “are no longer operative”.

1.2        Republican Presidential Candidate

The leading candidate as of now is clearly former President Donald Trump.  He remains popular with a large segment of the Republican and Independent voters.  However, he will have so many legal problems it will be difficult to run a good campaign (even if he is acquitted or the trials do not begin).  If he gets convicted, his support will decline.  His remaining competitors are Florida Governor Ron DeSantis, former New Jersey Governor Chris Christie; former South Carolina Governor Nikki Haley, former Arkansas Governor Asa Hutchinson, and businessman Vivek Ramaswamy.  The most qualified of the remaining candidates to replace Trump (should he be imprisoned or bogged down in unending court appearances) is Governor DeSantis, but so far his campaign has failed to gain traction.  It appears at present that the two most likely to win the nomination in case of President Trump’s absence are Governor Haley followed by Governor Christie.  Also, these same two will likely come in second place in various States should Trump be able to continue.  Haley and Christie are favored as Republican candidates for President by the New York Times, and thus by the rest of the mainstream media, since: a) they are both known quantities; b) are favorites of the Republican old guard; and c) have policies that are considerably watered down compared to Trump and DeSantis.

Mr. Trump has another difficulty should he be able to continue to run.  Recall how Mr. Trump got the nomination in 2016: he ran against a large number of other candidates (upward of 10) and therefore was able to win all the delegates in some States by getting 25 or 30% of the vote.  Trump is now running against a much smaller field, and is now faced with the task of getting closer to 40% of the vote, a much different circumstance than in 2016.

On 19 Dec 2023 the Colorado Supreme Court cast Mr. Trump off the Colorado primary ballot on the grounds (in their opinion, without trial) that Mr. Trump led an “insurrection” on 6 Jan 2021, and is therefore disqualified per the 14th Amendment.  The same thing was done by the Secretary of State in Maine; again, no trial and no conviction.  The interesting thing about these rulings is that it claimed that Mr. Trump is disqualified from being President at all; being cast off the ballot was an incidental consequence.  Four other States have already ruled otherwise (at least for the primary).  It remains to be seen whether the Colorado and Maine rulings will stand under review by the U. S. Supreme Court.  The bigger problem is whether the various States will cast President Trump off the ballot in the general election, should he be the Republican nominee.  I suspect that these primary ballot challenges are merely test cases for the real Democratic Party objective if Mr. Trump is the Republican nominee: remove him from the general election ballot and force him to run as a write-in candidate (guaranteed to lose).

1.3        The Democratic Party Approach

The Democratic Party will use its powers of hatred, fear, and chaos to promote their candidate.  First will be hatred for those voters who believe in traditional (i.e., “obsolete”) values. Second will be fear of a “conservative”, by falsely claiming that a Republican will destroy the rights of racial minorities, re-institute slavery, round up gays and lesbians for persecution, and decimate the “safety net” (Social Security, Medicare, Medicaid, and the various welfare programs).  Third, the Democrats will maximize chaos by claiming that all Republicans are “insurrectionists” that should be outlawed and imprisoned.  That tactic will include legal challenges in the court (pressure from above), and riots in the streets by BLM and ANTIFA (pressure from below).  The Democrats will claim that any Republican is a threat to democratic institutions.  The Democrats will say it; the mainstream media, academia, Hollywood, and the social media empires will continuously chant it; the artificial intelligence algorithms will enhance it; and the federal bureaucracy will confirm it.  The people will believe it and vote accordingly … unless the Republicans find a backbone and figure out how to counter this Marxist propaganda.