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Straight Out of Atlas Shrugged

Posted June 17, 2022

Jeffrey Tucker

It doesn’t get better, or really more painful, than this. The Biden administration apparently considered sending cards to millions of American households that would be filled with money and allow people to buy gas and groceries, supposedly helping people deal with inflation. 

But the plan was foiled, and why? Because there aren’t enough chips on the market to meet the need! So they backed off and good thing too. But think about this. When the central planners themselves cannot find enough resources around to enact their own plans, we’ve reached some kind of new low. 

But it even gets better. As everyone knows, the Biden administration is in a panic to deal with inflation because….well, because everyone and their cats and dogs are red-hot mad about inflation. The roots of the problem are deep but the evidence dates almost exactly from the day of Biden’s inauguration in 2021. So yes, he gets all the blame. 

It doesn’t help that we have reels of video of Biden himself promising to end fossil fuel. The first great action of these fanatics was to cancel the Keystone pipeline. Goading Russia into war over its border with Ukraine didn’t help either. But all that aside, gas and oil prices are responding to the overall devaluation of the dollar that was inevitable in any case. 

And now, acting on the assumption that the American people and press are all as dumb as earthworms, the Biden administration claims to be for bringing down prices. So it has sent a threatening letter to all major energy companies to demand that they “work with the administration” to supply the markets or else face “emergency measures.”

Good grief! These people have chutzpah! 

Don’t Bully Us

Fortunately, the energy companies are fighting back. Exxon, for example, points out that the administration could allow exceptions to the Jones Act which restricts shipping and reduces supplies. Of course that won’t happen because the Biden administration is in the pay of the labor unions that keep that preposterous law in place. 

As for allowing more drilling and refineries, forget it. Even today, if there really was a change of heart from the top, no one would really believe it. The industry needs certitude to make long-term investments, not just a temporary and mostly cosmetic policy change. 

The sheer quantity of oil and gas available on the markets has hit new lows, and it is hard to say that this is completely disconnected from government action. This is precisely what they were going for. The entire administration is united in the view that we should all be living off the “wind and sun” rather than digging around in the dirt for our energy needs. Sadly, that rules out 84% of U.S. energy consumption. 

In other words, these people are not only cray cray; they are also despotic. Even when the despotic regime faces massive revolt from the angry masses, they cannot do anything due to their ideological commitments and the powerful special interests to which they are beholden. 

This is how societies fall apart. This is how civilizations collapse.

Revolt of the Masses 

Months ago, we warned that the Summer and Fall would be extremely rough months due to impending recession plus inflation. That both forces were in play became unbearably obvious. Why did so few in the mainstream press give the heads up? Why should all of this come as a seeming shock, not only to government but the media?

The reason has to do with dated economic theory. In the old books, inflation and recession could not happen at the same time. Unemployment — once thought to be the perfect recession indicator — was believed to work in trade off with inflation. Make one go down and the other goes up, like a seesaw. For whatever reason, the model stuck in elites heads despite all evidence and they still carry it around today. 

This is why the Biden administration is so reluctant to wage serious counter-inflation measures by signaling approval to the Fed to get serious about tightening. They fear that a depression would quickly ensue. And as bad as inflation is for their political prospects, they are now saying (very quietly) that a major depression would be worse and might even bring Trump back to power. 

That would be the worst-possible fate, so far as they are concerned. As a result, most of what Biden is doing to curb inflation is purely symbolic and cosmetic. They want to be seen as doing something, even as they are doing nothing but sending threatening letters. To use a Biden favorite. What a bunch of malarkey! 

Meanwhile, the inflationary recession is upon us. Retail sales are declining dramatically, even as retail prices are soaring. In normal times that would make no sense, any more than rising house prices amidst falling demand and rising interest rates makes sense. But here’s the key: in an inflationary economy, signals are wildly distorted across the entire structure of production. 

Four Months of Hell 

Every day in the White House is utter misery. They came to power with the belief that the Trump administration would go down in history as the worst presidency in all time. They truly believed this. Now they are looking at something more remarkable: the label of worst actually belongs to the current regime! Biden is even less popular than Carter. 

This is my worry: they are cornered rats, hissing and biting and leaping. At some point, angry regimes have no options left but to use their power to attack their enemies, even to the point of turning them over to the police for jail time. That’ll keep ‘em quiet. 

That seems to be exactly what is going on right now. They are marching through the list: the January 6 protestors, the “anti-vaxxers,” the dissidents in the war against Russia, the seditionists and unpatriotic executives in the oil and car companies who are not complying with the demand to make more. Who do these people think they are?

The more they fail, the angrier they get. And each day these people are forced to look at the polling charts showing that Biden is sinking more each day. At some point, the people listed as approving of the job he is doing will amount to a possible statistical error. 

The Fed is now saying that its fight against inflation is “unconditional.” Wow, that sounds really decisive. One problem: no one knows what it means. It’s not language one associates with monetary policy at all. It sounds vaguely serious but otherwise implies absolutely nothing. 

In the book Atlas Shrugged, the central plans fail because even the elites cannot gain access to the resources to enact them. They instead turn to diktat and nothing more. Make more stuff! Lower prices! Just go back to the way things used to be! It becomes comical at some point except that civilization itself is collapsing. 

There is no way really to understand our times except by reference to dystopian fiction. 

Regards,

Jeffrey Tucker

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