The idiot is idiot!

by Jim Rickards

The Supply Chain Fiasco Is Bad Enough. Now Biden's Policy Makes It Worse.

By now, Americans are well aware of the supply-chain fiasco unfolding across the country. Of course, it's not just an American phenomenon; the supply-chain crisis is global. But, as the world's largest economy driven 70% by consumption, it's fair to say America is ground zero in this struggle. The effects are not limited to the paper goods aisle at Costco as they were during the pandemic. The effects are everywhere. There are bare spots on shelves in every aisle of the supermarket. Liquor stores can't get certain kinds of wine. Garages can't get auto parts. Doctors can't get certain medical devices. Anyone not done with her Christmas shopping should prepare for disappointment. Santa won't be coming to a lot of homes this season. Everyone is blaming everyone else. Ships that can't unload at ports blame the truckers who are supposed to remove the containers already ashore. Truckers blame state regulators that make them wait in line for days to pick up containers only to tell them to come back tomorrow. Retailers blame distributors. Customers blame retailers. The problem is they're all right. The supply-chain breakdown is not at one single bottleneck. It's up and down the supply-chain at all levels, from component suppliers to manufacturers to transportation providers to customers. What is the Biden administration doing about this? According to this article, they're busy making things worse. First, the Biden administration ordered the Port of Los Angeles to stay open 24-hours per day and work three shifts to ease the backlog. The problem is that working longer was never the problem. The port can't unload the vessels because there's no place to put anything. The piers and storage yards are full. Containers are stacked to the sky. Working longer hours does nothing when there's no place to put the cargo. The next Biden move was even dumber. They proposed a penalty on containers that remain on the docks for more than six days. But, no one wants the containers moved faster than the shippers. It's just a physical impossibility when they can't get the trucks to the ports. The penalty does not speed up the transportation process, but it does increase the cost of goods, which makes inflation worse and can drive some retailers out of business. The supply-chain crisis is real. The Biden administration is incompetent. That's a bad combination for the economy.

There's A Global Energy Shortage. Biden's Solution Is To Shut Down Supply.

Inflation is here with a vengeance. You can have a healthy debate about whether it will last or not, but there's no debate about the fact that it's here. The inflation numbers are the highest in thirty years, and they've been at high levels for over six months. The inflation is also widespread including food, gasoline, rents, automobiles and more. The question is, why? Money printing is the usual culprit named by analysts, but that's not a big factor (yet) because the turnover of money (velocity) has been dropping as fast as the printing presses have been humming. A lot of it has to do with supply-chain disruptions. These delivery delays are costly and are reflected in higher prices for scarce goods. The worker shortage is another factor. There are tens of millions of idle prime-aged workers (not technically "unemployed" but still out of the labor force) who are not looking for jobs. Reasons range from government benefits like rent moratoria and student loan repayment moratoria and child-care challenges. Employers are paying more to attract these workers and that gets passed along in the form of higher prices. This all goes by the name of "cost-push" inflation, which is different from "demand-pull" inflation (that's the kind typically associated with money printing). One particular problem is the cost of gasoline. This is almost exclusively due to Biden administration incompetence, as described in this article. Biden came into office last January and almost immediately shut-down construction of the Keystone XL pipeline that would have brought oil from Alberta, Canada. Then he ended new exploration leases on federal lands. Then he restricted output in the fracking industry. Now, Biden is considering shutting down another pipeline from Canada; this one is active today. It's the Line 5 pipeline that brings crude oil and natural gas to Michigan. The State of Michigan uses the most residential propane in the country and Biden wants to cut their propane supply. The U.S. has gone from an energy exporter to a net importer in record time. Russia and Saudi Arabia are taking note and are restricting their own output in order gradually to raise global prices. The next time you fill up your car and the pump reads $70.00, you can thank Joe Biden. That's not the worst of it. Some people will die this winter due to energy shortages notwithstanding the price. You can thank Joe Biden for that too.