BBB Is Dead in toilet!

Biden's Build Back Better Is Dead, Dead, Dead (by Jim Rickards)

Biden pushed through a pandemic relief package early in 2021 consisting of $1.9 billion of handouts for Democrat pet projects. Although the bill was dressed up as COVID relief, the money actually went to Democratic states with no strings attached, and to teachers' unions and other favored constituencies. Some money went to support jobs; but the cost came to $275,000 per job (according to estimates) with most of the benefit going to the top 20% of income earners. With hindsight, it looks like a huge waste of money. But, at the time it got bipartisan support due to the perception that it was needed to fight off the worst economic effects of the virus. Some Democrats warned at the time that the spending was unnecessary and would lead to inflation, but they were mostly ignored. One of the voices warning about inflation was Senator Joe Manchin of West Virginia. Later in 2021, it came time to consider another relief bill called Biden's Build Back Better plan. This was even more of a boondoggle than the first relief package. This plan includes the Green New Deal, Medicare for All, pre-school for all, and more money for childcare, school lunches, and some student loan forgiveness. You can debate the merits of these individual programs. But there's no debate about the fact that this has nothing to do with pandemic relief. It's just another multi-trillion giveaway by the Democrats. The original costs of this were planned at about $3.9 trillion. It was scaled back to around $1.9 trillion, but even that involves a lot of accounting gimmicks; the true cost is not far from the original $3.9 trillion once the gimmicks are removed. And once again, Joe Manchin is sounding the alarm about inflation, as described in this article. It's clear that the high inflation we are experiencing now is partly due to the 2021 package of $1.9 trillion in giveaways. If the economy is running close to short-term capacity in terms of labor markets and manufacturing ability, and you throw $1.9 trillion at it, inflation is the predictable result. Another $1.9 trillion will guarantee the inflation grows worse and the Fed will have to tighten even more to snuff it out. That will practically guarantee a recession or a market crash, or both. Fortunately, Joe Manchin has said that Build Back Better is "dead, dead, dead" as far as he is concerned. The Democrats will still try to push this through in smaller chunks of perhaps $450 billion each. Investors need to focus on this. Whether it's done all at once or in small chunks, the result will be the same over time. Make sure your portfolio includes some gold, energy stocks and real estate so it will be robust to inflation and resilient in the face of a market crash.