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Biden stagflation is coming

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Michael Byron, the former chairman of the American Bank of America Research Institute, is visiting the website of the Wall Street Journal on December 13. The full text is edited as follows: the White House continues to insist that inflation will soon recede, and that the United States will resume the boom before the COVID-19 outbreak. But the Biden administration's regulatory agenda actually ensures that the economy after the epidemic will be completely different from before. Biden's executive order will bring an increasing regulatory burden, the open hostility of his regulators to the U.S. economic system, and the return to the anti-monopoly law enforcement model in the progressive era, which will curb economic growth. All the factors that turn current inflation into stagflation will appear.

The painful experience of excessive regulation in the United States is still close at hand. When the recession triggered by the subprime mortgage crisis ended in mid-2009, economists predicted a strong economic recovery. At the beginning of 2010, the office of administration and budget had predicted that the average growth rate of real gross domestic product (GDP) in 2016 would be 3.7%, the Congressional Budget Office estimated that the growth rate in the same period would be 3.3%, and the Federal Reserve expected that the growth rate would be 3.5% to 4% in 2014. In fact, during the economic recovery from 2010 to 2016, GDP growth fell to 2.1%, the lowest level in 80 years.

In the early days of Biden's administration, the cold death hand of government regulation stretched further than that of Obama. The initial executive order cramped the cost-benefit analysis as the basis of regulatory policy and defined the benefits as including "social welfare, racial equality, environmental protection, human dignity, equity and the interests of future generations". The executive order opposes mergers and acquisitions that disregard the interests of consumers and targets the oil and gas industry as an extinction.

In order to re regulate the railway, Biden tried to overthrow the legacy of "deregulation" left by President Carter and Senator Ted Kennedy - their achievements have made the U.S. transportation system the most efficient transportation system in the world and reduced the transportation cost of people and goods by half. On antitrust enforcement, Biden tried to overturn nearly half a century of bipartisan reforms that abolished regulation in the progressive era and greatly improved productivity, especially in transportation and high-tech communications. The radical regulatory agenda of the Biden administration is most evident in the officials he appoints. President Clinton appointed Larry Summers, Arthur Levitt and Alan Greenspan to regulate and develop the economy in a way that is in the interests of consumers, rather than completely changing it. Clinton's regulatory institutions and policies have enabled the United States to prosper and develop. Obama's regulators stifle business and jobs, while Biden's regulators are openly hostile to the industries they regulate and the U.S. economic system. What they seek is not to protect investors and consumers, but to make enterprises serve government objectives. Through Biden's executive orders and regulatory policies, the U.S. economy is changing from a great world capitalist giant to a submissive capitalist puppet. Its owner is the government, not consumers.

If the economic stagnation caused by the regulation of the Obama era is being repeated in a way to intensify the regulation policy of the Obama era, the growth slowdown seems to be doomed after the rapid economic growth in the current post epidemic era. Once new stimulus spending and monetary adjustment measures are adopted to stimulate slowing economic growth, economic stagnation can easily turn into stagflation.

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