The Fed pauses and Biden’s state capitalism agenda

More interest hikes needed and turning America into China

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Robert Wright’s review of my book captures the essence of my journey in America. 

“There is a right way and a wrong way, always choose the right way.”  Abraham Sabrin (1914-2001)

Yesterday, the Federal Reserve announced it would not raise the fed funds rate now in a range of 5.00 to 5.25 percent.  After hiking the fed funds rate since March 2022, the Fed decided to wait until more data comes in before raising interest rates again.  In short, the Fed mantra that inflation was “transitory” revealed the policymakers were behind the curve in addressing the acceleration of prices in 2022. 

The Fed was clueless about future price increases even though the huge increase in the money supply during 2020-21 would inevitably lead to higher prices.  Economic ignorance at the Fed is breathtaking. 

Wall Street Journal columnist Greg Ip outlines why the Fed needs to keep raising interest rates to curb inflation.  In previous inflation cycles the fed funds rate was above the inflation rate.  Not this time so far.  We shall see if the Fed throws in the towel, reverses course, and begins another round of money printing to “stimulate” the economy, when the slowdown unfolds.  And with a presidential election next year, the so-called independent Fed typically gives the incumbent president an easy money policy.  Even if Biden is not the Democratic nominee, the Fed would be under pressure not to raise rates heading into the election.   

Where is the economy headed?  Daniel Henninger provides the answer—state capitalism like the Chinese model.  The “moderate” Biden administration is taking the country to a controlled economy with business, financial, and political elites running the country.  Is this the reason there are so many Wall Street and corporate top honchos supporting Biden and the Democrat?  They do not want to be left out of the government gravy train that is flowing their way and will increase if Joe or someone of his ilk is elected in 2024.

The US has been traveling down the state capitalism, i.e., fascist, road since the 1930s. John Flynn’s As We Go Marching (1944) called out the New Deal as a fascist economic program.  This is a must-read book as is Charlotte Twight’s America’s Emerging Fascist Economy (1975).

The merging of government and business is the essence of state capitalism.  A full-blown fascist economy with a Central Bank Digital Currency would mean the end of what’s left of the free enterprise system, private property, and civil liberties. 

This is the battle I have committed to fight with all the energy I can muster.  I hope you will devote some of your time and resources to restore the republic and the free enterprise system and in the process, help abolish the welfare-warfare state.

My latest piece on the economy was published in Fortune, https://fortune.com/2023/03/27/recession-2023-layoffs-tech-finance-unemployment-outlook-fed-rates-murray-sabrin/  This is an update of my 2021 forecast, https://fortune.com/2021/12/09/next-recession-heres-everything-bubble-markets-2021-2022-covid-murray-sabrin/ 

Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle.  Sabrin's autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.