Question: Why is the US economy growing, while at the same time consumer spending is slowing? Yet, the Feds are planning on raising interest rates to mob-up-liquidity. Where’s the money or the liquid? Certainly, not in working class families, it is at the top. This episode is powerful a so we discuss the recent GDP growth that the US economy is reporting for quarter 3. This podcast was an originally published as an article in The Neoliberal Post at renaldocmckenzie.com; diagrams & data with links are available for further consideration in The Post. The podcast episode provides the audio with background music and additional comments from a small group present for the podcast show. The US economy or Gross Domestic Product grew by 2.6 percent last quarter. Yet, economic outlook remains grim; consumer spending slows, & prices are still rising, while wages are stagnant. Minimum wage in Philadelphia, for example, is still at $7.25. Moreover, OPEC plans to cut oil outputs by 2 million barrel per day in November. In fact, gas prices are quickly climbing back up, and just today regular gas is at $4. 50 at Lukoil in Germantown, Philadelphia, up from $3. 85 a couple days ago and is rising. The US Feds plans to raise interest rates again, so as to mob-up-liquidity. Yet, income inequality is at an all-time high with a Gini co-efficient of over 0.9. (It is important to point out what is meant by mobbing-up-liquidity so that we can put this growth and the FEDS plans into perspective.
“Mob-up-liquidity is an economic term used to mean a strategy to cut-down or reduce spending or money within an economy, especially when there is “too much money chasing too few goods” known as inflation. To mob-up-liquidity must also be understood within the economics of demand-and-supply. When demand is high, and supply is low, then this drives up prices, ceteris paribus (all things being equal), such as wages being relatively above inflation etc. And the converse is true, when demand is low and supply is high, then this drives down prices.
In the US economy today, prices are rising, and real wages are falling, which seems to suggest that the economy is either correcting itself-absorbing the gluts created by COVID stimulus or is automatically fixing the supply issue affected by transportation during COVID which impacted the normal flow of distribution of goods and services. In fact, COVID created a situation where there was “too much money chasing too few goods” given the problem of transportation and supply which pushed up prices. President Biden’s administration had to pump millions of dollars into the shipping/transportation sector after COVID in the beginning of 2022, which had helped to free up supply again. However, the damage from the lack of supply to meet the huge demand stemming from the stimulus had already started & this led to a sharp increase in consumer price inflation, it was 9.1 percent in June 2022, one that the US has not seen since the depression (See diagram below). The Gini coefficient measures income inequality within a society, zero suggest perfect equality, any number over zero suggests unevenness. The higher the number the greater the level of inequality. Those at the top have been experiencing increases in their net income and wealth. Nevertheless, conservative economists argue that the market must be free of interference and restrictions as those at the top will drive wealth and stimulate growth. But that has not been happening. Those at the top are getting richer. In fact, in Neoliberalism, globalization, income inequality, poverty and resistance, I raise the concept of the Bureaucratic Phenomenon developed by Michael Crozier… Listen to the podcast for more & access the article in renaldocmckenzie.com. We’re now available on I-heart radio & the Audible for free! In addition to Apple Music, Amazon Music, Google Podcast, Radio Public, the Alexa & our sponsors Anchor.fm & Spotify. Support us at https://anchor.fm/theneoliberal.