Dimon’s Detached View Of Economic Realities

More Stimulus Not The Answer

Such remains problematic for many Americans and consistently forces them further into debt.

“The debt surge is partly by design. A byproduct of low borrowing costs the Federal Reserve engineered after the financial crisis to get the economy moving. It has reshaped both borrowers and lenders. Consumers increasingly need it. Companies increasingly can’t sell their goods without it. And the economy, which counts on consumer spending for more than two-thirds of GDP, would struggle without a plentiful supply of credit.” – WSJ

often show the “gap” between the “standard of living” and real disposable incomes. In 1990, incomes alone were no longer able to meet the standard of living. Therefore, consumers turned to debt to fill the “gap.” 

Dimon's View Economic, #MacroView: Dimon’s Detached View Of Economic Realities

Currently, there is almost a $2150 annual deficit facing the average American. (Note: this deficit accrues every year, which is why consumer credit keeps hitting new records.)

Notably, more “stimulus” has two very negative consequences economically:

  1. It pulls forward future consumption leaving a future void to fill (presumably with more stimulus); and,
  2. Stimulus reduces productive economic activity, which retards future growth. 

With still high levels of mortgages in forbearance, the need for continuing “eviction moratoriums,” and the ongoing demand for “government largesse” suggest the consumer is not nearly as strong as deemed.


Wasted Deficit Spending

“We need to properly invest, on an ongoing basis, in modernizing infrastructure. Spent wisely, it is an opportunity for everyone.”  

Mr. Dimon is correct. Proper spending on infrastructure could indeed be economically beneficial. However, even a cursory glance at previous expenditures, shows such is not the case. Out of the entirety of Biden’s proposed infrastructure plan, only roughly 6% goes to building roads and bridges. Another 2% goes to waterways and dams. The other 92% is a Democratic grab bag of liberal projects, most of which have a negative long-term investment return.

As such, the infrastructure bill is a negative long-term impact on economic growth. Such was a point we discussed previously in “One Way Trip:”

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