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100 Basis Points Please, Chairman Powell

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The democrats are clearly coming for the Fed Chairman next. They’ve blamed this economy on everyone and everything but this feeble administration, yet an attack on Jerome Powell and his tightening campaign could actually catch some support from notable pundits — unlike blaming gas stations, the “Putin Price Hike,” etc.

They would be wrong to blame Powell but it doesn’t mean they won’t try — and that it won’t work to some extent.

Further, a rush of falling prices across major economic sectors later this year will give the false impression of inflation has been “solved” and plenty of ammunition not only to those blaming the Fed, but to those who will beg for a policy reversal and interest rate cuts in early 2023.

Retailers are stating very clearly that a massive inventory liquidation is coming, which will temporarily drive down prices across a range of consumer goods. More on the consumer in a minute.

Used auto inventories are starting to build, in part based on a notable uptick in repos; prices are going to come down meaningfully here, as well.

And the housing market is where people are most carelessly whistling past the graveyard. Unsold inventories are already at levels not seen since 2010 and thanks to the spike in interest rates — the necessary spike in interest rates — mortgage originations are grinding to a halt. Red states will fare better than blue ones from which buyers are fleeing but if you don’t think we’re going to see a major correction in home prices, you’re kidding yourself.

Circling back to the consumer: the New York Fed, National Bureau of Economic Research and many others have definitively shown that falling home prices have a chilling effect on consumer spending. Spending behaviors are already changing measurably so just wait until home prices hit the skids.

In short, those hoping for a short, shallow recession don’t seem to realize that economic conditions are actually going to get much tougher from here.

And yet the Fed should raise rates as aggressively as possible. And this is the key: they need to do it quickly. The consumer is set to crash in a way that resembles the 2008 downturn so there isn’t much time left for lifting rates.

Why did the Fed surprise with a 75 basis point hike last month? I think one big factor, one I haven’t seen anyone talk about, was Japan: the Fed saw a zombie economy and its for-some-strange-reason-still-revered currency and saw a bit of ourselves. Japan’s long-term game of MMT is more mature and more severe than America’s but make no mistake: we have both played the dangerous game of wild monetary inflation too aggressively for far too long, something I suspect Powell does understand.

So why should the Fed bless us with a 100 basis point hike today? Because time is running out, politically, for any further hikes.

We need — yes need — a major recession here in America to clear out the ridiculous malinvestments that blew up the Everything Bubble. Few politicians understand this and none is willing to live through such an environment, which leaves only the Federal Reserve to burst the balloon to enact a little fiscal discipline by raising borrowing costs for both the private sector and government itself.

With a looming election, political assaults on the Federal Reserve’s tightening campaign are about to increase dramatically — bet on it.

At 2pm EDT today, the Fed will probably announce a 75 basis point hike to the targeted Fed Funds rate.

Here’s to hoping for 100 basis points instead.

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Americans sense things are on the wrong track, and have been for quite some time. Among our many challenges, for example: It can no longer be denied that income inequality is skyrocketing. But it is not capitalism that is enriching the few while slowly impoverishing the many. It is America’s long, slow turn away from free markets -- and the vital medium of exchange that underpins them -- that’s doing us in. This pseudonym is a nod to a somewhat-fringey, indulgent personal suspicion I hold with a 1% probability of being accurate: Alan Greenspan never ceased being Ayn Rand’s “man in Washington.” What if the well-known central bank chairman put on the show politicians wanted from him for years, all while secretly trying to return this world to rationality? Instead of destroying copper like D’Anconia, however, Greenspan destroyed money. Without realizing it now, some of you know me but I write under this pen name for two reasons. First: Of all the potential tyrannies we face today, by far the greatest threat to America is the misunderstanding, and therefore the ongoing destruction, of the U.S. dollar. Second: I write with the hope my ideas will stand on their own, aside from any political party, even apart from my own considerable charm and personality. Love me for my ideas, not because I'm beautiful. Politics, markets, more ... the things on which I’m qualified to opine will be unveiled here over time.



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News

What the Trump raid was really about

Indicting Donald Trump is a very big step, not simply because a lot of people like him and he’s the former President, but because indicting him at this point would be to reveal that this entire thing, and by ‘thing’ we mean our justice system, is just transparently political.

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Tucker looks at what didn’t make sense about the recent FBI raid on Donald Trump’s home in Florida.

Highlights include:

“No honest person could believe that the raid on Donald Trump’s home last week was a legitimate act of law enforcement — it was not. Even the Biden administration didn’t really bother to pretend otherwise. The official explanations that we have heard for the raid make no sense at all. It doesn’t matter how forcefully they are repeated by the media, they’re nonsensical.”

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“For the sake of argument on our show, we’re gonna say that it is, in fact, true, and that Donald Trump did, in fact, have boxes of classified documents sitting in his cellar. Let’s say that’s true. What would it mean? Well, what it means depends in part on what the documents were. Did those documents contain meaningful information? Should they have been classified in the first place? Is there a good reason the rest of us should not have been allowed to see those documents? Now, you never hear those questions asked in public, but anyone who lives in Washington knows perfectly well they should be asked in public, a lot, because in Washington virtually anything can qualify as an official state secret, and often does.”

“If that is true, would it justify what happened? Would it justify sending a large team of federal agents to shut down the entire southern tip of Palm Beach to raid Mar-A-Lago on a weekday? No, it wouldn’t. So, one of the laws they’re telling you that Trump broke doesn’t even have criminal penalties attached to it because it’s not serious enough. Federal paramilitaries don’t show up at your house when you violate the Presidential Records Act.”

“There was endless huffing on television about something called the ‘rule of law’ and how absolutely no one is above that, no one, not even a former President. We’re informed of this by the same people who paid rioters to burn down our cities, the ones who eliminated bail, the ones who encouraged tens of millions of foreign nationals to ignore our federal immigration statutes and move to our country permanently at public expense as a reward for breaking our laws. But, keep in mind, no one is above the law.”

“It’s exactly what it looks like: a show of force against the opposition leader by the head of state and his personal bodyguards. If this happened in any other country, it immediately would be denounced as the act of a dictator.”

“Now, superficially all of this is about Donald Trump, and on some level it is. Permanent Washington does not want Trump to run again. Of course, it’s their greatest fear, and they’re doing all he [sic] can to prevent it. It turns out democracy was too important to let voters choose their own president. But if you take three steps back and consider what’s actually going on, you’ll see that none of this is really about Donald Trump the man. It’s about power, and that means it’s about crushing and humiliating anyone who gets in the way of people who want to retain power.”

“Indicting Donald Trump is a very big step, not simply because a lot of people like him and he’s the former President, but because indicting him at this point would be to reveal that this entire thing, and by ‘thing’ we mean our justice system, is just transparently political. It’s just a means to an end, a means to power, and people know that at this point. They’ve watched it. They understand what’s happening, even people who don’t like Donald Trump, even people who didn’t vote for Donald Trump and don’t want to vote for him in 2024. They know, and they can’t un-know, and that means that we are at this point on the edge of something unprecedented, and something awful.”

Watch the video below and tell us what you think in the comments.

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Elections

Unraveling the Democrats’ “Contract with America”

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As we race towards the November mid-terms, we search for a clear differentiation between the parties vying for our support. Having lost control of the White House, the Senate, and the House, the Republicans have promised to supply a new Contract with America.

On Sept. 27, 1994, on the Capitol steps in Washington, D.C., Newt Gingrich shepherded members of the Republican minority to announce a “Contract with America” outlining legislation to be enacted by the House of Representatives within the first 100 days of the 104th Congress. They won big. It’s time for Republicans to come forward with a similar contract.

The Democrats are known to promise whatever they think will keep them in power. Many of their talking points need no evidence; they are accepted as undeniable truths by our left-leaning news media. You can’t defeat your political opponent until you know what they stand for. In an effort to begin isolating many of their key priorities, what follows could be the Democrat Party’s Contract with America and my brief commentary on why those priorities are bad for this country we love:

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Increased gun controls are vital because guns kill people. With growing incidence of mass murders and gun violence, we support doing more to limit citizens from purchasing and using guns. (Commentary: Criminals never follow gun laws. Citizens need the Second Amendment to support their right to bear arms.)

Women have the right to an abortion. With the U.S. Supreme Court reversing Roe vs. Wade, Democrats support a federal law securing a woman’s right to an abortion. (Commentary: The life of an unborn fetus has value and restrictions on when or if an abortion is allowed should be left to the states.)

Tax increases to support government programs must be paid by the rich who don’t pay their fair share. To fund the necessary programs designed to help those less fortunate still recovering from the COVID pandemic, the most successful Americans will be required to shoulder the cost. (Commentary: The rich already pay the vast majority of federal and state income taxes with the bottom fifty percent paying nothing. Adding new entitlements creates more government dependence rather than promoting the American value of self-reliance.)

Because of police abuse and racial biases, spend less on law enforcement officers and more on mental health workers to deal with the true “reasons” for crime. In a world of white privilege, systemic racism, and unequal incarceration of minority citizens, defunding abusive law enforcement practices and increasing mental health services must be considered a priority. (Commentary: At a time citizens are more fearful of becoming victims of crime, we need more law enforcement officers and DAs who will fully prosecute all criminals of any race.)

Support Election reforms which expand the access and days for voting and limit ID requirements that negatively impact minority voting. Forcing voters to show an ID and sign their ballots is just another form of voter suppression. (Commentary: Trust in election results is at an all-time low. As has always been the case, citizens should have to vote on the designated election day and proper ID should be required to prove citizenship.)

Because of the threat of Adverse climate change, end America’s dependence on fossil fuels and develop and fund green energy alternatives. No matter what the cost to citizens today, the reality of global warming requires changes now that restrict our dependence on oil, natural gas, and nuclear energy. (Commentary: Even if eventually it may be necessary, the reliable technology and resources needed for green energy alternatives are not adequate at this time and fossil fuels and nuclear energy should be used to meet our current energy needs. Instead of buying oil and coal from others, we should be 100% energy independent and capitalize on our own cheaper resources.)

Completing the Southern border wall is racially insensitive and unnecessary at a time we need more workers and must remain a refuse for those seeking freedom and opportunity. We will provide temporary status documents, transportation to a place to live, and eventual hope for a path to citizenship. (Commentary: Maintaining border security is job one for every country. Legal immigration should be encouraged and expanded as needed, but the border wall should be completed in order to limit illegal immigration, the flow of illegal drugs, and easy access to gangs and terrorists.)

Dismantle the conservative strangle-hold on the U.S. Supreme Court. Whether by expanding the number of justices, impeachment, or passing mandatory retirement for justices, we will secure a Supreme Court that is not bound by the antiquated Constitution but will meet the needs of this generation. (Commentary: The Supreme Court must remain independent of political manipulation, keeping the Constitution as the sole source of reference for whether a law can be enforced at the state or federal level.)

Convict President Donald Trump of some crime that will limit his ability to run for office in 2024. President Trump did such damage to our country and initiated insurrection on January 6th. As a result, he cannot be allowed to even run for President again. (Commentary: The unprecedented raid on Mar-a-Lago has already established their fishing expedition. Whether Donald Trump is the standard bearer for the Republican Party in 2024 should be up to the people and not a result of trumped-up charges or judicial fiat.)

Have I been fair? Have I let anything out? We could add military unpreparedness, diplomatic failures, minimum wage, student loan relief, as the list is endless. I wonder if liberals even know what the Left-leaning elites in their party have done to hijack their party? Hopefully, this column will help inform them of what they actually stand for and what their leaders plan to continue to do to America.

My fear is that, just as in the last election, most Democrats who voted against anything Trump, will do the same in the mid-terms against any from the party of the “deplorables.” After all, the one-sided mainstream media makes all conservatives look as bad as possible. Maybe it’s time liberals look in the mirror at their own party. Look at what they have done in two years and what lies ahead if they are given more time to have their way. Here’s hoping that many do before November.

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