Thoughts and musings from my desk to you.
The poor economic policy of the past is coming home to roost in the form of rising rates and spiraling inflation. To make matters worse, policy leaders spent months gaslighting us all, denying inflation’s presence when the signs were in plain sight. This lag in taking action has surely exacerbated the situation because it’s best to nip inflation in the bud before it blooms. Too late for that.Read More
As economic thought has shifted toward mathematical rather than empirical evidence, economic conclusions are at risk of shifting toward “accuracies” while being wrong all the while. The economy functions as a self-aligning organism due to the harmonic motivations of value decisions within each of us. If we turn that into a math equation, we get outcomes nobody could foresee.Read More
In my last musing, I wrote about the current odd situation where the 30-year Treasury bonds yields 2.58%, but inflation is running at 8% annualized. Who would loan their money to the government for three decades while it is currently depreciating at a rate three times that? To add insult to injury, Treasury bond interest is fully taxable as ordinary income at up to a 40.8% tax rate. That’s a great deal…for Uncle Sam.Read More
It is surely apparent by now that a confluence of events is causing energy prices to spike like none seen before. In 2008, when oil prices breached $140, the recession that followed quickly brought it crashing back down to the $30s. Prices today would need to be $200+ to match 2008 in inflation-adjusted terms.Read More
The language surrounding the Build Back Better Act suggests that it’s time for the rich to “pay their fair share.” But it is important to remember that 61% of all Americans pay no taxes. This vulnerability was addressed over 190 years ago, when Alexis de Tocqueville warned that the eventuality of non-taxpayers voting for the taxation of others would ultimately be America’s undoing. But don’t lose heart. We have been on such a brink before, and we voted in low-tax Ronald Reagan as a result.Read More
Twenty-five years ago, I had an archery deer lease in Refugio County, Texas. One time, I headed down there after a long day at work and arrived at Two-J’s Restaurant just at closing time. The place was empty, but they seated me anyway and promptly delivered my order. The waitress asked me what I did for a living and then pressed me about my economics degree. After pondering a bit, she returned a short time later and pulled up a chair. She then asked me a profound and now poignant question: “How come the government doesn’t just print twice as much money and make it so that I can have more?” I replied, “Because with two times the money and the same amount of productivity, each one of your dollars is then worth 50 cents.” She seemed to understand.Read More
Signs of inflation abound with chip shortages, car shortages, and sky-high lumber prices, among others. Many forecasters are predicting 70s style inflation or even stagflation. Given the similarities in Jimmy Carter’s and Mr. Biden’s policies, it’s a valid concern.Read More