Journey To The End Of San Pedro Bay

Have you recently bought furniture, auto parts, clothes, electronics, plastic wares, doofers, doodads, or other doohickeys?  Chances are, they were made overseas.

The U.S. monthly trade deficit in February scored a new record.  According to the Commerce Department, the U.S. imported $71.1 billion more goods and services than it exported.  Of this, $30.3 billion was from China alone.

What’s more, the month of February only had 28 days.  At a daily gap of $2.54 billion, had it been a full 31-day month, the monthly trade deficit would have been over $78 billion.  What to make of it…

A trade deficit is not inherently bad.  Remember, countries as a whole do not trade with each other.  Individuals and businesses trade with other individuals and businesses between countries.  Presumably they do so because it’s advantageous for both sides.

Sound money, of limited supply and market determined interest rates, would provide natural limits to how wide a trade deficit could expand. Continue reading

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Coming to America: LA Metro’s Model of Extreme Capital Consumption

How much does gas cost in your hamlet?

Here in the Los Angeles Basin the price of gas is now over $4 per gallon.  One year ago, it was just $2.89.  Could this be an example of what Fed Chair Jay Powell calls “temporary inflation?”

Maybe so.  Certainly, supply will increase to meet demand.  At the time of this writing, the latest Baker Hughes rig count shows 430 active drilling rigs.  That’s 13 more rigs than the prior week.  But 234 less than one year ago.

We have a hunch that Los Angeles gas prices in excess of $4 per gallon will be here until at least the fall – possibly longer.  Especially now that California refineries have switched over to producing state mandated summer blend gasoline.

What’s more, gas price increases may also be a function of rampant money printing…in addition to rising demand.  Thus, gas prices could go much, much higher.

President Biden, however, has a plan.  On Wednesday he outlined it in his $2.25 trillion American Jobs Plan (to be later followed up by the American Family Plan).  And if Biden, and his central planners get their way, we soon won’t have to use gas at all.  We’ll all drive electric vehicles and ride commuter trains. Continue reading

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There’s a Serious Flaw to the Team Powell-Yellen Inflation Scheme

If you’re a wage earner, retiree, or a lowly saver, your wealth is in imminent danger.

A lifetime of schlepping and saving could be rapidly vaporized over the next several years.  In fact, the forces towards this end have already been set in motion.

Indeed, there are many forces at work.  But at the moment, the force above all forces is the extreme levels of money printing being jointly carried out by the Federal Reserve and the U.S. Treasury.

Fed Chairman Jay Powell and Treasury Secretary Janet Yellen have linked arms to crank up the printing presses in tandem.

This is what’s driving markets to price things – from copper to digital NFT art – in strange and shocking ways.  But what’s behind the money printing?

Surely it’s more than progressive politics – under the guise of virus recovery – run amok.

Where to begin?

The U.S. national debt is a good place to start.  And the U.S. national debt is now over $28 trillion.  Is that a big number? Continue reading

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The Great Donkification

“Right here, boys!  Right here!  Get your cake, pie, dill pickles, and ice cream!  Eat all you can!  Be a glutton!  Stuff yourselves!  It’s all free, boys!  It’s all free!  Hurry, hurry, hurry, hurry!”
– Pleasure Island voiceover, Walt Disney’s Pinocchio (1940)

Welcome To Pleasure Island!

Did you get your stimmy check, yet?  If so, what are you going to do with it?

Are you going to park it in your savings account, pay down debt, and pay off a few bills?  Are you going to buy Chinese ‘stonks’, cryptocurrencies, and digital NFT art?

What about a new iPhone, fancy dinners, or a plane ticket to Cabo?  How about a new living room rug, a wood pellet grill, or a 75-inch flat screen TV with a sound bar?

The collective answer to these questions is the difference between deflation, asset price inflation, and consumer price inflation.

Billionaire folk hero Warren Buffett says you should use your stimmy check to “pay off credit card debt.”  His rationale is sound enough: Continue reading

Posted in Government Debt, MN Gordon | Tagged , , , , , | 5 Comments