In The Long Run We Are All Alive

In 1976, economist Herbert Stein, father of Ben Stein, the economics professor in Ferris Bueller’s Day Off, observed that U.S. government debt was on an unsustainable trajectory.  He, thus, established Stein’s Law:

“If something cannot go on forever, it will stop.”

Stein may have been right in theory.  Yet the unsustainable trend of U.S. government debt outlasted his life.  Herbert Stein died in 1999, several decades before the crackup.  Those reading this may not be so lucky.

Sometimes the end of the world comes and goes, while some of us are still here.  We believe our present episode of debt, deficits, and state sponsored economic destruction, is one of these times.

We’ll have more on this in just a moment.  But first, let’s peer back several hundred years.  There we find context, edification, and instruction.

In 1696, William Whiston, a protégé of Isaac Newton, wrote a book.  It had the grandiose title, “A New Theory of the Earth from its Original to the Consummation of all Things.”  In it he proclaimed, among other things, that the global flood of Noah had been caused by a comet. Continue reading

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Your Figuring Central Planners At Work

“Every man is a consumer, and ought to be a producer,” observed 19th century philosopher Ralph Waldo Emerson.  “He is by constitution expensive, and needs to be rich.”

These days Emerson’s critical insight is being taken to its extreme.  Consumers, many whom lost their jobs due to government lockdown orders, no longer produce.  Yet they still consume.  They’re expensive.  Not rich.

What’s more, this consumption is not funded through personal savings.  Nor is it funded through government transfer payments.  Rather, it’s funded via the printing press.

Emerson, no doubt, was lacking in the unique perspective we’re presently granted.  He didn’t have the special opportunity to watch his government destroy the economy in short order.  Perhaps if he had, he would have penned a neat axiom to distill the essence of what has happened.

The world today looks nothing like Emerson’s day.  The 19th century was an age of honest money.  Central bankers did not roam the land. Continue reading

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What You Will Find When You Follow the Money

It has been a rough go for California Governor Gavin Newsom.  Late last week it was revealed that the state Department of Public Health had tickled the poodle on its COVID-19 record keeping.  Somehow the bureaucrats in Sacramento undercounted new coronavirus cases by as many as 300,000.

Perhaps this oversight prompted Newsom to imbibe in a little meditation and reflection.  At his Wednesday coronavirus news conference, shortly after quoting Voltaire, Newsom offered the following epiphany:

“Businesses can’t thrive in a world that’s failing.”

Often the simplest insights into reality are the most essential.  We’ll give Newsom that.  Yet, this is hardly an insight.  Rather, it’s readily obvious…even to a numskull.

The world that’s failing, where businesses can’t thrive, is a direct consequence of government lockdown orders.  And Newsom, more than any other public official, has his fingerprints all over the offense.  If you recall, California, under Newsom’s command, was the first state to order lockdowns.  It’s a shame he didn’t pause for meditation before committing the state to ruin. Continue reading

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The Dollar Is Dying

This week, while perusing the Federal Reserve’s balance sheet figures, we came across a rather curious note.  We don’t know how long the Fed’s had this note posted to its website.  But we can’t recall ever seeing it.  The note reads as follows:

“The Federal Reserve’s balance sheet has expanded and contracted over time.  During the 2007-08 financial crisis and subsequent recession, total assets increased significantly from $870 billion in August 2007 to $4.5 trillion in early 2015.  Then, reflecting the FOMC’s balance sheet normalization program that took place between October 2017 and August 2019, total assets declined to under $3.8 trillion.  Beginning in September 2019, total assets started to increase.”

Directly below this note is the following chart: Continue reading

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