Flying on a Wing and a Prayer

Posted on September 22, 2023 by MN Gordon

The main essence, as we understand it, is that over the last 18 months the Federal Reserve has reduced its balance sheet by nearly $1 trillion.  With less Fed credit available, market interest rates must go higher.  As interest rates go up, asset prices (stocks, bonds, and real estate) will eventually go down.

It is important to understand this.  Because if you don’t, you may end up doing something you’ll regret.  The consequences of which you’ll have to live with.

Here at the Economic Prism, as an implicit policy, we do not regret the past.  For regrets can lead to bitterness in old age.  And living with bitterness is no way to spend one’s final years.

So, while we do not regret the past.  We also do not wish to shut the door on it.  The past provides a deep source of instruction for what has worked and what hasn’t.  This resource should not be ignored or dismissed.

At the same time, there are no guarantees that what worked in the past will work in the future.  The world is ever-changing.  What worked in one instance may not work in another. Continue reading →

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ARMed and Dangerous at the U.S. Treasury

Posted on September 15, 2023 by MN Gordon

The U.S. government’s 2023 fiscal year ends at the end of the month.  Does this excite you?

It should.  Assuming you care about the reliability of your dollar-based savings, investments, and what Uncle Sam does with the taxes you pay.

The Treasury won’t release the full fiscal year statement until mid-October.  Though, it appears the 2023 fiscal year deficit will be just under $2 trillion – nearly double last year.

Why is there such a gaping deficit at a time when there’s low unemployment and economic growth?  Is countercyclical stimulus spending now the standard operating procedure of the U.S. government?  What would happen if all this deficit spending was eliminated?

This week the Treasury released the spending tally through the first 11 months of the fiscal year.  Over this period, the federal government has taken in $3.97 trillion in receipts.  However, it has spent $5.49 trillion.  The cumulative deficit through 11 months is over $1.5 trillion.

Of the 11 months reported so far, there were deficits for every month except April and August.  In April, following the collection of individual income tax returns, the federal government eked out a surplus of $176 billion. Continue reading →

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The Art of the Lose-Lose Deal

Posted on September 8, 2023 by MN Gordon

Has there ever been a worse time to be a lowly American wage earner?

First, Washington spewed out $6 trillion in printing press money.  This pushed consumer price inflation to a 40 year high.  At the same time, it diluted wages from a standard lager to a pilsner light.

Now, at this very moment, the demand for higher wages through union organization is leading to the mass culling of payrolls.  The higher wages go.  The less jobs will remain.

Just last month, for example, Yellow Corp., a trucking company, filed for Chapter 11 bankruptcy protection.  Yellow CEO Darren Hawkins blamed the International Brotherhood of Teamsters for driving the company out of business.

Teamsters General President Sean O’Brien pointed the finger at, “Yellow’s dysfunctional, greedy C-suite” for the company’s demise.  Adding, “They shamelessly pin their corporate incompetence on working people.”

Who’s right?  Who’s wrong?  Who knows? Continue reading →

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Taking Scalps

Posted on September 1, 2023 by MN Gordon

Major League Baseball continues its grind through the dog days of summer.  By now, the hunt for a playoff spot is long gone in many cities.  Teams are below .500.  They can’t even make it via the wildcard.

In Atlanta, however, Braves fans are invigorated.  The team has the best record in baseball.  It’s also running away with the National League East.  With just 30 games left, as of this writing, the Braves lead the division by 13.5 games.  At this point, it’s near impossible to not make the playoffs.

Many Braves ballplayers are having career years.  Matt Olson leads the league in runs batted in by a wide margin.  He’s second in home runs.  Ozzie Albies.  Austin Riley.  Marcell Ozuna.  All are on fire.

On the hill, Spencer Strider mows down opposing batters like whirling dervishes at the Battle of Omdurman.  He leads the league in both strikeouts and wins.

The most sensational performance, however, is being put on by Ronald Acuña Jr.  The 25-year-old right fielder is a terror on the bases.  He leads the league in – on base percentage, stolen bases, and runs.  In short, he gets on, steals bases, and scores more effectively than everyone else. Continue reading →

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