How Fed Dependence on Bogus Data Invites Disaster

Numbers may seem like hard facts. But they are rigorously flexible in the right hands. The game often involves framing. Politicians and bureaucrats are masters of it.

Here’s a typical example: “Our no child goes to sleep hungry program has reduced hunger by 10 percent.”

Sounds great, right? But what if hunger was at an all-time high just before the policy was enacted? A 10 percent drop from a massive peak might still mean hunger is higher than it was five years ago.

This is called “cherry-picking” the timeline. By choosing a specific start date, they can paint a rosier picture than reality. As an aside, the charts and figures included in mutual fund brochures cherry-pick timelines to perfection.

Another favorite trick is using different metrics. A politician might boast about “record-low unemployment.” But what if that’s because many people have simply given up looking for work and are no longer counted in the official numbers?

They’re technically not “unemployed,” but they’re also not working. The statistic is technically correct. Yet it hides a more complex, less favorable story about the economy. Continue reading

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Powell Holds the Line

The high stakes standoff between Fed Chair Jerome Powell and President Donald Trump is exhilarating.

Trump wants Powell to cut interest rates so the U.S. government can save money on its debt financing costs. Powell wants to wait and see how tariff policies impact consumer prices before cutting – or raising – rates.

Between July and September, the U.S. Treasury intends to borrow over $1 trillion in privately-held net marketable debt. Between October and December, the Treasury plans to borrow another $590 billion. Lower interest rates would certainly help Uncle Sam finance all this new debt. But it may also bring unpleasant consequences.

Lower interest rates, for example, encourage more borrowing. With a national debt of $37 trillion, which is projected to skyrocket to $60 trillion or more well before the middle of the century, borrowing more money is the last thing the U.S. government should be doing.

If Congress really cared about the future of America, and the younger citizens whose futures are being crippled by all this debt, it would balance the budget or even run a surplus to pay down the debt. Instead, Congress is stepping on the gas as it speeds towards the fiscal cliff. Continue reading

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Stargate’s AI Dreams Meet Reality

The major stock market indexes continue their push to new all-time highs. Year to date the S&P 500 is up 8.43 percent. The NASDAQ is up 9.22 percent over this time.

The tariff panic of early April has turned out to have been a delightful buying opportunity. Valuation metrics like the CAPE ratio and the Buffett Indicator are at the extreme of their extremes. No one seems to care.

Meme stocks are once again all the rage. On June 25, shares of Opendoor Technologies Inc. were trading for just $0.51. On July 21, they spiked to an interim high of $4.97 – an increase of 874 percent. Then they did an abrupt faceplant. At market close on July 24, these same shares were at $2.42.

Nothing has changed to Opendoor’s underlying online – iBuyer – real estate business over the last month that justifies the wild swings. But like GameStop and AMC Entertainment from several years ago, Opendoor has become a “meme stonk.” An object of speculative frenzy. Continue reading

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Capitalism: The Enemy of Poverty

Today we return with another dispatch from Joel Bowman, founder and author of Notes from the End of the World.

When Mr. Bowman last updated us on President Javier Milei’s experiment with libertarianism in Argentina, he detailed a fascinating tale of a disappearing government. Cutting debt and deficits, reducing taxes, and taking a chainsaw to the administrative state have quickly given way to greater individual freedom and liberty. But that’s not all…

In his article, Capitalism: The Enemy of Poverty, Bowman reveals some important findings. Not only is Milei’s experiment having a positive impact on personal freedom, it’s having a positive impact on economic prosperity. The two are proving to be mutual.

After giving it a read, if you haven’t already done so, please head over to Bowman’s website and subscribe to his newsletter. This will ensure you receive all his latest findings as they’re reported in real time. Continue reading

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