Are You Unknowingly on a Suicide Mission?

Posted on December 6, 2024 by MN Gordon

“We’re a creature of Congress, we’re not in the Constitution.” – Fed Chair Jerome Powell, December 4, 2024

Chasing the Wild Goose

The transfer of wealth from workers and savers to the government and the big banks rolled on this week with Swiss-like precision. The process is both mechanical and subtle. Here in the USA the automated elegance of this ongoing operation receives little attention.

NFL football. Holiday BOGO offers. Trump’s cabinet picks. Hunter Biden’s pardon by the big guy. You name it. Bread and circuses like these – and many others – offer the American populace countless opportunities for chasing the wild goose.

All the while, and with little fanfare, debts are piling up like deadwood in Angeles National Forest. These debts, both public and private, stand little chance of ever being honestly repaid. The obligations extend well above what the economy can support.

The national debt is now over $36.1 trillion. But that is only a small piece of the picture. Unfunded liabilities – like Social Security, Medicare, federal debt held by the public, and federal employee and veteran benefits – amount to over $221.4 trillion. If you’re a U.S. citizen, your share of this pile is over $645,322. Continue reading →

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The Zealous Pursuit of Retail Therapy

Posted on November 29, 2024 by MN Gordon

Something remarkable happened following the election of Donald Trump as the 47th President of the USA. The Dow Jones Industrial Average (DJIA) topped the 44,000-point barrier for the first time ever. Then, several weeks later, it briefly eclipsed 45,000.

The stock market is in full melt up. The Trump bump is powering share prices higher. Investors and speculators expect a bright future. And their intentions are to exploit it for personal profit.

The general logic is that Trump is pro-growth and pro-business. That his policies will unshackle the economy from the restraints of burdensome and onerous regulations. That he will stick it to foreign competitors and Make America Great Again. That corporate earnings will soar. And thus, stocks will become even more valuable.

The logic, unfortunately, is braindead. Stocks are already priced for perfection. Any positive effect Trump’s policies may have on the economy will take several quarters or more to show up on bottom lines. Yet share prices are increasing as if such an earnings boost will be immediate. Continue reading →

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The Choice

Posted on November 22, 2024 by MN Gordon

“And cast ye the unprofitable servant into outer darkness: there shall be weeping and gnashing of teeth.” – Matthew 25:30

Daycare for Adults

Sometimes things must get worse before they get better. Reducing deficit spending and eliminating government waste, for example, will initially have a negative impact on GDP and employment. Though, this is exactly what is needed to restore America’s economic health.

U.S. government spending has run riot for over 50 years. Over the last two decades, it has gone completely berserk. In fact, since 2004, the national debt has jumped from $8 trillion to $36 trillion.

All this debt-based government spending has created massive distortions in the economy. The price of consumer goods, a glut of unproductive government jobs, the appearance of economic growth, and more. The effects of government spending range far and wide.

Without question, government spending is responsible for the inflation of consumer prices. However, it is also responsible for the inflation of key government statistics. Specifically, GDP and employment. Continue reading →

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How The Trade War Ends

Posted on November 15, 2024 by MN Gordon

The quote “When goods don’t cross borders, soldiers will,” is frequently attributed to 19th century writer and free market economist Frederic Bastiat. While these specific words, strung together with this specific syntax, cannot be found in Bastiat published catalogue, their sentiments are of the type he would have likely endorsed.

The point is that free trade not only increases the wealth of different societies, but it may also be essential for peaceful relations. The breakdown of free trade has often coincided with wars. These wars start as currency and trade wars and then escalate into shooting wars. This is something to be mindful of as President-elect Trump amps up forthcoming import tariffs.

Global trade has expanded without interruption for so long that only senior citizens remember anything different. But global trade hasn’t always expanded. In fact, there have been long episodes of global trade contractions that have played out over long secular trends for thousands of years. Continue reading →

Posted in Economy | Tagged , , , , | 5 Comments