Why Consumer Price Inflation Is Here To Stay

Posted on June 4, 2021 by MN Gordon

Jerome Powell might be done as a useful Federal Reserve Chairman.  Not that Fed Chairs provide a use that’s of any real value.  They mainly excel at destroying the wealth of wage earners and savers for the benefit of member banks.

But as Powell loses a grip on price inflation the business of supplying credit at a fixed rate of return becomes less fruitful.  Consumer price inflation, as measured by the consumer price index (CPI), is rising at an annual rate of 4.2 percent.  That’s well above interest rate of a 30 year fixed mortgage, which is currently 3.1 percent.

It doesn’t take much imagination to foresee a CPI over 6 percent.  At that rate of price inflation, what good to the bank is a home loan that’s only paying 3 percent?  This, among other reasons, is why Jay Powell is toast.

Powell, no doubt, has been going along to get along since long before he took over the reins of the Federal Reserve.  He’s always done what everyone asked.  He’s rapidly expanded the Fed’s balance sheet to fund massive government deficits and backstop the mortgage market. Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , | 24 Comments

Welcome to Walley World!

Posted on May 28, 2021 by MN Gordon

One of the fringe benefits of Washington’s stimulus program has been inflated stock portfolios.  This has delivered a great boon for certain state governments.  In Connecticut, for example, a state that taxes capital gains as regular income, this year’s budget surplus is projected to be $470 million.

That’s quite an achievement.  Especially when you consider the state’s rainy-day fund will hit an all-time high of $4.5 billion.  Federal coronavirus stimulus is also bringing $6 billion into the state.

Yet for the greedy fellows in the Connecticut state legislature the budget surplus is not nearly enough.  They want to soak the rich for the noble purpose of helping people.  Lawmakers are proposing a “surcharge” on high earners; single filers making more than $500,000 will be subject to a combined capital gains rate of 8.99 percent.

But that’s not all.  The state legislature also wants to create something it calls a “consumption tax.”  People earning more than $500,000 would pay 0.7 percent of their adjusted gross income.  That rate would rise to 1.4 percent for those earning $2 million, then 1.5 percent over $13 million. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , , | 25 Comments

Financial Repression 101

Posted on May 21, 2021 by MN Gordon

Bad ideas are flourishing like Washington lobbyists.  Just look around.  It’s near impossible to blink without countless crackpot ideas coming into view.  What’s more, the worse an idea is, the more popular it becomes.

Take Mickey’s Fine Malt Liquor.  It’s almost as destructive as doctor prescribed pain killers.  Yet people chug down Big Mouths as if their lives depend on it.

Or consider central banking.  Has any other single idea extracted more wealth from the lowly wage earner?  The Federal Reserve’s backdoor taxation program has snookered honest hard-working Americans for over 100 years.

Why is it that bad ideas are so warmly received?  Perhaps, it’s because they generally promise something for nothing.  That one can live off the forced philanthropy of their neighbors.  That one can get more out of their retirement fund than they put in.

Promises of fruits without labors are fantastical.  They’re also the reliable way for politicians to get reelected.  How can it possibly be a good idea to spend more and tax less, and fill the gap with more and more debt? Continue reading →

Posted in Government Debt, MN Gordon | Tagged , , , , | 17 Comments

Karl Marx’s Road to Hell is Paved with Fake Money

Posted on May 14, 2021 by MN Gordon

“The way to Hell is paved with good intentions,” remarked Karl Marx in Das Kapital.

The devious fellow was bemoaning evil capitalists for having the gall to use their own money for the express purpose of making more money.

Marx, a rambling busybody, was habitually wrong.  The road to hell is paved with something much more than good intentions.  Grift, graft, larceny, corruption and fake money are what primarily composes the pavement.  Good intentions are merely dusted in to better the aesthetic.

If you want to understand what’s going on with exploding price inflation then you must understand this…

Right now in the United States we have a scam currency that’s controlled by central planners.  Specifically, we have what Marx envisioned in Plank No. 5 of his Communist Manifesto:

“No. 5.  Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.” Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , | 26 Comments