The Federal Open Market Committee (FOMC) issued its latest statement on monetary policy.  As was widely expected, the Fed has lowered its target federal funds rate by a quarter of a percent.  Meanwhile, in other news, the S&P 500 index hit new all-time highs on the same day.  I wonder if that has ever happened before.

It certainly seems contradictory.  Why would the Federal Reserve be reducing its target rate if stocks are at an all-time high?  Is the economy booming, or is the economy in trouble?

Maybe the answer to both of these questions is yes.  It is booming according to the stock market, but it is also in trouble. This also seems contradictory. Perhaps it is less contradictory to say that there is an artificial and unsustainable boom, and the economy is in trouble.

The people at the Fed know that something is wrong.  They wouldn’t just be lowering rates to please Donald Trump.  They are just not explicit about the problems that exist.  There are the weird happenings in the repo market.  And I think more importantly, they see the partially inverted yield curve.

The Fed is now indicating that they may stop reducing the target rate for now.  They are waiting to see the data, which is really what they always do.  Jerome Powell and company are also saying that a hike in rates is unlikely until they see a significant uptick in price inflation.  They obviously haven’t looked at my health insurance premiums.

There were two dissenting votes in the decision.  Esther George and Eric Rosengren “preferred at this meeting to maintain the target range at 1-3/4 percent to 2 percent.”

In the Implementation Note, it states that interest rate paid on required and excess reserve balances will be lowered to 1.55%. This was to be expected, as the Fed’s free money to banks (not for us) is helping to control the federal funds rate.

Monetary Inflation and a Stock Bubble

The bigger elephant in the room that does not get as much attention is the Fed’s balance sheet. The Implementation Note indicates a continued swapping of $20 billion per month of mortgage-backed securities to Treasury securities.  This is a wash in terms of the Fed’s balance sheet.

The key statement though was this:

“In light of recent and expected increases in the Federal Reserve’s non-reserve liabilities, the Committee directs the Desk to purchase Treasury bills at least into the second quarter of next year to maintain over time ample reserve balances at or above the level that prevailed in early September 2019.”

This is what Powell said is not QE.  This is a lot more vague than what we were told for the last 11 years, but it still looks like monetary inflation to me.  It was originally reported a few weeks ago that the Fed will buy $60 billion per month initially, extending at least into the second quarter of 2020.  But the official statement does not give a set amount for the Fed to purchase.

Regardless, I don’t think this is going to prevent the recession from coming.  I don’t even think it will slow it down. But when a recession does arrive, the Fed will at least be able to say that it had already started doing something.

I keep saying that the biggest bubble of all is this unsustainable boom in stocks.  I don’t understand how the S&P 500 is hitting new highs while the Fed’s actions are indicating practical panic.

I simply think that the bond market is smarter than the stock market.  I know this isn’t technically true.  A market can’t be smart.  It is made up of millions of individuals.  But the people buying stocks are making a huge mistake, unless they are counting on the greater fool theory and planning to unload them in the near future.

The low yields on long-term bonds are not indicating good times ahead.  There are many reasons that people are buying bonds, but the overall conclusion is that they are seeking some form of safety.

While the Fed members are not smart enough to centrally plan an economy of 325 million people (nobody is smart enough to do this), they do understand what the bond market is telling them.  They know that the booming stock market is an illusion.  They are acting now to fend off some of the criticism later.

The market is betting now that the Fed won’t touch rates in its December meeting.  But a lot can change in six weeks.

We are in a bubble economy.  There is little question about that.  When the Fed nearly quintuples the adjusted monetary base from 2008 to 2014, there have to be major misallocations.

The problem is figuring out where the bubbles are and when they are going to pop.  If you can figure this out, you can make a lot of money.

As I write this in late October 2019, I think the biggest bubble in the United States is in stocks. I am talking about the major categories: stocks, bonds, real estate, oil, and even gold.

Cryptocurrencies – the most famous of which is Bitcoin – are probably one gigantic bubble, but I don’t know this for certain.  We hear that stocks can’t go to zero, or at least not when taken as a whole. I think it is possible for Bitcoin and other cryptocurrencies to go to zero or near zero.  I am not saying this will happen, but only that it reasonably could.

The Bitcoin market is relatively small though.  Most people don’t own any Bitcoin or any other cryptocurrency.  Some may never have heard of Bitcoin.  Many do not even know what it is. Therefore, I do not consider it an important bubble, because not that great of a percentage of people will be hurt by it if it goes bust.

For commonly owned assets/ investments, I think stocks are the biggest bubble.  If you have a brokerage account or 401k plan, you should take this into consideration.  It wouldn’t surprise me if stocks stay down for a while after the next crash. It may not be like the last decade after the 2008 financial crisis.  Even if the Fed does create new money like crazy, it may not have the same stimulative effect on stocks the next time.

Bonds may be in a longer-term bubble.  Corporate bonds will likely take a hit in the next recession, but I am talking about U.S. government bonds.  Some day, interest rates are going to spike much higher, crashing the long bond bubble.  However, in the near term, bonds will likely do well.  As long as price inflation expectations remain relatively low, people are going to seek safety in bonds in the next economic downturn.  Long-term interest rates could go even lower from where they are now.

I believe real estate will go down in most areas in the next recession.  I doubt it will be as bad as the crash in the mid to late 2000s decade.  It’s possible, but not likely.  Prices in many places are still below the peak in housing prices from around 2006, despite the inflation since that time.

Therefore, I think if you are looking to buy a house – whether it is to live in or as an investment property – you will probably get a better deal if you wait for the next recession.  But I also don’t think it will be as much of a catastrophe for as many people as what we saw around 2007 to 2009.

Regarding oil and gold, I would not put these in a bubble category right now.  Both could certainly go down in price with a recession, but it likely will be minor compared to other asset classes.

Driving Luxury

Now I would like to discuss automobiles.  I believe this is a major bubble, but I am not clear on how it will play out. Buying a car is not as big of a purchase as buying a house.  It is easier to get rid of a car than to move out of a house.  It is also less of a problem for the lending institutions when it comes to defaults, but it is still a problem.

The average new automobile sells for over $36,000 now.  This is over half of the median annual family income (before taxes).

My son likes to look at nice cars.  Sometimes, when I am driving him somewhere, we play a game where we call out if we see a nice car. I know the term “nice” is subjective.  We generally count any of the luxury cars.  We count any Tesla, Mercedes, or Audi.  We will usually count Lexus, Infiniti, Mustangs, and Corvettes, although I know that some of these cars can be bought new for under $40,000.

On a 25-minute drive, it is not uncommon for him to find 50 cars.  I am lucky to find 10.  I have to concentrate on driving, and his eyes are better than mine. Plus, he knows his cars well and can pick them out from far away.

One of the areas during our typical drive is in an upscale neighborhood.  The people living there really are in the top 1%. Therefore, my story is a bit biased, as part of the drive is in an area where people have significant wealth, or at least significant income.

Still, on a 25-minute drive, to see about 60 cars, most of which are bought for over $40,000, is quite astounding.  I’m sure there are some Acuras, and even the occasional Hyundai, which retail for more than $40,000 new, but we don’t count these.

There are a lot of people driving really nice cars.  I can appreciate a really nice car, but I can’t justify spending the money on one.  My wife drives a minivan that we bought slightly used.  That is as luxury as I will get.

In some ways, the luxury cars on the road are a symbol of our wealth.  In other ways, it is a symbol of a bubble that is about to pop. I wonder what percentage of these people can actually afford these cars.  Sure, they can afford to make the payments on them, but I’m guessing many of them would not be able to pay for them in cash.  And many more won’t be able to make the payments when the next economic crisis hits.

In the really nice neighborhood we drive through, I am guessing most of these people will be fine in an economic downturn.  In terms of raw numbers, and maybe even percentages, they will take the biggest hit in terms of net worth.  The upper class owns the greatest percentage of stocks, so they will take the greatest hit.  But if your net worth goes from $10 million to $5 million, you are still doing well compared to most others.

I believe we do have an automobile bubble.  Like other bubbles, it has been fueled by easy money and artificially low interest rates.  When people can make payments for 6 or 7 years, it makes the asset look affordable.  Maybe it is affordable, but that doesn’t make it wise.

There will be a lot of defaults on car loans when the next recession hits.  The rise in defaults may start before the recession is evident.  This will hurt banks.

It is easier for people to turn in the keys to their car than it is to turn in the keys to their house.  It isn’t much of an adjustment to drive a car that is less luxurious.  The biggest adjustment is the hit to someone’s ego.

Although we can thank government for the high prices of new vehicles, I believe prices will come down in the next recession.  If you are looking to buy a new car, it is best to wait at this point if at all possible.  When people start getting tight with their money again, they will not be buying new cars. Dealerships will get more desperate to sell new vehicles.  There will be better deals available.

Every bursting bubble has advantages for someone.  It is usually people will cash waiting to buy.

In early 2007, when I heard that Ron Paul was considering a run for the presidency on the Republican ticket, I got excited.  I remember thinking and saying that if he gets into the debates, a lot of people would hear a message that they hadn’t heard before.

My enthusiasm was well placed.  This is exactly what happened.  But I must admit that it didn’t play out quite the way I expected, and I mean that both in good ways and bad ways.

There are a lot of libertarians that get depressed over the situation in the United States and around the world.  They think there is little hope.  These are mostly people who were not libertarians prior to 2007.  They don’t know what a lonely time that was.  If you think the number of libertarians is small now, it was a fraction of the size prior to 2007.

At least when I became a libertarian, the internet was up and running.  There was no Facebook yet, but there were a few libertarian sites.  I followed Harry Browne through his website in the early 2000s.

It was after the first debate that Ron Paul gained significant traction.  Many people didn’t realize that a Republican could be anti war.  They didn’t realize that there was an argument to be made against having a central bank (“End the Fed”).  They rarely heard an argument for eliminating entire departments from the federal government. They were accustomed to hearing arguments about whether we should have a 35% top tax rate or a 40% tax rate. They didn’t consider whether there should be an income tax at all.

I wasn’t surprised that Ron Paul gained some traction.  I was surprised at just how enthusiastic his hardcore supporters – many of them new to libertarianism – were.  I never would have dreamed that he would be easily winning online polls and that cities and towns would be covered in Ron Paul signs.  And who could have seen a Ron Paul blimp in the cards?

This was obviously a pleasant surprise.  In fact, when I look back, it was one of the best times of my life.  I had a newborn baby at home, but luckily my wife was supportive and didn’t have a problem with me leaving a couple of nights per week to help with the campaign.  Our unofficial headquarters was at a business (owned by a Ron Paul supporter) less than a mile from where I lived, which was fortunate for me.  I would typically go there for two nights per week where a bunch of us (maybe 15 to 20 on average) would make signs, brochures, and occasionally phone calls, or whatever else we could do to help Ron Paul’s name get out there.  We had a great time doing this, and I met some wonderful people.

We did this for several months up until the Florida primary in early 2008.  I think some people were really disappointed when the vote totals came in and it was just a few percentage points.

I was never so naïve to think that Ron Paul had a significant chance at winning.  I had mild hope he would do better, but I figured the Republican establishment would snatch it away from him if he got close.  If you think the establishment hates Donald Trump, well, they would have really hated Ron Paul if he had gotten close to the presidency.  He was a threat to turn over the entire system.

When Trump says he is going to withdraw a few hundred troops from somewhere, the whole establishment goes ballistic. You can just imagine if it were Ron Paul saying that he is going to withdraw all troops from all over the planet.

Deeper Divisions

I think what still surprises me to this day is the deep divisions that formed.  Most people either bought into Ron Paul and his message, or they didn’t.  There were some conservatives that said they liked his economics, but they couldn’t support him because of his foreign policy.  There were also some independents, and even some Democrats, who respected Ron Paul for his integrity, but they didn’t really support his overall message.

I thought there would be more of a gradual shift in the thinking of the public because of Ron Paul’s message.  But it was more all or nothing, or at least it seemed that way at the time.

After Trump got the nomination in 2016, I had second thoughts about this assessment.  I don’t know how much of an impact Ron Paul had on people’s thinking outside of libertarian circles.  Trump stood on a debate stage right before a South Carolina primary and said that Bush lied us into war in Iraq.  I don’t know if it was a case of some people being tired of wars, or just general fatigue from the Bush regime and the establishment in general.  If Trump had done this in 2008, I don’t think it would have been as effective, and I don’t think he would have gotten the Republican nomination.

It’s actually quite amazing today just how deep the divisions are.  It isn’t just pro Trump and anti Trump.  It isn’t just Republican vs. Democrat, although that is certainly a major thing.  Many Democrats are openly calling themselves socialists.  Bernie Sanders almost snatched the nomination away in 2016.  But you still have some hardcore libertarians finding different places to vent their frustrations.  Some of them have sided with Trump.  Some are against Trump.  Some are – like me – not pro Trump, but recognize that many of his enemies are the worst elements of our society.

My guess is that there are still at least a million people in this country who are hardcore libertarian.  It is hard to tell for sure because there is nobody running for office who has a consistent libertarian message.  We haven’t had this since Ron Paul’s campaign in 2011/ 2012, so it is hard to measure.  If the Libertarian Party were to actually run a libertarian, then we could get a better idea of how many there are of us out there.

I believe there are many factors playing into the deeper divisions that we see today.  Some people are just fed up with the status quo.  I think Ron Paul’s campaign in 2007 kicked things off.  It was a way for people to protest the status quo.

Donald Trump has obviously created deeper divisions, but we should be careful not to blame Trump. If the establishment and their media had not gone after him so hard, then the divisions wouldn’t be as deep. Trump was playing to the dissatisfaction with the status quo.  People didn’t support him in spite of being loud, obnoxious, and a fighter. They supported him because of these traits.  They were tired of electing people who would cower to the establishment.  Believe me, his supporters want Trump to continue calling his enemies names, including the corporate press.

We must also consider that this has all happened in the age of the internet.  You can find any news that you want.  You don’t have to listen to the establishment media for your news.  There are alternative sites for virtually any point of view.

Overall, this is good, but there is a problem that people live in an echo chamber.  If you go to a bunch of different websites that all share a common view, then you are probably going to get firmer in that view if you don’t hear the dissenting opinions.

I can’t say that most libertarians would fall into this category.  I certainly visit libertarian sites more than non-libertarian sites when it has to do with politics.  But I live in the real world.  Any time I hear a news report on television, I am getting the establishment view.  The libertarian sites I visit just balances out everything I hear in my everyday life.  Many people don’t even realize they are living in an echo chamber.  They don’t realize they are being propagandized when they are at work or at school.  They just think this is normal and that most people think this way.  This is why it was such a shock to some when Trump received over 60 million votes.

Decentralization

I just don’t know that these divisions can be healed.  They could be healed, in a sense, if we live under a tyranny.  There weren’t many deep divisions in the Soviet Union, or at least they weren’t talked about.  You spoke politely about the regime, or you risked death. I don’t want to eliminate deep divisions that way.

The only sensible solution at this point is for mass decentralization.  It just doesn’t make sense to have 325 million people battling for control.  Different sides want to run the show, but there are always going to be tens of millions of people who are unhappy.

That is what happens when you use violence against others, which is what this is.  When people have violence threatened against them, they tend not to like it, even if it is delegated to the state.  It is hard to not have deep divisions when there are so many threats of violence, even if they come in the form of laws and regulations.

If power is radically decentralized, most of the divisions will go away.  There may be divisions on a local level, but these are more manageable.  If you really don’t like it, is easier to move to the next town over, or worst case, the next state over.

This has to be the long-term solution.  I don’t think there is going to be any other solution.  People are going to keep visiting the same websites on the internet, hearing confirmation of what they want to hear.

There are likely some rough waters ahead, economically speaking.  There is an unsustainable national debt.  There are unsustainable unfunded liabilities. When promises get broken, people will be looking for explanations and solutions.  I hope that people will consider decentralization, which simply means removing power from Washington DC.

Since September, the Fed has been assisting the “repo” market by lending overnight and other short-term funds to keep short-term rates from spiking higher.  A “repo”, or repurchase agreement, is a form of short-term borrowing for dealers in government securities.

I have hesitated to write on this topic because, frankly, I don’t fully understand what is going on. Federal Reserve officials have tried to give explanations for the need to step into this market.  They say it was a perfect storm.  They said that there were quarterly corporate tax payments in September, coupled with dried up liquidity from monetary tightening.

I don’t buy the corporate tax payments excuse at all.  Why is this time any different than any other time?  Why didn’t short-term rates in the repo market spike up in September 2018 or September 2017?  And if this is really an issue, why is the Fed continuing to lend money into this market?  If it was a corporate tax issue, it shouldn’t have lasted more than a few days.

Since October 2017, the Fed was allowing a certain portion of maturing securities to not be rolled over.  This went on into part of 2019.  This equated to a small (relatively speaking) reduction in the Fed’s balance sheet.  It was mild monetary deflation, but this had stopped before the repo issue appeared.

With the balance sheet reduction, there was a sizeable reduction in excess reserves held by commercial banks.  Still, the excess reserves are at a total of about $1.3 trillion, which is nearly $1.3 trillion more than what existed in early 2008.  Prior to 2008, the total excess reserves were measured in billions, not trillions.

If there is still a huge pile of excess reserves held by the commercial banks, why did the repo market explode like it did?  Why are banks desperate for liquidity?  Why would you need to borrow overnight funds if you have massive excess reserves?

If anyone has a good answer to these questions, please let me know.  I have not heard a good explanation yet.

The best that I can guess is that there are certain financial institutions that are in trouble.  It is probably more than one.  For all I know, maybe these are foreign institutions.  We don’t know for sure.  Maybe the Fed is helping to support failing European banks.  Maybe there is a major bank in the U.S. that is in crisis, but they don’t want to tell the general public.  Maybe it is the government-sponsored entities – Fannie Mae and Freddie Mac – that are in trouble.

Again, if all of the major banks had significant excess reserves, then I don’t see why they would need to borrow overnight.  The Fed has not explained this.

A Rose By Any Other Name

Fed Chairman Jerome (Jay) Powell has insisted that this is not QE4.  He says that the Fed will need to be accommodative, but that we should not consider this as quantitative easing.

The FOMC released a special statement on October 11, 2019.  One of the points stated the following:

• In light of recent and expected increases in the Federal Reserve’s non-reserve liabilities, the Federal Reserve will purchase Treasury bills at least into the second quarter of next year in order to maintain over time ample reserve balances at or above the level that prevailed in early September 2019.

I take this to mean that the FOMC, in its statements, will not be specific as to the target of money creation, as it was from 2008 to 2014.  In other words, the Fed isn’t going to specify that it will buy $30 billion (or whatever number) in Treasury securities every month. There is not going to be a set amount as before.  The Fed will just buy securities (create money) on an as-needed basis to keep short-term rates in its target range and to gradually expand its balance sheet.

I don’t see a significant increase in the adjusted monetary base yet, although it has ticked up slightly. It did go up by about $100 billion in a couple of weeks time.  The Fed is not on a monetary inflation spree as it was from 2008 to 2014, or at least not yet.  But it looks like the Fed will be expanding its balance sheet again, even if it is just gradually (again, relatively speaking).

The way I see it, this is QE4.  If it’s not already here, it is coming.  The Fed will be a net buyer of government debt.  It buys this debt by creating digital money out of thin air.  It is not necessarily the actual printing of dollar bills.  It is digital accounting, but it is still monetary inflation.

It was actually because of the Fed, under Ben Bernanke, that the term quantitative easing began widespread use.  I believe they thought this would deflect the critics from calling it monetary inflation or money printing.  It was a more technical sounding term that didn’t sound as harsh.

But the Fed critics quickly adopted the QE term, so it now has a negative connotation.  This is as expected.  The people who talk about the Fed are usually critics. I am not counting the establishment figures at the Fed itself or in the establishment financial media.

The reason is because anyone who studies the Fed and talks about the Fed is going to understand that the Fed is an enemy to the average person.  The defenders are people in the establishment who directly benefit – financially and through power – from the system.  This is why they defend it.  Anyone else who understands the system is probably going to criticize it because they know that they, and a majority of people, are getting the short end of the stick.

So even though the Fed started the widespread use of the term “QE”, now they are trying to avoid it.  You can call it whatever you want, but the Fed is creating money out of thin air.  This serves as a bailout and benefit to certain special interests.  For the rest of us, it means a misallocation of resources and a reduction in living standards as compared to what they would have been.

Whether it’s called QE or not, the American people are poorer for it.

I suffered through another debate.  I was thinking about skipping this one, but the presence of Tulsi Gabbard, along with the recent Biden/ Trump/ Ukraine saga, was enough to get me to tune in.

I will go through the 12 different candidates with a little bit of commentary.

Tom Steyer

He was new to the scene, and he immediately fell flat.  He started out saying how much better all of the people on the stage are than Donald Trump.  He waited for applause and got just a little after an uncomfortable pause.  I thought he was going to pull a Jeb Bush and say something to the effect of, “It’s ok to applaud now.”

Steyer is going nowhere.

Kamala Harris

She is still an authoritarian.  She is still unlikeable.  Luckily, I think others are not finding her likeable either.  I don’t think she will gain more traction, and I really hope that I’m right.  Her main platform at this point seems to be that Twitter should be forced to ban Donald Trump’s account.

Pete Buttigieg

Mayor Pete, as they call him, is certainly more likeable than many of the other candidates. I am not counting him out yet. If Joe Biden goes down quickly, I think someone will fill the void.  It won’t just be a runaway for Elizabeth Warren.  Buttigieg still has a chance at the nomination.  He doesn’t seem as scary as some of the others, but maybe we should fear him more because of the fact that he can be likeable.

Cory Booker

Cory Booker just seems mediocre in everything.  Even if you are a hardcore Democrat, I don’t see how Booker stands out or really excites anyone.  We would have to see 4 or 5 of the other candidates implode for Booker to have any significant chance.

Andrew Yang

Andrew Yang is likeable.  He is different. I don’t think the establishment really wants him because he is a little too forward with his welfare.  He is not engaging in the trickle-down (from government) theory.  He wants to give everyone cash directly.  He doesn’t understand the Democratic playbook of funding bloated bureaucracies.

Because he is likeable and little bit different, I don’t fully discount Yang’s chances.  I doubt the Democratic establishment will allow him the nomination, but he may be around in this race for a while.  I disagree with most of what he says, but at least he is mildly interesting.

Joe Biden (and CNN)

Anderson Cooper, when asking Joe Biden about impeachment, said that Trump made false allegations against Joe and Hunter Biden.  I guess CNN doesn’t even try to give any appearance of objectivity any longer.

I wonder why Anderson Cooper didn’t ask Joe Biden about the video of Joe Biden bragging about threatening to withhold money to Ukraine unless a prosecutor (who was investigating the company that employed Hunter Biden) was fired.

In spite of the existence of the internet, my guess is that way more than half of voting Americans have not seen the video of Biden bragging about what he did, which is an explicit version of what Trump is being accused of doing.

I think the impeachment proceedings against Trump are ultimately going to take down Joe Biden if Biden doesn’t do it to himself first.

Julian Castro

Castro is just annoying.  I don’t think he has any significant chance of getting the nomination.  He is horrible on virtually every issue, and have I mentioned that he is annoying?

Beto O’Rourke

Luckily for Castro, he isn’t the most annoying candidate on the stage.  Beto is so incredibly annoying and obnoxious; I don’t understand how he almost beat Ted Cruz in Texas in the senate race.  This guy can’t drop out of the race soon enough for me.

Bernie Sanders

Sanders may have just had a heart attack, but he is still high strung.  He is also still a socialist wanna-be.  He goes on and on about going after the wealthy. He should really say “high-income earners”.  It is Elizabeth Warren who more often talks about an actual wealth tax.

Bernie focuses all of his energy on expanding the welfare state.  He does not focus on foreign policy, which is a place where some money (and lives) could actually be saved.  He opposed Trump on withdrawing troops from Syria recently. He campaigned in 2016 for the bloodthirsty Hillary.

Bernie said that Trump’s withdrawal of troops in Syria sends a message to others to not trust the president.  He was basically saying that the Kurds or any other group will never trust the U.S. as an ally again in engaging in war.  But isn’t that what someone should want if they are anti war?  Sanders’ position on this issue is despicable. He is just trying to score political points against Trump.  Sanders is an interventionist to the bone, and it isn’t just domestically.

If Bernie becomes president, I don’t think foreign policy will change.  He will be taken over by the establishment quickly.  He will also be put in his place in regards to the welfare state.  He will probably get a slightly higher tax rate on high-income earners. Maybe he will get some more spending if the conditions permit.  But overall, a Sanders administration will bring the status quo for the most part, and the leftists who support him are delusional if they think otherwise.

I think Bernie is done.  When I saw him on Joe Rogan’s podcast a while back, I thought he had a good chance because of the positive comments I saw on YouTube in favor of Sanders.  But I have since changed my mind.  I think his heart attack is a major setback. People were already questioning his age.

He may stay in the top 3 for a while, but the Democratic establishment runs away from the far leftists when it comes to a presidential nominee.  I don’t think Sanders will be the nominee.

Amy Klobuchar

She is trying to play the role of moderate, which would make her a disaster when it comes to foreign policy.  She is hoping for the downfall of Biden.  Her only hope is to take some of the Biden supporters when they finally realize they must abandon him.

She may end up getting the support of the Democratic establishment.  She would certainly be acceptable to them.  If Biden goes down quickly and she picks up a sizeable percentage of his current supporters, then she may be around for a while.

The only problem (for her) is that she doesn’t exude a lot of confidence.  During the debate, it sounded like she was going to cry.

Elizabeth Warren

Elizabeth Warren is still Elizabeth Warren.  She is still Pocahontas, or will be if she is up on the stage with Trump. She has a plan for everything, so I don’t know what her plan will be when Trump is up on a debate stage with her calling her Pocahontas.

She has so many plans, I am not so sure that we should fear her too much.  She will be an establishment shill if she becomes president.  She certainly won’t be good for liberty, but I don’t think most of her crazy ideas will be implemented.

She is the frontrunner at this point, especially with Biden having been damaged.  But it is far from being a done deal.  She will be accepted by the establishment, so that is in her favor.  I still think her phoniness will present a problem for her.

Tulsi Gabbard

And then there’s Tulsi.  I am glad she didn’t go through with her threat of boycotting the debate.  Tulsi is likeable and unique.  She has a unique name.  She is from Hawaii.

I think she should stress foreign policy even more than she does.  With that said, when she was asked about Syria, I thought she was great.  She called out the New York Times and CNN, the debate sponsors, for smearing her.  She blamed the media and both parties for the war in Syria.

Her exchange with Mayor Pete was good.  I think she should have pointed out that the chaos in Syria happened because of the U.S. intervention in the first place.  Aside from that, I thought she was strong and showed confidence in that exchange.

She wasn’t all that good when responding to the question of age.  She criticized Trump on Syria, which I think would only confuse people with her previous message of supporting a withdrawal.

I believe that Tulsi needs to be less afraid of going against the grain, which seems funny to say because she is already the most unique candidate of the Democrats. She should not be afraid to praise Trump when he does something that deserves praise.  She should not be afraid to go against the leftist talking points.  She should focus on getting independents, libertarians, and even conservatives on her side. It’s not that these people need to like everything about her, but she needs enthusiasm.

I hope she stays in the race and in the debates.  She is a lone voice of a peaceful foreign policy.  I don’t think she is as good as Ron Paul on foreign policy, but she’s close.  She needs to gain the enthusiasm that Ron Paul gained in 2007/ 2008 and 2011/ 2012.

She recently did an interview with John Stossel.  It was a good discussion.  Stossel challenged her on some things.  For example, since she favors marijuana legalization, he asked why she didn’t favor the same thing for harder drugs.  Even when I disagreed with her, she came across as likeable.  She needs to make more appearances on the libertarian circuit, including podcasts.

I don’t think Tulsi stands a chance to get the nomination because the establishment is so against her.  Trump somehow got through, but I think it’s even harder in the Democratic Party.  I appreciate her voice though.  I wish Trump had made her Secretary of State instead of Mike Pompeo.  We – the anti interventionists in foreign policy – need to unite against the establishment.

Let’s hope we see Tulsi in the next debate so that Americans can hear a pro peace message.  We sure aren’t hearing it from the other candidates.

“Trump’s move will not put an end to endless wars.  What it *will* do is reward Russia, Iran, and ISIS.”

~Ilhan Omar on Trump’s plan to start troop withdrawal from northern Syria

On the occasion that Obama did something good in terms of liberty, I could compliment the move while still opposing all of the horrible things that Obama did.

There were wars and coups started by the Obama administration, or assisted in some manner, in various countries such as Libya, Syria, Yemen, and Ukraine.  But when he loosened sanctions against Cuba, I acknowledged that it was a move in the right direction.  When he signed the JCPOA to ease sanctions against Iran, I praised the move.  It may not have been the perfect agreement, and he really should have just dropped all sanctions without any agreement at all, but overall I praised the action as moving towards peace.

I didn’t like Obama then, and I don’t like him now.  I think he is a fraud.  I think he sold out to the military-industrial complex and the spy state.  He broke the few promises from his original campaign that were actually good.  But I don’t have Obama Derangement Syndrome.  I am capable of not liking him while still acknowledging when he did something positive for peace, even though most of his policies were against peace.

This brings us to the so-called progressive left.  They have Trump Derangement Syndrome (TDS) for the most part.  No matter what Trump says or does, they will flip out about it and heavily criticize him.  The high-profile leftists in Washington DC may or may not have TDS, but they prey on those who do.

So if it comes to choosing to help end war or to score political points against Trump, they will generally choose the latter.  Maybe this is what their constituents prefer, but it is still telling nonetheless.

This tells us that these politicians aren’t really concerned about protecting innocent lives. If they do care, it is secondary to scoring political points.  You may think it makes no difference, but it makes a huge difference.  If the far left were to fully support Trump on his foreign policy when he occasionally does or says the right thing, then we would have a much better chance of gaining peace.  Instead, the only support Trump gets for a peaceful foreign policy is from libertarians and a fraction of his base.  There are a few leftists who will praise Trump when he does the right thing, but it is a tiny fraction of the left.

Bernie and the Hypocrites

Ilhan Omar is one of the women in Congress who has gained national attention for her leftist politics.  I think she occasionally gets things right on foreign policy.  She was accused of being anti-Semitic when she implied that American politicians are being bought out by Israelis.  I don’t know if she is anti-Semitic, but her statements in this regard are obviously true and not hostile to Jews in general.  Is it really any different than saying American politicians are bought out by pharmaceutical companies or defense contractors?

So it is disappointing when she gets on board the anti-Trump train to criticize his foreign policy when he is actually seemingly doing (or trying to do) something right.

On Twitter, Omar said, “Trump’s move will not put an end to endless wars.  What it *will* do is reward Russia, Iran, and ISIS.  He’s not leading us toward peace.  He’s showing the world that his political interests are more important than reliable leadership and keeping our commitments to our allies.”

Alexandria Ocasio-Cortez (AOC), another darling of the left, also tends to be decent on foreign policy issues on the occasion that she isn’t promoting her welfare/ socialist polices on domestic issues. But again, she has to criticize Trump, no matter what.

AOC said on Twitter, “Trump’s sudden withdrawal from northern Syria & endorsement of Turkey’s actions could have catastrophic consequences & risks laying the ground for immense violence and suffering.  We can pursue a strategy to stop our endless wars without endangering the lives of innocent people.”

Actually, whenever any proposal is made to scale back a war or reduce the presence of troops, the war hawks themselves will claim that it will endanger lives and cause more violence.  In other words, there is never a right time for troop withdrawal according to the war hawks.  It is hard to differentiate what AOC says as compared to any shill for the establishment.

Bernie Sanders said on Twitter, “I have long believed the U.S. must responsibly end our military interventions in the Middle East.  But Trump’s abrupt announcement to withdraw from northern Syria and endorse Turkey’s incursion is extremely irresponsible.  It is likely to result in more suffering and instability.”

Again, saying we must do it “responsibly” is no different than any typical war hawk.  There will never be a “responsible” time to do it in their eyes.

And Trump has to be “abrupt” in his announcement because otherwise the opposition will have time to build up against him.  If he has any chance of a troop withdrawal, it almost has to be done abruptly.

This isn’t to say that Trump said everything right in regards to withdrawing troops from northern Syria.  I certainly wouldn’t have chosen all of the same words as Trump, but his intended actions seem to be on the right track in reducing U.S. government interventionism overseas.

This also isn’t to say that Trump will follow through on what he said, just as his previous announcement of withdrawal from Syria didn’t happen.  But a major part of the reason it doesn’t happen is because there is so much backlash against him when he makes such an announcement.  If the left were to align with Trump when he actually does something that they would typically see as correct, then we would have a much better chance of seeing a reduction in interventionism overseas.

This is why I don’t trust Bernie Sanders at all when it comes to foreign policy.  He barely puts any emphasis on foreign policy because he is too busy talking about vastly increasing the welfare state at home.  And we must always remember that Bernie campaigned for the bloodthirsty war hawk that is Hillary Clinton in 2016, even after her campaign and the DNC rigged the primaries against him.

If Bernie became president, his foreign policy would almost immediately be taken over by the establishment.  There is little doubt about this.

You should never trust a socialist/ statist, even when it comes to foreign policy.  If they think violence is the solution on the domestic front, then they can find reasons to excuse violence when it comes to foreign affairs.

Libertarians (and I mean true libertarians who oppose initiated violence) are the only ones who can be trusted to consistently oppose wars and foreign interventions.

The good news is that in reading the comments to these leftist Twitter rants against Trump, there is recognition of the hypocrisy. If Bernie Sanders, AOC, and Ilhan Omar will not support a troop withdrawal in northern Syria, then they should be recognized as the hypocrites that they are.

There are, unfortunately, some people who are stuck in poverty who will always be stuck in poverty.  There are whole societies that are stuck in a poverty mindset.  They tend not to respect property rights.  They look down on entrepreneurship.

In the United States, for all of the problems, there is still a spirit of entrepreneurship. There is a respect for property rights up to a certain degree.  This is obviously not absolute or we would be living in a libertarian society. But Americans have a stronger respect for property rights as compared to many other people around the world.

Within the U.S., there are still people stuck in a poverty mindset.  This is especially unfortunate because these people are essentially enslaving themselves.

I am quite sympathetic to the plight of the American middle class and the lower class.  I hate the term “working class” because it implies that rich people don’t work.

I wish other libertarians were more sympathetic as well.  If libertarians would emphasize the struggles of the American middle class in particular, I think our platform would get more attention.

I know that there are many millions of people who work hard out there and are still struggling to get by.  Most aren’t struggling in the sense of putting food on the table.  Many of these struggling people have cell phones and televisions. But it is unfortunate that they work so hard but can’t manage to get out of the grind of living paycheck to paycheck with little in the way of savings.

If we didn’t have a central bank creating money out of thin air and manipulating interest rates, and if we didn’t have a government that took almost half of our income and that imposes thousands of regulations, then we would be far wealthier.  Someone could work a middle class job for 40 hours a week and meet their obligations and have plenty of money left over for savings.

Even though I think the government makes life extremely hard for us, it doesn’t mean we shouldn’t seek to better ourselves.  It makes me sad when I see people who have basically given up all hope. They have a poverty mindset, and it will stay that way forever.  Their only hope in life may be buying a lottery ticket.

Even here, we know the stories about lottery winners.  If you have a poverty mindset and win the lottery, it will probably just make you even worse off in the long run.  You won’t know how to handle the money.  You will spend it on material goods instead of setting up a secure and permanent cash flow.

Getting Ahead

There is a commonly repeated phrase that it takes money to make money.  There is certainly some element of truth to this, but I also think it is overplayed.  There are plenty of people who have made it big while starting with very little.  There are plenty of rags to riches stories.

I think to get out of a poverty mindset, it is important just to get ahead a little bit and to stay ahead.  You need a cushion. If you have a cushion, this will make the difference of many thousands of dollars over the years.  It may make the difference of tens of thousands or hundreds of thousands of dollars over a lifetime.

The most obvious example of this is in regards to debt.  When you owe debt, you are typically paying interest on the debt.  This is a cost.

It isn’t so bad if you have a mortgage on a house that you can reasonably afford.  Shelter is a basic human need.  If you buy something with a mortgage instead of renting, then the interest you pay may be worth it over the long run.  Still, for somebody who is on the cusp of poverty, I would recommend renting at least until getting that cushion built up (and some).

Think about other debt such as credit card debt.  If you don’t pay off your balance in full each month, you are paying interest on that debt in most cases.  It is hard to recover from this.  You are essentially throwing money away in most circumstances.  You need to pay off this debt so that you are at least starting from zero and not negative.

It is even worse if you look at people getting a payday loan or something equivalent.  These are high interest loans.  People taking these loans are generally not in a good situation.  The cycle tends to be continuous too.  At some point, they are taking out a payday loan because they don’t have money from paying back the previous one a couple of weeks earlier.

For someone in this situation, they could find extra work for just a couple of weeks.  Or they could cut down to the bare minimum for a couple of weeks.  They could drink water and eat for 4 dollars per day if they absolutely had to.  If they would just do this for a couple of weeks, they may be able to break the bad cycle.

This would be the same for someone with no money who is living paycheck to paycheck.  Take one month and try to live way below your means.  Save this extra money. Do it for a few months if you have to.  Put the extra money away in savings and don’t touch it except for an absolute emergency.

Having a cushion will not only save you from paying interest on debt.  It will help you save money by buying things at a discount. Maybe you can buy certain things in bulk that you would have bought anyway.  Maybe you can pay your insurance premiums for a whole year for a substantial discount.  This alone may save you a couple of hundred dollars per year.

When you have some money saved, and you have the discipline to not use it for impulse buys, you will find you have more power.  You can make smarter decisions over the long run with your money.  You will find little places to save that you might otherwise not bee able to if you had no extra money.

This is an important factor in breaking a poverty mindset.  You should have savings for emergencies and to buy yourself discounts.

There are tens millions of Americans right now who have virtually no money or, worse, a negative net worth.  They would not be this bad off if it weren’t for the size and scope of government.  But given the situation, most of these people could suck it up for a few months and find a way to build up a little bit of cushion.  Once you have some extra money, you will find it easier to keep it.

Ever since Donald Trump was elected president in November 2016, certain segments have been trying to delegitimize him and even outright overthrow him.

Even though Trump has not drained the swamp, he has been a threat to the establishment/ deep state. He is loose with his words, and the powers-that-be see him as a threat to their power.

You can imagine just how much the deep state would react if someone was president who was actually cutting budgets, withdrawing troops from overseas, and threatening to break apart the intelligence agencies.

Although Trump doesn’t go along with the establishment in terms of his rhetoric, his policies have largely been a maintenance of the status quo.  I believe this is one of the reasons why he hasn’t been taken out in the same fashion as John F. Kennedy.  Instead, the CIA, FBI, and other deep state operatives can just delegitimize Trump and distract the country with impeachment hearings.

Let’s remember the words of Chuck Schumer prior to Trump taking office.  He said, “You take on the intelligence community, they have six ways from Sunday at getting back at you.”

https://www.youtube.com/watch?v=fotKK5kcMOg

I guess the allegations of Russia collusion and the newest allegations of Ukraine interference are what Schumer was talking about.  There is little doubt that the CIA and FBI (and maybe the NSA) are involved in these.  It is not inaccurate to say that there is a CIA/ deep state attempted coup going on right now.

There could be valid reasons for impeaching Trump, such as starving people in Yemen or dropping bombs on innocent people.  But these are things that most presidents of the last one hundred years have done, and these aren’t the stated reasons for going after Trump.

The craziest thing about these latest allegations against Trump is that Joe Biden actually admitted to doing what Trump is accused of – that is, bribing a foreign government with foreign aid.

Biden clearly admitted that he threatened to withhold money if a prosecutor in Ukraine wasn’t fired. That prosecutor was investigating an energy company that employed Hunter Biden (Joe Biden’s son).

Trump did not explicitly threaten to withhold money from Ukraine in exchange for favors, or if he did, there has not been any proof provided yet.

Of course, there are two major differences between Biden and Trump in dealing with Ukraine.  The first, as just discussed, is that Biden’s threat was explicit, whereas Trump did not explicitly threaten anything from what we’ve seen so far.

The other major difference is that Trump was requesting an investigation into possible criminal activity.  Biden was requesting a cover-up of an investigation.  These are major differences.

One is saying, stop investigating criminal activity or I’ll withhold money.  The other is saying, investigate criminal activity.

The Power to Abuse

This may be good political theater, but I believe this is important because it shows the power of the intelligence agencies and the evil things those at the top will do to stop any disruption of their power.

Even though there are major differences between what Biden did and what Trump did according to what we’ve seen evidence for so far, there is another point in all of this that has been completely missed.  I think only a libertarian could credibly point it out.

Let’s say that the worst allegations of Trump are true and that he withheld money from Ukraine so that the president of Ukraine could help Trump by destroying Joe Biden’s campaign for president.  If this were true, then we have the vice president at the time and the current president both using their powers in office to gain personally by using taxpayer money in the form of foreign aid.

We can have all of the investigations and impeachment hearings in the world, but this doesn’t really solve anything in the long run.  The only way to solve the problem is to eliminate foreign aid. This is the obvious conclusion that nobody seems to be mentioning.

Harry Browne liked to say (quoting Michael Cloud), “The problem isn’t the abuse of power; it’s the power to abuse.”

Biden abused his power.  Trump may have abused his power.  He is being accused of abusing his power.  Regardless of whether it’s true, he certainly could have abused his power.

And this is the problem.  It is the power to abuse.  If the American people insist on foreign aid, then why aren’t all of the terms set by Congress? Why isn’t there a specific amount designated to be distributed at a specific time with specific qualifications to receive it?

Of course, there really should be no foreign aid at all.  This is actually one budget cut that a majority of American people agree on.  It would not only save many billions of dollars for the American taxpayer, but it would eliminate these situations of alleged bribery.

As long as foreign aid is available, and as long as presidents and vice presidents have discretion on how and when it is to be distributed, then it is almost guaranteed that corruption will continue now and into the future.

The answer to these specific allegations isn’t impeachment hearings.  The answer is to eliminate all foreign aid.

Then we can work on eliminating the budgets for the so-called intelligence agencies.  This would have to be demanded by a large percentage of the American population.  We would have to ask Chuck Schumer if the intelligence agencies have six ways from Sunday at getting back at the American people.

I recently went with my family to a meet and greet with a family that does YouTube videos. My kids have watched their videos for a couple of years, so they had the pleasure of getting to meet the family and take a picture with them.

The family we saw has over 3 million subscribers on YouTube.  It is geared towards kids.  If most of the subscribers are from the U.S., that would be about 1% of the total population.

There are some YouTube celebrities with many millions of followers.  There are a few who are in the tens of millions.  And I am talking about people who are famous because of their YouTube videos.  I am not talking about people who were already celebrities and then posted videos.

It’s interesting that we still consider someone more famous if they are on television.  But you could appear on a YouTube video for someone who has a million subscribers, and you would get more people watching you than the total viewership for many cable news shows.  Even measuring against the major networks, many videos on YouTube are seen more than the average television show.

One difference is that a celebrity from Hollywood may be more widely known.  I know of many actors in which I may not be able to name a movie or tv show that they have been in.  With YouTube celebrities, they are quite well known amongst their fans, but the average guy on the street may have no idea who they are.

After the meet and greet, we were talking at dinner about meeting celebrities.  The question was posed: if you could meet one person, who would it be?

I didn’t have an obvious answer.  I have been fortunate enough to meet many famous people.  I have met Eli Manning and many other famous athletes.  I’m not saying everyone would know them, but anyone who follows sports would know them.

In my libertarian world, I have met many stars.  I met Harry Browne before he passed away.  I have met Lew Rockwell, Tom Woods, Dave Smith, Bob Murphy, Ron Paul, and many others.  I don’t know any of them well, but I have had conversations with all of them, regardless of whether they remember me.

This has really been my greatest thrill in meeting people.  They are only celebrities in a limited circle of like-minded people.  Ron Paul is the only one outside of libertarian circles who is a common name.  I enjoy a good discussion with any libertarian, so it is especially fun getting to talk to people whom I have read and listened to, and have also been an influence.

Outside of political circles, my comment was that I would like to do an activity that a particular person is famous for.  For example, I would like to shoot hoops with Michael Jordan.  I would like to sing a song with Billy Joel or the Backstreet Boys.  I would like to play a round of golf with Tiger Woods.  It is best to do the activity for which you look up to the person.

It would also be great fun talking to anyone that I listen to on a regular basis.  That could include YouTube videos or podcasts. Again, I would want to talk about the subject that is the general topic of the podcast.

Making a Difference

When I thought about someone I would like to meet, at first I was thinking that I have little interest in meeting any political figures outside of libertarian circles. But then I thought again.

If I could meet one person right now, I might pick Donald Trump.  It wouldn’t be for a picture, although I would certainly take one if given the chance.  I would love the chance to have a conversation with him.

Trump is not overly impressive to me.  I think it is impressive that he has been able to accomplish a life in business and his road to the presidency.  He has some great instincts when it comes to marketing.  But the purpose of meeting him wouldn’t be for me to learn something, although I am always open to learning something.

My hope is that I could spend a few minutes with him to give him some unsolicited advice.  I would have to try not to be overbearing. I would be very complimentary of his original campaign and his ability to fight the establishment.  This would be sincere.

I would tell him that he is still surrounded by the establishment.  He should already know this, but I am not sure that he does fully understand it.  I would warn him about Pompeo.  I would warn him about Pence.  I would warn him that none of the intelligence agencies are on his side. The CIA, the FBI, and the NSA will all take him down in a heartbeat if given the chance.  The same goes for people like Lindsey Graham, who sometimes pretends to be Trump’s ally.

I don’t know if the insiders have explicitly threatened Trump, but I would tell him to go down swinging.  They are either going to get you to adopt their agenda, or they are going to destroy you.  Either way, you lose and the American people lose.  Why not just order all troops to be withdrawn from the Middle East immediately?  Why not start cutting budgets everywhere? They will blame you for the recession once it starts anyway.

I don’t know if Trump fully understands the threats from the deep state.  Maybe he does, but I am really not sure.  He knows there are bad people on the inside, but I don’t think he realizes how systematic it is.  I don’t think he realizes that Pence would shove him out the door if the time were right.

I would encourage Trump to pardon Assange and Manning and Snowden.   I would strongly encourage him to stop all sanctions against other countries.  I would encourage him to pardon all people convicted of federal drug charges, if that is their only offense.  I don’t think I would get too deep into economics unless he wanted to talk about it.  That is a much harder subject to tackle.  It isn’t easy to overturn someone’s worldview in economics in a relatively short conversation.

I doubt any of it would make a difference, but you never know.  Trump is a different kind of being.  While he has largely governed like a swamp creature, there is still something different about him.  His rhetoric is obviously different.

I wouldn’t bother talking to someone like Hillary Clinton or Jeb Bush or Joe Biden if any of them were president.  They are too corrupt to the bone.  Trump may be corrupt, but it is on a different level.  He has an element of honesty about him, and maybe he would be open-minded enough to consider doing something against the deep state and for the people suffering under the thumb of the state.

Maybe my conversation would make no difference, but it would be worth a try.