I sat through the debate between Ron DeSantis and Gavin Newsom that was hosted by Fox News.  It was “moderated” by Sean Hannity.

At the beginning of the debate, Hannity pointed out (about himself) that he is a conservative, but that it was his job to be fair and moderate the debate.  Immediately after that, he pulled up a chart and asked why so many people are leaving California and migrating into Florida.

It seemed like every question asked by Hannity started with some kind of a chart or graphic showing why California is bad and Florida is good.  This included education, crime, the price of gas, and several other things.  Maybe it’s just because most everything is worse in California these days, but you would think Hannity would have at least thrown in a question about something in Florida not doing well.

As a Floridian, I can say that things are far from perfect.  As Newsom pointed out, there is a problem with violent crime in the cities in Florida.  The government school system is mostly a disaster, although I’m guessing it is worse in California.  With all of the new money coming into Florida (higher property tax base and more people), you would think the state of Florida would build new roads and expand existing ones.  Maybe this has happened to some degree, but traffic keeps getting worse and worse, even with more people working at home.

I say all of this only to point out that Florida has its problems like everywhere else.  I thought Hannity might challenge DeSantis with something.  Instead, Hannity was quite obviously on team DeSantis and didn’t even try to hide it with the questioning.

I’m not sure if this helped or hurt DeSantis.  It helped by directing the questions that were tough for Newsom to answer.  The only problem is that it seemed that Hannity was only trying to help DeSantis with the questions, which could perhaps weaken DeSantis.  Some might think that DeSantis can only win the debate because he is being assisted by the person asking the questions.

Winners and Losers

Fox News was a winner just for hosting the debate.  That was probably Hannity’s most watched show ever.  He isn’t exactly popular these days, especially since Fox fired Tucker Carlson, who’s show used to be right before Hannity.

Unfortunately for Fox News, this was a one-time event.  They got high ratings for an hour or two.  Now they can go back to having mostly establishment Republicans watch the channel, and there aren’t even that many of those watching.  Since Tucker was fired, Gutfeld is the only mildly interesting and entertaining show, and even that has seemed to go downhill fast since the October 7^th attacks in Israel.

The end of the debate was kind of awkward where Hannity said they would just keep going for another hour or so.  When they came back from commercial, the debate was declared done because of prior commitments.  I’m not sure what commitments they had at 10:30 at night.  Either way, when you say a debate will be a certain length, you should try to stick to that timeframe, at least somewhat.

I thought Donald Trump would be a winner, just as he has been with the Republican debates.  But I can’t really say that’s the case here.  Trump is still the big favorite to be the Republican nominee, but it wouldn’t surprise me if DeSantis gains a few percentage points in the polls after this.

The one-on-one format was much better for DeSantis, and it is much better in general.  These debates with many people talking over each other and hurling insults is not a good look.  When it is just two people doing the same thing, it is more controllable.

I know how slick Gavin Newsom is.  He reminds me of Bill Clinton (back in the day) in many ways.  Yet, I thought Newsom didn’t do that great.  He tried to sell us some narratives that just fell flat to me.  If anyone thought he was really effective, I’m sorry to say that they just aren’t that bright.  Anyone believing the drivel coming out of Newsom is just not that intelligent or is completely blinded by politics.

For DeSantis, I would give him a “B” for performance.  If there hadn’t been foreign policy questions at the end, maybe I would give him an “A-“.  He was mostly effective on the domestic issues that were discussed (helped by Hannity’s questions), although there were some times where he could have been even stronger.

The Issues

On the question of people leaving California and going to Florida, there isn’t much to say.  The numbers speak for themselves.  Newsom tried to say that more people moved from Florida to California than moved from California to Florida.  I have no idea if that’s true, but it is mostly irrelevant.  What matters is the overall net numbers.  People leaving Michigan and New York are more likely to move to Florida than California (just as an example).  That is the point.

On the question of taxes, Newsom defended the high taxes by saying that we need progressive taxation and that millionaires and billionaires pay more in his state.

I thought a good retort by DeSantis could have been to sarcastically agree with Newsom and say that he’s right.  All of the homeless people in California are spared from paying the progressive income taxes.

There were several times DeSantis referred to Newsom as a lockdown governor and pointed out that his kids were in private school while California public schools were shut down.  He also pointed out Newsom eating at a fancy restaurant while Californians were locked down.  I was surprised that Newsom actually came back at DeSantis one time and said that Florida was locked down, which is true.  But that seems to fall flat, just as when Trump says it, because DeSantis was one of the least bad governors on this issue (unless you have the perspective that the lockdowns were great).

There were a few times that Hannity interrupted the conversations because they were talking over each other, but then Hannity moved on to another question.  I actually wanted to hear them argue it out because it went against Newsom.  Hannity could have simply asked that they speak one at a time.  Instead, he moved on.  It may have been straying too far from Hannity’s range of allowable opinion.

The so-called book banning in Florida came up a few times.  DeSantis did ok with that, but I thought he could have been more effective.  He should have more explicitly pointed out that the only statewide bans are for pornographic material in government-funded institutions.  The more well-known books that some people say are banned are not banned.  If a book is not made available in one school or one school district in Florida, this has nothing to do with DeSantis, and it is false to imply it is a statewide ban.

There was one funny sidebar where Newsom tried to lecture DeSantis on how to pronounce “Kamala” (as in, the vice president).  I can’t imagine this plays well to anyone other than the most diehard leftists.

On abortion, I thought Newsom might get the better of DeSantis.  Surprisingly, I think DeSantis came out on top because of Hannity’s questioning.  Hannity kept asking Newsom if he supports any ban on abortion, even in months 7, 8, and 9.  Newsom couldn’t directly answer the question, and you could tell he was a bit uncomfortable.  Even most people who identify as pro-choice see a problem with aborting a baby that could easily survive outside the womb.

On the subject of gas prices, Newsom just sounded like an idiot.  He is blaming big oil companies for gouging California.  DeSantis rightly pointed out that it is strange that they aren’t gouging Florida and other states.  Why would oil companies only be gouging California?  You would have to be a complete dolt when it comes to economics, or maybe life in general, to believe that oil companies would only gouge California but offer a lower price to everyone else.

Foreign Policy

Ron DeSantis has been terrible on foreign policy.  He hasn’t been Nikki Haley terrible, but still pretty bad.  That is a major reason that I don’t want him as president.

The topic of foreign policy came up briefly near the end of the debate.  They were both bad.  I thought maybe Newsom would be better on this issue from a libertarian perspective, but he is even bad on this.

For this reason, they would both be terrible presidents.  DeSantis showed that he is much better on domestic issues than Newsom.  The problem is that if DeSantis became president, he wouldn’t be a fiscal conservative because he would be too busy funding the U.S. empire overseas.

I will also point out that DeSantis hasn’t exactly been a budget cutter in Florida.  Again, he is just less bad than other governors.

Conclusion

Overall, DeSantis did himself a favor by doing this debate.  It won’t be near enough to overtake Trump, but it does put him in a position to possibly run again in 2027/ 2028.

By doing this debate, DeSantis was not trying to convince independents and undecided voters with regard to Democrats and Republicans.  He was trying to convince the Republican base to support him.  It is easier to go against a leftwinger like Newsom than other Republicans.  It draws a clearer line for DeSantis.  It allows him to rail against leftwing policies.

Newsom did his best to assure everyone that he isn’t running for president next year and that he is all in on the Biden/ Harris ticket.  We all know that’s not true, and DeSantis pointed that out.

As soon as the Democrats (and the establishment in general) decide to dump Biden, Newsom will be more than happy to step in.

I knew he was a slick politician going into the debate, and he played the part well.  But I was surprised at how weak some of his arguments were.  He was not nearly as impressive as I thought he might be.  For that, I am happy.  If Newsom ends up on the Democratic Party ticket in 2024 (or 2028), his fakeness will show through to many people.  I would now give him lower odds of winning the presidency than what I thought going into the debate.

There is still a Keynesian fallacy that consumer spending drives the economy.  This incorrect line of thought is particularly prevalent around Christmas time.

After Black Friday and Cyber Monday are done, we will hear statistics about how great or how disappointing retail sales were.  If sales meet or exceed expectations, the talking points will be that the economy is still strong because the American consumer is spending money for the holidays.

There is a relationship between consumer spending and the economy.  There is a relationship between consumer spending and our overall living standards.  But we shouldn’t confuse a correlation with causation.  Strong consumer spending doesn’t cause us to have a good economy.  If anything, a good economy leads to strong consumer spending.

You Can’t Consume What Isn’t Produced

You can only consume what is first produced.  We can be sure that the people of Ghana or Bangladesh would love to be lining up at Best Buy to purchase the latest 70-inch television for only a few hundred dollars.  The problem is that most people living in these third-world countries simply can’t afford to buy a 70-inch television.  They are more worried about having clean water, a safe shelter, and food to eat for tomorrow.

The reason Americans, in general, are so wealthy as compared to many other people in the world is because Americans are more productive.  It’s not that Americans necessarily work harder and faster.  It’s that Americans have generations of savings and capital investment that make us more productive.

It isn’t so much technological advancements, although they certainly help.  But those technological advancements are available to anyone in the world.  The problem is that they can’t put them to good use.  You have to have the factories and equipment, along with the knowledge, in order to produce consumer goods.

There may be people in Bangladesh helping to produce televisions, but the capital investment is likely coming from the U.S. and other first-world countries.  The people in third-world countries don’t save a lot of money, and they invest very little, at least comparatively.  If you are worried about where your next meal is coming from, you aren’t going to invest in a factory to build electronics.

Savings and Production

Increases in production come from savings and investment.  When you produce something and don’t consumer something in an equal amount, then the difference is in savings.  This is measured in money.  You can produce any number of goods and services and sell them.  If you save some of the profits, then this can go into investment.  It can be used to build machinery or start a new business.  This is done in order to seek profit in the future by producing more.

It is hard to grasp in today’s world because so many people make their money by producing things that aren’t directly consumed.  An accountant or attorney may be helping a corporation, even though they aren’t the ones making the widgets, but it still may be a necessary function.

There are people who produce services too, which is a sign of a wealthy people.  When you think of athletes, actors, and singers who make a lot of money, it is hard to think that they are producing something.  But that is what they are doing, and they are sometimes producing this entertainment for millions of a people at a time.

The person serving you your food at a restaurant or making your coffee at Starbucks may not be directly producing the food, but it is still production that is meeting demand.  There are many things that Americans consume that are not necessities.  Again, this is a sign of a wealthy society.

Government Interference

The problem we have today is that the government (at all levels) interferes in the marketplace.  This is done through taxation, inflation, borrowing, and regulating.  Most government action discourages savings and investment.  It is actually amazing how much people are still able to save and invest in spite of government interference.  It is amazing that new businesses and innovations still come about as rapidly as they do.

The U.S. has built upon previous savings and investment from generations before for over 200 years.  Even the people in the late 1700s were building upon what was built before them.

If the government weren’t taxing and regulating us so much, we would have even more prosperity than what we have today.  It is actually unimaginable what we might have.

Still, even with the government at all levels taking nearly half of our money and misallocating it, most Americans are still able to go out to eat, go to Starbucks, own a smartphone and a big screen television, and go on vacations.  If some of these things aren’t your cup of tea, maybe you have something else where you spend money, even though you don’t necessarily “need” it.

The fact that Americans are spending as much money for Christmas gifts as in past years is almost meaningless.  This could be because consumers are doing well, but it is just as likely, at least in 2023, that it is because they just aren’t saving much money.  In some cases, people are buying Christmas gifts with debt and no ability to pay off the debt within the next month.

We actually want people to save money and spend less so that we can have greater production in the future. We don’t want to consume our capital, which could actually make us poorer in the future.

For the sake of the American economy and our future living standards, let’s hope that retail sales are down this Christmas season.

The people of Argentina have elected Javier Milei as the new president of the country.  Milei is sometimes described as a radical libertarian.  He has even described himself as an anarcho-capitalist and a follower of Murray Rothbard.

Milei won with about 56% of the vote, so it was quite decisive.  Argentina has been plagued with high unemployment and high inflation.  The price inflation there is reported to exceed 100% annually.

It shouldn’t be surprising that the people wanted a change, yet it still is a bit of a surprise.  When socialist governments create problems, they also create dependency.  There is much propaganda to tell people that we need even more socialism and government interference.  Unfortunately, history has shown that people often fall for it and continue to elect hyper interventionists.

Is Milei Really a Libertarian?

This is where the skeptic in me comes out.  Even though Milei has cited Rothbard and likes to rail against the central bank, I have strong doubts that he will govern as a libertarian.

Milei is an advocate of Bitcoin, but that should really play no role in politics other than keeping government out of it.  There certainly should be no monetary system based on Bitcoin unless it is chosen by the market.  Perhaps you could say the same thing about gold, but at least a gold standard, even if it is run by a government, has some basis of being derived by the marketplace.  Gold was chosen freely as a form of money for thousands of years.

Some libertarians have been skeptical, or even critical, that Milei may tie the Argentinian currency to the U.S. dollar.  I actually don’t think this would be a bad first step, because the U.S. dollar is a much sounder currency than the peso.  I don’t think libertarians should expect an abolishment of the central bank in Argentina, and certainly not right away.  There is a libertarian argument to made that it shouldn’t be abolished in just one step because of the chaos it would cause.

Of course, 100% or higher inflation causes utter chaos.  But there are contracts to be concerned about, and the best way to have a somewhat smooth transition to sound and free money is by allowing competition to take place.  Argentinians should be free to use pesos, dollars, gold, Bitcoin, or anything else they want to use for transactions.

In terms of policy positions, my biggest concern with Milei is his foreign policy.  He could probably fit in on the debate stage with the GOP (i.e., war hawk) candidates talking about Israel.  Hopefully Milei will serve as president of Argentina and not of Israel.

Perhaps the fortunate thing about the disaster that is the Argentinian economy is that the government doesn’t have a lot of money to spend on foreign interventions.  That is not yet the case with the United States.

Will Milei Have Courage?

Even if Milei is a fairly solid libertarian to start, there is going to be immense pressure from special interests, from foreign players, and from the establishment in general.  It is tough to stand up against this.

I can think of very few politicians who have mostly been able to stay principled for a long period of time.  There is Ron Paul.  He was in Congress, but never made it to the presidency.  I’d like to think that he would have stuck to his principles if he had become president, but you never know.  But that is what made Ron Paul so unique.  Most people actually believed that he would stick to his principles.

Boris Johnson was supposedly a reader of LewRockwell.com at one time.  I have no idea how true this is.  But he was a total disaster of a prime minister.  He is partially responsible for the war in Ukraine and killing any peace negotiations.

It is easy to be skeptical of anyone who reaches a position of high power.  In fact, it is right to be.  Power corrupts people quickly.  They want to be liked, and they want to maintain their power and prestige.

Even if Milei shows courage and sticks with his convictions, it will still be really difficult.  We all saw what happened to Donald Trump.  He was already smeared relentlessly by the establishment and its media up until the 2016 election.  After he was actually elected, they went after him with just about everything.  The deep state maintained control over every important area and agency.  This includes the FBI, the CIA, the Department of Justice, the military-industrial complex, the medical establishment, and the national security state.

So, while it’s nice that Milei seems to be really solid on economics, the biggest question is whether he will be able to take on the deep state.  Argentina is different from the United States, but there is deep state bureaucracy in every major government.

Reason for Optimism

The main reason I am cheering this election and am optimistic is for the simple fact that the Argentinians elected someone who was running on a somewhat radical libertarian message.  He is popular among the young voters, which is an even better sign.

Even if he isn’t successful in getting Argentina anywhere close to a libertarian society, I think things will move in that direction.  Even if Milei goes against his promises and is a disaster, it is still quite positive for the future of liberty.  It’s not like he was a libertarian while campaigning as something else.  Some might have voted for him as the lesser of two evils, but that means they saw the socialist candidate as the bigger evil.

I wouldn’t expect great things from Milei, but I do expect improvements.  And with the liberty movement alive and well in Argentina, there is great hope for the future there.

The latest consumer price index report came out for October 2023.  The numbers came in slightly below expectations, which drove stocks higher.

The CPI was flat for the month of October, while it was expected to rise 0.1%.  The year-over-year rate now stands at 3.2%.  Overall prices keep going higher, but at a slower pace than before.

The median CPI, which tends to be less volatile, was up 0.3% for October, while the year-over-year stands at 5.3%.

Again, price inflation is not coming down.  The rate is coming down.  Prices are going up at a slower pace than before.

The Bulls are Happy, For Now

U.S. stocks boomed on the news.  Stock investors tend to like inflation, so you may be wondering why this was taken as good news for stocks.  The reason all goes back to the Fed.

If price inflation is coming under control, then that means the Fed is less likely to hike its target federal funds rate.  It also means the Fed is more likely to stop its monetary deflation earlier.  So, investors are banking on a loose – or at least a less tight – monetary policy.

I think the stock bulls are right about the monetary policy going forward, but they are interpreting it wrong.  We will see a looser monetary policy as compared to now because the economy is going to go into a recession.  That may be putting it mildly.  With rates having gone up so fast, and with an inverted yield curve for 2023, we may be looking at a major financial crisis in the near future.  And if that happens, stock investors are going to get the loose monetary policy that they wanted.

The problem is that we will be in a financial crisis, or at least a bad recession.  This isn’t good for stocks.  It typically isn’t good for asset prices in general.  If the Fed is aggressive enough after the crash, then stocks could turn around.  But it won’t be before they take a major beating.

The Fed May Win Against Inflation, Temporarily

Price inflation is still above the Fed’s target of 2%.  They will ignore what they said a few years ago about trying to average 2% over time.  They never specified what time period, but shouldn’t that mean that we will go under 2% for a while to average out to 2%?  It was just over a year ago that price inflation topped 9% year-over-year.

We have seen short-term rates go above 5% along with a declining balance sheet.  This is all in the face of an inverted yield curve.

I think Americans are still suffering terribly from price inflation.  Car insurance prices are up nearly 20%, which tends to be a fairly big line item in most people’s budgets.  Wages are simply not keeping up with consumer prices.  The reason that some prices are starting to stabilize is simply because consumers don’t have the money to buy as much.  They have to prioritize their needs.  And with some needs, such as food, they find cheaper substitutes.

The Fed will be successful in bringing down the price inflation that it created (with the help of the federal government).  The problem is the next side effect (recession/ financial crisis).  Then the problem is the Fed’s reaction swinging the other way.  So, we may get back to much higher price inflation again, but not before we see major economic turmoil.

• Every single presidential candidate I’ve heard, outside of the Libertarian Party, has been bad on the conflict in Israel/ Gaza.  That includes RFK Jr., who has probably destroyed his campaign for taking the establishment position.  Since October 7^th, I haven’t seen or heard much from RFK Jr., probably because he hasn’t been making appearances on the podcasts/ shows that I listen to.  I have had far less enthusiasm for his campaign since that time.

• Vivek is the least bad on Israel.  He won’t admit that the Israeli state has done some bad things to innocent people in Gaza, but at least he says that the U.S. government should remain neutral.  He doesn’t want to stray too far from the establishment narrative on this one because he is running for Trump’s VP in 2024.

• I heard five presidential candidates from the Libertarian Party speak last month.  They all had their strengths and weaknesses, but I can say that they were all good, at least from what I heard, on the subject of foreign policy.  And this was after the October 7^th attacks in Israel.

• Trump’s nickname for Ron DeSanctimonious was never that good.  He should just go with Neocon Ron.

• I recently learned that there are only about 16.1 million Jews in the entire world.  Israel and the United States make up about 14 million of the Jewish population, although estimates vary.  It is incredible that there is so much controversy regarding a group of people that makes up just 0.2% of the world population.

• I understand that last comment can be taken in different ways.  It is incredible that such a small percentage can have such a big influence, especially in the political realm.  It is also incredible that Jews can exist given how much hatred there is towards them.

• I grew up in New York and had several Jewish friends.  I was a kid, so it meant little to me other than the fact that they celebrated different holidays.  I was mostly ignorant of happenings in the world, which is probably good.  I enjoyed playing sports and having fun.  I have little bias for or against Jewish people. As with any other group of people, there are good ones and bad ones.  I do have a bias against government, so I can recognize the crimes of the Israeli state.

• Public opinion is turning against Israel in a lot of ways.  More people are learning about the “open air prison” that is Gaza and the mistreatment of the Palestinians.  Even if you are the biggest fan of Israel and the Israeli state, you should be warning the Israeli state to tread lightly.

• Anyone who uses political arguments based on Scripture should be ignored or ostracized.  Saying that the Bible entitles a Jewish state is not a good argument.  It is even worse when it’s used to justify killing.  That means that there will never be peace when people use religion (Judaism, Christianity, Islam, or anything else) as justification for political acts.

• In Israel, Jews make up about 7 million people.  There are a little more than 2 million non-Jews in Israel.  The Palestinians include Christians.  Unfortunately, all three religions place high value on this little piece of land.  If religion weren’t involved, it should be easy to resolve all conflict.  The U.S. alone takes in about a million legal immigrants every year.  The number of illegal immigrants is even greater.  You would think that one group or another could find just about any place in the world to settle and live in relative peace.  The problem is that there are religious and cultural reasons for the conflict.

• I wonder how much the land itself means to Palestinians.  They feel that the property of their ancestors was unjustly taken.  Some of the Palestinians today have had property taken from them, and they are largely under the control of the Israeli state.  If Palestinians were given the opportunity to immigrate to the U.S. or some other first-world country, I wonder how many would take it.  Does the land itself mean that much to them?  Do they just want revenge against their oppressors?  Or would they be willing to essentially “let it go” if they were given an opportunity to live somewhere else with property and relative freedom?  I genuinely don’t know the answer to these questions.  Maybe it differs greatly for different people.  I suppose one could ask the same last question of Israeli Jews.

• As a libertarian, I am not advocating this, but the U.S. government could relocate every single Palestinian and give each one $10,000 as a one-time payment.  2 million people times $10,000 is $20 billion.  That’s the equivalent of less than 5 days of the U.S. deficit (not spending).  The government spends close to $20 billion every single day.  That one-time payment would be a lot cheaper than continually sending money to Israel and other countries to promote ongoing conflicts.  But the people spending the money aren’t trying to achieve peace, so this will never happen anyway.

• Regardless of where your sympathies lie, nothing good can come from more U.S. government intervention.

• Ron DeSantis wants to ban pro-Palestinian protests on college campuses.  I guess DeSantis only stands up for free speech when it is anti “woke” speech.  Aside from the free speech aspect, what is wrong with being pro Palestinian?  Surely not everyone at these protests are anti Jewish.

• I am pro Palestinian and pro Jews, at least for the innocent people.  In order to achieve peace, we need to criticize all who want violence.

• It is still hard to believe that the Israeli state did not know what was going to happen on October 7^th.  The “intelligence” there is completely inept, or else there were elements within the government that knew the attacks were going to happen.  Either way, it is a not a good look.

The third neocon debate for president was hosted by NBC News.  All of the candidates had great ideas to stop China, defend Israel, and involve America in the entire world.  For a second there, I thought it was a debate to be president of Israel

It makes it rather easy for someone like Donald Trump to step forward and say, “I care about Americans and what is happening in America.”  It’s not that Donald Trump is great, but he looks good when compared to these slithering war hawks.

Ron DeSantis

Ron DeSantis has gone full neocon now that Israel takes center stage.  He lacks charisma, but I don’t think that’s a reason to be against him other than strategy reasons.  But if DeSantis actually became president, I am now of the opinion that he would be bad news.  He wouldn’t be a fiscal conservative at all because he would be too busy sending troops and war planes all over the world.

Tim Scott

Tim Scott is also a war hawk.  Unfortunately for him, he is also a bore.  He speaks, and people fall asleep.  I’m not sure if he is in this race because he wants the VP slot, or if he actually thinks another voice for the American empire can win in this crowded field.  If Trump picks Scott as his running mate, I will definitely not vote for Trump.

Chris Christie

Chris Christie just falls flat on nearly everything.  It’s almost surprising that he was able to qualify for this debate.

Nikki Haley

Nikki Haley is the most evil of the candidates.  Her lust for blood comes out in virtually every issue and every response to a question.  It is actually possible that someone could be worse than Biden, and she is that possibility.

Vivek Ramaswamy

Vivek Ramaswamy wasn’t great, but he was far less bad than all of the other candidates on stage.  The so-called moderators showed their bias with him.  They were quick to shut him down whenever he challenged anyone.  Perhaps they didn’t like it near the beginning of the debate when Vivek said that NBC shared blame in promoting false stories such as the Russian collusion hoax.

(The shills at NBC assured us after the debate that it was a strong night for Nikki Haley and Ron DeSantis and had everything negative to say about Vivek.)

Vivek had what was likely a rehearsed line that was funny, but I’m not sure if it landed.  He referred to two people on the stage wearing three-inch heals.  Nikki Haley shot back at that, even though it was a far bigger shot at DeSantis.  This was based on a story last week that talked about DeSantis wearing high-heeled boots in order to appear taller.

Vivek also had to show his Israeli credentials, but he was definitely the least bad.  He called out the neoconservatives, even though, at times, he is borderline one himself.  I think Vivek reads the mood of the electorate better than the others, so he at least knows he has to sell a message of America first.

Summary

Once again, Donald Trump was the winner of the debate.  He made the right decision to not participate in these clown shows.  The only person Trump should consider as a running mate from the presidential race is Vivek.

Trump’s biggest flaw from his presidency is putting people in his administration who hate his guts.  If he puts any one of these candidates, besides Vivek, on the ticket, it will tell me right away that Trump learned nothing from his first term.

Trump will say some things about being friends with Israel and supporting their revenge against Hamas.  But I do think Trump will also make it clear that his number one priority is America.  It isn’t Israel.  It isn’t Ukraine.

The candidates on the debate stage all could have been wearing a “Make Israel Great Again” hat.  Most of the people watching the debate are worried about violence in their own community and the cost of eggs at the grocery store.  They may be sympathetic towards the innocent people in Israel, but they want someone who will represent the American people and their needs.

With the major boom in housing over the last decade, many long-term homeowners find themselves with significant home equity.  For many, it makes up the highest category of their net worth.

If you bought a house 10 years ago in 2013, you might have $200,000 or more in equity with an average house.  If you haven’t taken out any money already through refinancing and you bought the house with a significant down payment (say, 20%), then you may even have more than this in equity.

It would be realistic to have bought a house for $200,000 ten years ago with $40,000 down.  Now that house is worth over $400,000.  With the paydown of principal on the mortgage, you might have $300,000 in equity.

Some people see this as a waste because of opportunity costs.  The problem is: Compared to what?

Maybe there was arbitrage opportunity when mortgage rates were 3%, although it is still a significant risk.  Mortgage rates are now 7 to 8 percent.  In order to put this money to “work”, you would have to take out a loan for almost 8 percent.

You could also take a loan from your credit card company and invest the money in the stock market (or Bitcoin, or whatever).  You could make a return higher than the interest paid to your credit card company.  But you could also lose a lot of money.

Home Equity is Not Wasteful

Your home equity is not just money sitting there.  It is money that you are not borrowing to have an asset that you hopefully want to own.  With your home equity, it is money that is there to keep you from paying interest to a bank or some other financial institution.

It is easier to see that this money is working for you when you pay off your mortgage.  Your principal and interest will go to zero.  You will still have to pay insurance and property taxes if that is part of your monthly mortgage payment.

Let’s say that principal and interest is $1,000 per month.  When your mortgage is paid off, you will increase your monthly cash flow by $1,000.

If you never fully pay off your home loan because you sell the house, then you will get access to that money at that time, unless you opt to use it towards another house.

Your home equity is not a waste because it is “just sitting there”.  It is helping to reduce your monthly expenses now and in the future.

The Bubble Economy

There is more talk of these kinds of schemes in a bubble economy.  Of course, it is more possible in a bubble economy because more people tend to have significant home equity.

But even in rough times, there are people with significant home equity.  But it doesn’t cross their mind to take out a loan to invest the money because they see that most things have a negative return at that time.

When stocks and real estate are going higher, that’s when people become clever and think about taking out equity to invest.  Perhaps it’s better than using equity to take a vacation, but it is better to not tap into that equity unless you have some kind of very special opportunity cost.

If you are borrowing money to own the business of your dreams, then maybe you will have a case for taking on the risk.  But if you are taking out an additional loan to buy penny stocks, or even index funds, then you are probably going to get burned.

The bubble economy gets people to make irrational decisions because they think the good times are going to last.  They don’t think a prolonged bear market is going to happen.

When the bubble economy bursts, you don’t want to be in debt.  Any debt you do have, you want it to be at a relatively low interest rate, and you want it to be affordable compared to your monthly income and your other expenses.

It is never a good idea to borrow money out of your home equity, but it is especially bad to do in a bubble economy with higher interest rates.

The Federal Open Market Committee (FOMC) met this week and released its latest monetary policy statement.  The Federal Reserve’s target range for the federal funds rate will stay between 5.25% and 5.5%.  This is the second meeting in a row where the FOMC did not change its target rate.

While the Fed is hoping this is a Goldilocks scenario (not too hot, not too cold), this isn’t the case.  On the one hand, the Fed fears losing control of the dollar through higher price inflation.  This could ultimately also mean a loss of control over interest rates.

On the other hand, the Fed fears a major financial crisis.  The Fed doesn’t want a recession, but the people at the central bank probably wouldn’t mind an ordinary recession as long as the major banks stay solvent and the bond market doesn’t blow up.

If the Fed had hiked rates more, this would have been more tightening in the face of an inverted yield curve.  If the Fed had lowered rates – which nobody expected to happen – this would have risked much higher price inflation and a bigger blowup of asset markets.

Therefore, the Fed just kept things the same.  It will let the economy come to the Fed instead of bringing the Fed to the economy.  In other words, the Fed will just react to economic news.  It is always reacting to what is in the rearview mirror.

The Inevitable Recession

I think Fed officials understand that a recession is coming.  Even those in the financial media are talking about the possibility, and they almost never predict a recession.  But if you want to be a contrarian, don’t think that there won’t be a recession just because the financial media is talking about a recession.  The contrarian take is that the recession will be far worse than what they are talking about.

The yield curve has been mostly inverted for all of 2023.  It has recently started to somewhat flatten, although the long yields are still less than the short yields.  It just isn’t as much.  But the recession doesn’t typically happen until after the yield curve normalizes after being inverted.

I don’t think most people understand the potential of how bad this could be.  The government is spending over $6 trillion per year with massive annual deficits well over a trillion dollars.  This will continue to get worse with higher interest rates on the debt that is rolled over.  It will continue to get worse as the Fed is paying higher interest rates to banks for their reserves.

The stock market is still a massive bubble.  Housing prices are still astronomical, with mortgage rates near 8%.  This whole thing has the potential to blow wide open.  Throw in some insolvent banks due to the higher rates, and we could be looking at a financial crisis that is even worse than 2008.

Protect Wealth First

I am still an advocate of the permanent portfolio, or something similar.  If we hit a bad recession, rates may fall back to near zero and bonds may actually do well.

If the Fed is essentially forced to go back to easy money to save the banking system, then gold may finally skyrocket with more money creation.  There is always the possibility too that stocks may do well again in such an environment.

Of course, it is also important to have some cash or cash equivalents on the sidelines, as sometimes that is the only thing that holds up in the short run in a recession.  Plus, right now, you can actually earn a decent rate of return on short-term Treasury bills and cds.

If we do get a deep recession and the major asset bubbles pop, it will actually be an opportunity for some people with cash on the sidelines.  It will be an opportunity to buy assets at a steep discount when everyone else is fearful.  This is always easier said than done, but it is good to know going into it.

Warren Buffett said to be fearful when others are greedy and to be greedy only when others are fearful.  On this, I believe Buffett was correct.  But you have to believe this and think about this before the fear hits.

The U.S. federal government spent about $6.1 trillion in fiscal year 2023.  There are about 340 million people in the United States.  There are about 131 million households.

That means that each household, on average, paid about $46,500 towards federal spending just in the last year.  This doesn’t include state and local government spending, which accounts for most of the spending when it comes to roads, police, firefighters, and schools.  Even though these don’t have to be funded by any government, these are things that actually matter to people.

Are you and your family getting $46,500 per year in benefits out of the federal government?

Sure, some of this money does go back into our pockets.  For some people, it might be directly, such as with Social Security.  For others, maybe they consider the small amount the federal government “contributes” to the government schools as important.

Harry Browne liked to ask the question: Would you be willing to give up your favorite government programs in exchange for never having to pay income taxes again?

We are in a situation now where the majority of the money spent by the federal government isn’t even coming from income taxes.  There are payroll taxes, which are really just a different bucket of income taxes.  There are corporate taxes.  There are capital gains taxes.  There are many different types of excise taxes.

Worst of all is the debt/ inflation tax.  The government “only” collected about $4.4 trillion in “revenue” in the fiscal year.  So, nearly $1.7 trillion was just borrowed.  But this isn’t free money.  This money has to come from somewhere.  It is $1.7 trillion that is drained from the private sector and spent by the government.

Would You Give Up Your Favorite Government Program?

I’d like to rephrase Harry Browne’s original question.  Are you getting $46,000 in benefits for you and your family from Washington DC?  Would you be willing to give up your favorite government programs for that amount?  Would you be willing to give them up for just half that amount?

Some people will scream national security.  Some people will scream about Social Security and healthcare.  If the government just spent half as much, say $3 trillion, that would still get you a lot of Medicare, Social Security, and defense.  But you wouldn’t be able to fund Ukraine and run an empire overseas.  You wouldn’t be able to have millions of bureaucrats like Dr. Fauci doing virus research and climate change research and handing out electric vehicle credits.

We could scale back the so-called entitlement programs and just have an actual defensive military.  If that cost $3 trillion, then you could at least save about $23,000 for you and your family every year.

Status Quo Bias

This is a situation where people adjust their thinking and behavior to the new status quo.  The federal budget just goes up nearly every year from the previous year.  We think it is just normal for the government to have its hand in everything.

If you compare 2023 America to the America before 1913 and the income tax and Federal Reserve, the difference is stark.  While the U.S. government had its overseas interventions then, it wasn’t running an empire overseas.  It wasn’t involved in a massive welfare state at home.  Most taxes were paid at a local level, and the overall burden of taxation was a fraction of what it is now.

If the U.S. budget were cut in half overnight, there would be a period of adjustment, especially for those who are so dependent on federal spending.  But after the initial shock, we would see a prosperity that is unimaginable.

Imagine

Somehow, we still see increases in production and great increases in technology in spite of massive government taxation and interference.  Imagine what would be if the federal government were drastically scaled back.  People would be wealthy beyond their wildest dreams in a relatively short amount of time.

Just imagine if you had an extra $20,000 (tax free) in your pocket this year.  Would you pay down some debt?  Would you donate to charity?  Would you save it for a nice vacation?  Would you help fund your retirement account?  Would you upgrade your house?  Maybe it would be a combination of several of these things.

Now imagine that you have that extra $20,000 every single year after this.  Just think of the possibilities.

The American people are getting the short end of the stick from their government.  If the American people free themselves from the chains of Washington DC, they would be far wealthier than they could imagine.

Aside from the prospects of a new world war, there has been much political drama lately.  Even though we are getting close to primary season for the next presidential election, the drama recently has been in the House of Representatives.

When then Speaker of the House, Kevin McCarthy, cut a deal for the budget, Matt Gaetz and a handful of other representatives rebelled and forced McCarthy out of his position.  We went several weeks without a Speaker of the House, yet the American people somehow survived.

Thomas Massie, the most libertarian member of Congress, did not vote to remove McCarthy as speaker, questioning whether it was really worth it.  He also worried that things could actually be worse with someone different, which is always a reality in politics.

Still, while I have much respect for Massie, I disagreed with his take on this issue at the time.  The system is already so broken and corrupt that we shouldn’t worry too much about disturbing it.  McCarthy was, and still is, an establishment guy.  The only reason he ever did anything that seemed to oppose the establishment was because of pressure from people like Gaetz.  There is also much pressure from the Republican electorate, in general, outside of Washington DC.

After going through many candidates and votes, the Republicans in DC have finally settled on Mike Johnson.  It is someone that I was not familiar with, and most people outside of Congress and his district probably didn’t know much about him, if they had even heard of him.

Speaker Mike Johnson

From the little I have learned about Mike Johnson in the last couple of days, he is evidently a conservative.  From a libertarian standpoint, this can be both good and bad.  Johnson’s home district is in Louisiana, and he is quite religious.

I have no problem with Johnson being a devout Christian who wears his religion on his sleeve.  The problem is that most politicians who do this end up being a disaster.  Ron Paul is a Christian, but he never wore his religion on his sleeve.  It is deeply personal to him, but he generally didn’t bring it into his political statements.

The other major issue as it relates to religion is that, unfortunately, most politicians who claim to be deeply Christian are the biggest warmongers in existence.  The politicians who constantly express their Christianity have no issue with the mass bombing of innocent civilians, as long as the “good guys” are doing it in the name of self-defense and democracy.

So it is no surprise that one of Johnson’s first acts as speaker was to support the U.S. government’s involvement in supporting the state of Israel.  In Washington speak, supporting Israel doesn’t mean praying for the Israelis or just issuing statements in moral support.  It means providing money and weapons to the Israeli government.  It means justifying the mass bombing of Palestinians.  It could even possibly mean American troops in the region.

Of course, Johnson’s support for Israel (meaning the bombing campaign by the Israeli government) is supported by most members of Congress.  Thomas Massie is the only one questioning U.S. involvement from a libertarian perspective.

The Good News

There are positive aspects about Mike Johnson taking the position that is second in line for the presidency behind the illustrious Kamala Harris.

When Johnson isn’t helping to send money to fight overseas wars, he is somewhat of a fiscal conservative, at least compared to other politicians in DC.  He initially supported funding for Ukraine, but then voted against every subsequent round of funding.

Johnson supported not certifying the presidential election in 2020.  You might see that as good or bad, but it is significant in the sense that he isn’t just going along with the deep state.  He isn’t going to help the establishment by spreading phony stories about Russian interference.

Maybe every move Johnson makes is for political reasons, but that is actually good news.  Even if he isn’t genuine in his rhetoric, he feels the need to say the things he says because of public opinion, or at least public opinion within the Republican Party and his home district.

Public Opinion – Making a Difference

Some libertarians just blow off all news out of Washington DC saying that all of the politicians are the same.  In this case, there are some people who say that having a new speaker means nothing and it is just politics.

And they may be right in the sense that Mike Johnson is probably just another politician who cares more about his own power than he does about the American people.

But we shouldn’t confuse this with a lack of progress and assume that nothing is changing.  Some libertarians, including myself, say that you can’t gain long-term liberty by electing the “right people”.  It requires changing the hearts and minds of the American people.

But if Mike Johnson changed his position on funding Ukraine to satisfy public opinion, then that means we are making progress.  Even if Johnson is lying about every position he takes, we should celebrate when he takes the pro liberty position on an issue.  It means that public opinion has shifted towards greater liberty and is having an impact.

In conclusion, even though Mike Johnson is probably not much better than Kevin McCarthy or any other previous speaker, he is at least more rhetorically on the side of liberty with many issues compared to previous people.  It means that public opinion does matter.

And if Johnson ends up being really terrible, especially on budget issues, there is no preventing Matt Gaetz and others in Congress from removing him as speaker.  This pressure alone should make a difference and provide us some hope that greater liberty in the future is possible.