There was an article linked by Drudge Report saying that each taxpayer in the United States now “owes” $1.1 million to fund the federal debt.  The article includes the national debt of $17 trillion, plus the unfunded liabilities, which was put at $126 trillion.  As the article explains, the majority of the unfunded liabilities consists of Medicare ($87.6 trillion) and Social Security ($16.6 trillion).

While the article is slanted in particular against Obama and the Democrats, it is pointed out that the Medicare prescription drug legislation that was passed in 2003, and signed by Bush, adds $22 trillion to the unfunded liabilities.

The scary thing about this article is that the estimate for the unfunded liabilities might be really low.  If you take Laurence Kotlikoff’s numbers, he puts the unfunded liabilities at $222 trillion as of last year.  In other words, it could be that each taxpayer has a supposed liability in the neighborhood of $2 million.

I am not sure how exactly the article defines a “U.S. taxpayer”, but it gets its point across.  Even on a per person basis, which would include children and retirees, the amount per person would still be hundreds of thousands of dollars.  And, of course, U.S. taxpayers are considered because children won’t be paying taxes (yet).

So how is each working person going to come up with a million dollars or more to pay for his share?  The answer is that he won’t.  It is not statistically possible to pay for all of the unfunded liabilities.  Even if it were possible, there is no way the electorate would put up with it.

So what does all of this mean?  It means that the U.S. government is going to default.  It can significantly raise the retirement age to collect Medicare and Social Security.  It can reduce the cost-of-living increases well below the actual price inflation rate.  It can use means testing to eliminate payments to those with more wealth.  Most likely, a combination of all of these things will happen.

As the article rightly points out, Obama and the other politicians can talk all they want about reducing reimbursement rates for Medicare.  But this almost never comes to fruition.  And as the article says, the chief actuary thinks most doctors won’t see Medicare patients if there are major cuts.

I don’t know if the government will officially repudiate its debt or just pay it back with money that has depreciated.  But it is almost a certainty that there will be major changes in Social Security and Medicare.  They are simply unsustainable as they stand now.

If you are 55 or younger, don’t plan to retire before the age of 70, unless you are going to do it without any government “help”.  In fact, you can almost plan that you will have to be at least 75 for any government retirement “benefits”, if you ever see any at all.

It is tougher to predict for those who are currently in their upper 50’s and early 60’s.  It will just depend on how fast things break down.

I expect that future elections will be more young vs. old than Republican vs. Democrat.  While older people are more organized in their voting, I think younger people will hit a breaking point.  Young people who are working long hours and struggling to put food on the table for themselves and their family are not going to be willing to pay more in taxes so that his retired neighbors can play golf and take big vacations in Europe.

So while it is interesting to note the huge liability of each U.S. taxpayer, the taxpayers will shed off these liabilities at the voting booth, at least at some point.  If you are old, don’t depend on Medicare and Social Security too much.  If you are young, don’t depend on them at all.

One thing I keep saying about Obamacare is that the Republicans will not defeat it.  Instead, Obamacare itself will defeat Obamacare.  It was a complete disaster from the start and even most critics underestimated just how much of a disaster it would be.

Obamacare’s signature part is requiring that nearly everyone buy health insurance (although it really isn’t health insurance anymore) or else pay a penalty (tax).  We forget about the many taxes that we got with Obamacare such as the additional income tax on high income earners.  We forget about the tax against sun tanning salons.  We forget that you can no longer use HSA money to buy over-the-counter drugs with pre-tax money.  These are just a few of things.

One interesting thing about Obamacare is that it doesn’t provide any significant savings elsewhere.  It is not as if we got Obamacare to replace Medicaid.  The Medicaid program will still go on and probably expand.

If everyone is going to have health insurance, then why is Medicaid still necessary?  I guess it is because some people will still not have insurance and even those that do will not be able to afford the high deductibles.

Obamacare has gotten off to an even rockier start than I could have imagined.  The government, with its huge extractions of money, still cannot get a functioning website.  This is really incredible.  We know that the government is incompetent, but usually something like this can be made functional by outsourcing it to a private business.

In this case, the Obamacare website is truly symbolic of the bureaucracy that is government.  It is also symbolic of the corruption that comes with power and money, as we find out that one of the executives of the company that received the no-bid contract to build the website is a former Princeton classmate of Michelle Obama.  There always seem to be coincidences at the top levels.

Now we are getting reports of the millions of people who are being dropped from their insurance plans.  Obamacare has a list of mandatory things that insurance must cover (which again, means it isn’t insurance at all).  Because of this, many insurance plans that did not previously cover these mandatory things are going away.  This has been another feature of Obamacare that is symbolic.  Politicians lie.  Obama promised that anybody who was happy with their current insurance and wanted to keep it would not be affected.

And now we are just getting to the big thing with Obamacare.  That is the price.  For a middle class family that receives little or nothing in the way of subsidies, the premiums will be quite high.  I don’t know how some families will afford a monthly premium that will be something in the range of a car payment.  The average American family is already struggling to pay the bills because of the huge government spending and massive monetary inflation we have seen.  This is just one more burden.  Perhaps we could say it is another straw on the camel’s back.

But wait until some of these people actually have to go to the doctor or hospital for medical care.  Many of the less expensive insurance plans are for high deductible plans.  A family may have to spend a few thousand dollars before the insurance actually kicks in.  Do you think most American families have a few extra thousand dollars laying around?

Obamacare, at this point, is much like the housing bubble that we went through.  It is simply unsustainable.  Just as there was no way that millions of families could afford the huge mortgage payments during the housing bubble, there is no way that millions of American families can afford to pay the huge premiums and medical costs associated with Obamacare.

In conclusion, Obamacare is unsustainable and will not last for long.  Something will change.  It might be nationalized medical care.  It might be a turn towards more of a free market.  But Obamacare will not last.

It is being reported that Rand Paul, a senator from Kentucky, is threatening to put a hold on the nomination of Janet Yellen as the next Federal Reserve chair.  Paul wants a vote on his Fed transparency bill that would include a provision to audit the Fed.

In order for Paul to be successful in putting a hold on Yellen’s nomination, he would need 40 other senators to join him.  For this reason, I fully expect Yellen to be confirmed.  The only success Rand Paul will see from this is a bit of publicity.

As with many things Rand Paul does, this is a mixed bag for libertarians.  Unfortunately, his stand isn’t really out of principle.  As with so many things Rand Paul does, it seems to be for political leverage.  While I think he is the best of the 100 senators (not saying much), he is also not much like his father.

If Rand Paul thinks that Janet Yellen will be a bad Fed chair, then he should oppose her nomination on those grounds.  What is his point of holding up her nomination so that he can get a vote on his bill?  It is not as if Yellen is specifically known as being against a Fed audit.  Of course, she is against an audit of the Fed, but so is Bernanke and almost everyone else in the American establishment.  The only reason some politicians have supported a Fed audit is because it was politically popular and because they knew it had no chance of getting passed.

I am glad that Rand Paul is not letting Yellen go through without an ounce of opposition, but I don’t think he should tie it to his Fed transparency bill.  He should oppose Yellen because she is a hyper-Keynesian who wants to further destroy our economy by having the government spend more and the Fed create more digital money.

Of course, if Ron Paul were in his son’s shoes, he would certainly oppose and vote against Yellen as Fed chair.  But Ron Paul would also point out that it probably doesn’t make much of a difference because it will just be another status quo candidate either way.  He would point out that the whole institution of the Fed is our problem, not just the person in charge of it.

At least Rand Paul’s little stunt here will make things mildly interesting.  I suppose we can be optimistic in that it is one more thing we can use to point fingers at the Fed and all of the damage it is doing to the economy.

I read, or at least browse, many libertarian pieces, almost on a daily basis.  I have found that many libertarians like to cite John Williams of shadowstats.com when looking at various figures such as price inflation and unemployment.

It is natural for libertarians to distrust government statistics.  I have my own concerns about certain government statistics and how accurate they are.  I certainly don’t think it is out of the question that certain statistics may have their formula manipulated over time to favor the government.  I don’t think the government is lying about how they are currently calculating statistics, although I am always open to evidence.  But I do think that the government will make changes in formulas to make things look better than they really are.

Since many libertarians want to shun government statistics, they look for alternatives.  I see several libertarians, or those who lean libertarian, who like to cite John Williams.  Williams is currently showing that unemployment is well over 20% in the U.S.  He is showing that GDP is negative.  He is showing that consumer price inflation is near 10% using a similar methodology used prior to 1980.

My main point of this post is to caution others in using his statistics.  Just as the government has an agenda, Williams also has an agenda.  I tend to agree with William’s agenda more than the governments, but it is an agenda nonetheless.  I’m sure Williams is on our side in the fight for liberty and there are some things I agree with him on.  But his statistics are not one of them.

Just as the government is understating the CPI and unemployment, my opinion is that Williams is overstating these things.  For him to put unemployment at over 22% is kind of crazy.

Also, if you do use William’s statistics, you should explain to your audience the criteria you are using.  It would be misleading to say that unemployment is 22% without explaining that this number includes part-time workers.  I think there is a big difference between someone working 30 hours per week and someone working zero hours per week.

Another thing I don’t like about William’s statistics is that he doesn’t do a good job of explaining how he comes up with some of his figures.  In this sense, the government data is actually more open.  I would like to see a good detailed explanation on how he comes up with his numbers, particularly the CPI.

Here is my suggestion when it comes to using statistics such as the CPI.  I would use the government statistics.  As long as they don’t announce a change in the formula, it is staying fairly consistent from month to month.  So while the formula may be understating consumer price inflation, we can still use the trends from the data.  If the CPI was at 2% last month and is reported at 2.5% this month, then we can see a trend that consumer prices are starting to increase at a greater rate.  And while one month doesn’t make a trend, this can be useful data when looking at it over the course of several months or years.

In conclusion, I have nothing personal against John Williams and he is free to publish his own statistics all he wants.  But I would strongly caution libertarians to be careful in using his data.  I would be really careful if you are using the data to make money and investment decisions.

I was reminded of something today that most Americans don’t think about on a regular basis.  They may not even realize the extent of their situation.  Americans are rich compared to the rest of world, on average.

The gap has certainly narrowed, particularly in the last few decades.  There are some small countries such as Hong Kong and Singapore that have a richer population on a per capita basis.  There are several countries such as New Zealand, Australia, Canada, England, and Japan that have comparable wealth to Americans, although still not as much on average.  China and India have come a long way in the last 30 or so years.  China has come further than India.  But both countries still have an overall population that is really poor by American standards.

What percentage of the world’s population has $1,000 to spend (in terms of purchasing power of the U.S. dollar)?  Some Americans don’t even have $1,000 to their name, although most could probably come up with $1,000 if they had to.  But the majority of the world’s population does not have $1,000 at their disposal.  Someone in a third-world country could be offered the opportunity of a lifetime in another part of the world, but if the package didn’t include airfare, they wouldn’t be able to take advantage of it.

I believe there are going to be some really rough times ahead for Americans.  It will be rougher than the last 5 years.  It is almost inevitable at this point, barring some technological miracle.  There are hundreds of trillions of dollars of unfunded liabilities.  There is massive government debt.  There has been huge monetary inflation by the Fed, causing major malinvestment that has to be shaken out.

But while I think tough times ahead are inevitable, things are not hopeless.  Beyond the deterioration of the empire and welfare state, there is a lot to look forward to.  I don’t know if this will be in 5 years, 10 years, 20 years, or more.

When things come crashing down, American wealth will still exist.  All of the houses, roads, cars, computers, furniture, skyscrapers, etc. will still exist.  Technology will still exist and continue to get better.  Production techniques will not go away and will probably keep getting better.  We won’t be going back to growing our own food, unless you choose to do so for personal reasons.  We won’t be going back to the horse and buggy.

I think this is important to remember.  For libertarians who have a good understanding of the economy, it is easy to get depressed knowing how bad things may be and knowing how much better things could be.  But as libertarians, we should also realize the incredible power of free thinking individuals.  We should realize the massive division of labor that we have today and the incredible technology we have to share information.

In conclusion, I think there is reason to be pessimistic in the short term.  But in the long run, we will likely see brighter times.  Americans are still really wealthy in comparison to most of the rest of the world and in comparison to almost everyone in history.  If we go backwards, I don’t think it will be for long.

I am a strong proponent of putting a good portion of your investments in a permanent portfolio setup, as described by Harry Browne in the book Fail-Safe Investing.  You can also use the mutual fund PRPFX as a substitute.

What if you are new to this concept and you want to put a sizable portion of your money into a permanent portfolio setup?  Should you just put all of your money in at once, or should you use dollar cost averaging?

Dollar cost averaging is simply contributing a set amount of money in given intervals for an investment at specific times.  This avoids trying to time the market.  So instead of buying a stock market mutual fund all at once, you may decide to contribute $200 per month to buy it.  This way you won’t be hurt too much if you happen to buy at a high price.

I don’t mind the strategy of dollar cost averaging, but I think the rules change a bit when talking about the permanent portfolio.  If you have $40,000 sitting in the bank and want to invest it in the permanent portfolio, then I don’t think you need to use dollar cost averaging.  The fund itself is set up so that there aren’t dramatic swings.

A problem with dollar cost averaging when you already have a sizable portion of money is that you are defeating the purpose of the strategy of the permanent portfolio.  If you have $40,000 and you start buying $500 of PRPFX every month, then you are leaving the rest of your money exposed.  If there is a big boom in the stock market or if gold goes up due to inflation fears, then you will have missed out on those gains.  You will also lose purchasing power with the large amount of liquid savings.

If you have a sizable portion of money, you are better off putting most of it into the permanent portfolio as soon as possible, without trying to time the market or use dollar cost averaging.

If you don’t have much money but you want to start investing, then you could certainly use dollar cost averaging to contribute to something like PRPFX.  One of the advantages of dollar cost averaging, for anything, is that it disciplines you to save.  You can have your money automatically taken out of your checking account each month.

If you don’t have much money and want to invest in the permanent portfolio without using the mutual fund, this will be a little more difficult.  If you want to contribute $200 per month, it isn’t going to make any sense to buy $50 worth of gold, $50 worth of stocks, and $50 worth of bonds each month.  In fact, you will probably find it impossible to do so.  You may have to extend your time horizon and buy when you accumulate enough money that it makes sense.

In conclusion, I like the concept of dollar cost averaging.  But if you are investing in the permanent portfolio and you have a sizable amount of money, then don’t use dollar cost averaging for that purpose.

I think it is important to take a step back and look at the big picture sometimes.  We get bogged down in debates over the debt ceiling, government shutdowns, Obamacare, etc.  But for this post, I just want to spell out the big picture of government spending and what it costs the average American.  I will use nice round numbers to make it easy to understand.

For budget year 2013, the U.S. federal government is expected to spend approximately $3.8 trillion.  Again, I am just dealing in round numbers.  Let’s put the population of the U.S. at about 320 million people, although this number is probably high by a few million.

Now let’s say we drastically cut all federal spending so that the total budget is $600 billion.  This is still a significant sum of money, although nothing close to the $3.8 trillion in current spending.  That means that there is $3.2 trillion left over in a country of 320 million people.  That equals $10,000 for every single person in the U.S.

My guess is that most Americans would be willing to give up all of their favorite government programs if they could receive a check for $10,000 every year.  Of course, it would be a redistribution of wealth due to some paying far more and others paying far less.  But it is a redistribution that most would probably prefer over the current system where much of the money seems to go to rich bankers or down a drain in waste, or worse.

I know that some seniors would be against it because of Medicare and Social Security.  But let’s remember that the $10,000 figure is an average for every American.  This includes all children.  And even if it were divided up with children included, two married seniors would be getting $20,000 per year, and I would expect medical costs to go way down.

This means a family of four would receive $40,000 per year.  What would you do with $40,000 per year, even without your favorite government programs?

And let’s not forget that this still includes a budget of $600 billion for the federal government.  This would more than cover defense and other constitutional functions.  You could probably even have enough to make some small additional payments for those seniors who would no longer have Medicare.

It is also important to remember that I haven’t even brought up state and local spending.  Most spending for government schools and roads come from state and local spending.  The federal government only makes up a small portion on this spending.  Perhaps part of that $600 billion could still go towards road and bridge building and repair, although there is no reason it can’t be left to the states.

This is in no way a proposal on my part.  I think it would still be morally wrong to redistribute wealth in such a fashion.  It would be better if everyone were able to simply keep what they earn, while donating what they want to donate.  But this illustrates a point of just how much we are getting ripped off.

Imagine today’s situation with the government spending $3.8 trillion.  But instead, $3.2 trillion of that would be direct payments to U.S. residents.  Imagine what a family of four could do with $40,000 extra per year.  I’m sure they could easily get by without food stamps, disaster relief, foreign aid to dictators, and empire building overseas.  I’m sure their $40,000 would carry them a lot further than it does today, as allocated by the government.

Are you getting $10,000 per year worth of government (at the federal level only)?  If you are married with 2 children, are you getting $40,000 worth of services per year from your friends in Washington DC?

On October 16, 2013, Congress passed legislation that ended the partial government shutdown and raised the debt ceiling, at least for now.  While the votes on the Democratic side were unanimous in favor of bigger government and more debt, there was more of a split on the Republican side.

In the House, the vote was 285-144.  All 144 votes against the legislation were Republicans.  On the Senate side, the total vote was 81-18, with all 18 votes coming from Republicans.

Breaking it down just in the Republican Party, in the House there were 87 votes in favor and 144 votes against.  It was the so-called moderates in the House who allowed the legislation to pass.

In the Senate, 27 Republicans voted in favor and 18 against.  So, in the Senate, there was a higher number of Republicans who voted to raise the debt ceiling and end the government shutdown.

In other words, the House tends to be more reliable than the Senate in preserving liberty.  Or I suppose it would be more accurate to say that the House is less bad than the Senate.

This shows a real split in the country.  I think the politicians are somewhat reflective of their constituents, at least in terms of what people are willing to put up with.  I don’t think there are 144 principled members of the House or 18 principled members of the Senate.  Many of these same people voted to raise the debt ceiling and voted for big budgets when there was a Republican president.  For the newer members, I’m sure some of them would have voted for the legislation if we had a President Romney right now.

The good news is that the tide has shifted a little.  Some of these politicians, who are considered part of the Tea Party, really are conservative, economically speaking, in comparison to what we have seen in the past.  Most of them are not libertarian by any stretch of the imagination, but they do realize that many people are demanding less government and lower spending, and their rhetoric and actions are reflecting that sentiment.

I don’t think the Republican Party is going to break up.  I don’t think it is done winning elections.  I also don’t think we will see any significant legislation pass in the near future that is a great benefit to liberty. I think there will continue to be a struggle between the two factions within the party.

The interesting test will come in 2016.  I guess it will start in 2015 with the heavy campaigning for the primaries.  I have no idea at this point who will be the Republican nominee for president.  On the Democratic side, you can guess a few names such as Hillary and Joe Biden.  Regardless, you know that the Democratic nominee will be a reflection of the status quo.

The Republican side will be far more interesting.  It will be a fight between the Tea Party and the establishment.  On the Tea Party side, there is Rand Paul, Marco Rubio, and Ted Cruz.  On the establishment side, there could be any number of potential candidates.  I suppose there could be someone that is kind of in between, such as Rick Perry.

I am not saying that we should hold out great hope for a so-called Tea Party candidate.  Rand Paul is the least bad of all of them and I have my criticisms of him.  But the good news is that this is even a possibility.  It’s been a long time since Reagan, who placated conservatives.  It has been an even longer time since Barry Goldwater.

Again, I won’t have any high expectations of the Republican nominee, even if it is a Tea Party person.  But I think it is a reflection of the stronger pro-liberty views that we have today.  For that, we should be optimistic.

What does eating have to do with libertarianism?  It doesn’t seem it should have much to do with it, just as investing shouldn’t have much to do with libertarianism.  But unfortunately, we live in a world where the state is nearly fully entrenched in our lives, and food and diet is one of those things.

Unless politicians and bureaucrats are stating something that seems undeniably true, then you can probably safely bet that whatever it is they are saying is false.  But there may even be some things that you think are undeniably true that really aren’t, only because of the perpetual brainwashing.

Health and diet are good examples of where you shouldn’t believe what politicians say, along with those who are doing their bidding.  There might be some obvious truths where they can’t get away with lying.  If someone says that eating broccoli is good for you, then that is an obvious truth.  If someone says that eating a plate full of chocolate brownies is bad for you, then that is an obvious truth.  If a politician thought he could tell you that eating brownies is good for you and that most people would believe it, then he would probably say it.

It is hard to know where to even start when it comes to health and diet myths.  There are so many things that have been ingrained in us for decades.  There is all of this hype of cholesterol, which is based on faulty and incomplete studies from a long time ago.  Instead of believing the hype, read some alternative viewpoints, such as The Great Cholesterol Myth.

The government, along with most of their trained doctors, will tell you to severely limit your saturated fat.  But the problem is that they are completely wrong.  Saturated fat is really good for humans.  You should be eating things like avocados, eggs, butter, and coconut oil.  They are good for you.

It drives me nuts to see so many people order egg whites.  The yolk is the most nutritious part of the egg and people are trying to avoid it.  In addition, the whole egg tastes a lot better in my opinion.

The whole food pyramid that has been pushed on us is mostly backwards.  Perhaps a few parts are correct, such as eating vegetables.

And then don’t get me started on high fructose corn syrup (HFCS).  It is better to eat sugar.  But many food products substitute sugar with HFCS.  And why?  Because the government subsidizes the corn industry and puts massive protective tariffs on imported sugar.  So the government makes as poorer and less healthy, all at the same time.

In terms of obesity, it is actually frustrating for me just to watch other people.  Some think that the only way they can lose weight is by hours and hours of exercising or basically starving themselves.  I can attest to the fact that it is mostly about diet.  But when I say “diet”, I don’t mean starving yourself and I don’t mean a temporary thing.  It should be a lifestyle change on eating better.

For the last year and a half, I have eaten a mostly paleo diet, which limits carbohydrates, grains, and sugars.  I eat meat, vegetables, eggs, nuts, and a little bit of fruit.  I do “cheat” on my diet, but it isn’t a lot.  I started it for health reasons, but I lost some weight, even though I wasn’t that heavy to begin with.  I eat more now than I did in the past, but it is hard for me to put on weight.  I think the only way I could put on a lot of weight is by going back to a regular diet of high carb foods.  But eating fat – the right kind of fat – doesn’t make you fat.  If you eat saturated fat, it will make you skinny.

These are just a few observations.  Almost everything the government tells you is wrong.  Unfortunately, most doctors are on board with the conventional “wisdom” and will not stray far from the establishment.  They are trained to prescribe pills and do surgeries.  They are not trained to take a whole body approach.

I am not completely against doctors and western medicine, as I think there are some good reasons to go to a doctor and I acknowledge that some of the new technology is great for saving lives.  But in general, if you have health issues, you should look at your diet and lifestyle and do your own research and probably avoid doctors as much as possible.  Just make sure to use your common sense.  And most of all, do not listen to those in government.  You would be better off doing the opposite of what they say.

In conclusion, you can eat cupcakes and still be a libertarian.  As long as you don’t advocate for the initiation of force for political or social change, then you can eat as many cupcakes as you want and keep your libertarian credentials.  But I think we are starting to see a little bit of a correlation between those who believe in liberty and those who take care of their bodies.  Just as there are probably a higher percentage of libertarians who own gold, there are probably a higher percentage of libertarians who eat a diet of natural, unprocessed foods.  It is because libertarians tend to be far more skeptical of government and the government is usually lying.

As the government shutdown and debt ceiling debate gets behind us, perhaps we will start to see a better picture of where the economy is going.  Treasuries and bonds have been very steady, except for 30-day treasuries which have seen a higher yield due to fear of a possible short-term default.

The stock market has been bouncing up and down a few weeks at a time.  There is about a 900 point range that the Dow has been in, sometimes dipping below the 15,000 mark.

As the dust settles from Washington DC, investors will start looking at the Fed again.  The next FOMC statement will be released on October 30, 2013.  The question again will be whether or not the Fed starts to taper (scale back on its monetary inflation).

I think if the Fed does taper, it will not be by a huge amount, at least in comparison to what QE looks like now.  The Fed is currently buying assets and increasing the monetary base by $85 billion per month.  Maybe the Fed will cut back to $70 billion or $75 billion per month.  Either way, it will still be unprecedented when compared to anything prior to 2008.

But even with the Fed continuing to inflate by massive amounts, most of this money has still been going into the banks and kept as excess reserves.  It is not being loaned out and not being multiplied through the system.  This holds down consumer price inflation.

Also, the Austrian Business Cycle Theory tells us that an artificial boom can go to bust even with monetary inflation.  The only way to avoid the bust is to continually increase the rate of monetary inflation.  Eventually you would hit hyperinflation and then you would get a bust anyway.  So a bust is inevitable.  It is just a question of how long it will be drawn out and how severe it will be.

At the same time, I have a sense that velocity has been picking up.  I can see it with people around me.  It seems that confidence is a little better and that more people are taking out loans, even as people continue to struggle.  I don’t have any hard statistics to back this up.  It is just a sense I get from the people around me and the things I see and hear on the news.

There continues to be this tug-of-war between an artificial boom and a bust.  If velocity is picking up, meaning people are spending more and money is changing hands faster, then this points to a boom phase.  If the Fed slows down its rate of monetary inflation and the banks continue to pile up excess reserves, then this points to a bust.  We will have to wait and see which one wins out in the short run.

As the news about the government shutdown and debt ceiling gets behind us, we will start to get a better sense of what is happening.  We will also see what the Fed decides to do on October 30, the day before Halloween.  It’s not trick or treat.  It will only be a trick.