The Federal Open Market Committee (FOMC) released its latest monetary policy statement. The Fed hiked its target rate by 25 basis points (0.25%), as was widely expected.

We were reassured from the statement that the U.S. banking system continues to be “sound and resilient”. It will be sound and resilient until it isn’t.

It is bad economic theory when Jerome Powell insinuates that wages need to be forced down in order to control inflation. Falling wages may result from the Fed hiking rates and draining its balance sheet, but that is just a consequence. Making wages fall doesn’t automatically mean we get less inflation.

Of course, wages have been going down in real (inflation-adjusted) terms. They have been rising nominally, but at a slower pace than price inflation. This means that most families are experiencing a decline in living standards.

This is all because of massive government spending, government regulation, and previous monetary inflation. The only reason we are facing price inflation problems now is because the Fed was willing to create massive amounts of money and fund deficits at low rates in previous years.

A Soft Landing?

Powell was asked about a “soft landing” for the economy. Of course, no Fed chairman will ever say that a big recession is imminent. Powell pretends that the experts at the Fed are managing the economy well and hope to get inflation under control without seeing a massive slowdown.

Why should we think that this time is any different? If it is any different at all, it is because it is far worse than other times in the past. The price inflation may not be as bad as the 1970s, but the major asset bubbles are likely worse.

The Fed is continuing to hike rates in the face of a heavily inverted yield curve. And they are leaving the door open for another rate hike later this year if the economy doesn’t completely implode before then.

I know that Powell is something of a Keynesian and believes in centrally planning the economy, but I don’t think he’s completely stupid either. He must understand that a bad recession is likely on the horizon. He just has to pretend like everything is ok.

Maybe the Fed Really is Independent

It is something of a joke that the Fed always claims independence. Fed officials will say they shouldn’t be audited and should have minimal, if any, oversight because it would ruin their independence.

This is just an excuse to maintain power and to maintain the status quo.

With that said, I also don’t buy into the argument that is often made by Fed critics that the Fed is really working for the president or for the Democrats. Maybe they are working for the big banks, but I think it is hard to claim that Jerome Powell is working on behalf of Biden and company.

Maybe the Fed is just part of the establishment, which makes sense in that they want to somewhat maintain the status quo. But the establishment is not always working in complete unison.

The Fed is obviously doing what needs to be done to save the dollar. If they lose control of the dollar, then the whole establishment probably loses.

But with the rate of price inflation coming down, the Fed could at least stop hiking rates at this point. By continuing to tighten its monetary policy in the face of an inverted yield curve, they are risking a recession for the ages, and it would start before the November 2024 election.

Therefore, I think this does away with any theory that the Fed is there to help the president or the Democrats. We have a Democrat president, and Jerome Powell and company seem to have no problem bringing on a recession heading right into the next election.

It will be one more factor that will make presidential politics really interesting in the next year and a half.

At least back in the day, the Democrats would play the class warfare game and pretend to be for the poor and middle class. Their solution – at least in rhetoric – was to tax the rich more. But at least it insinuated that they wanted to help the average American.

Now the Democrats don’t even pretend to be for the little guy. They have been too busy defending big pharmaceutical companies and the military-industrial complex, while collaborating with social media companies to censor information they don’t like.

The Republicans aren’t much better, but at least some of them will occasionally acknowledge the plight of middle class America.

Mike Pence recently said that Ukraine is his number one priority. This was right after Tucker Carlson listed all of the problems at home in the United States. If Pence thinks this is a winning message, let him keep it.

DeSantis was pretty good at standing up for the little guy in Florida after he realized his mistake with the COVID lockdowns. As a presidential candidate, he has been horrific. I don’t really care about Bud Light and its transgender spokesperson. I can choose not to buy Bud Light, just as millions have chosen. I don’t need a president standing up for me regarding stupid decisions by corporations.

Where are the Populist Candidates?

In today’s world, being a libertarian is almost being a populist. Nobody else is standing up for the tens of millions of Americans taking it on the chin, so libertarians might as well do it.

You don’t even have to sell them on radical libertarian reform. You just have to acknowledge their pain, and that will be enough for a good percentage of the population to go to your side.

The only two candidates with somewhat of a populist message are Donald Trump and Robert Kennedy Jr. Sometimes Vivek Ramaswamy has the ability to connect with people, but it still isn’t an adequate acknowledgement of the suffering out there.

Trump and Kennedy touch on it at times, but they could both be better. They are the two best major candidates on the issue of Ukraine. They both want to end the war. They should tie this back to the struggling middle class.

It would be easy to say, “Why should you pay higher prices at the grocery store every single week while we ship tens of billions of dollars of money and weapons to Ukraine to prolong a war?”

“Why do the budgets of the corrupt FBI, CIA, and NSA keep growing while Americans have trouble paying their rent and their insurance premiums?”

See how easy this whole populist thing can be.

Where Rand Paul Failed

I recently read something on a forum that was discussing politics, and someone mentioned that they wished Rand Paul would run for president and get elected.

Rand Paul is wisely not running for president this time around. DeSantis should have done the same. He should have learned from the mistakes of Rand Paul. He never should have run. But if you are going to run, you have to sell a populist message and acknowledge the struggles of everyday Americans.

Rand Paul was cooked in the first 10 minutes of the first Republican debate in 2015. The first question asked was if the candidates would promise to support the eventual nominee. Everyone but Trump raised their hand.

Rand Paul then stupidly spoke up and criticized Trump for this, even though his dad had done the same thing 4 years earlier.

Rand Paul should have avoided criticizing Trump or anyone else. He should have been hammering home about the struggling American middle class every time he had the opportunity to speak.

You can do this with any question. It doesn’t matter if it is foreign policy, or gun rights, or your opinion on gay rights. You can bring every single issue back to the struggling average American.

Trump and Kennedy

Biden, or whoever replaces Biden as the establishment favorite, has the backing of the corporate media and the entire establishment. This includes many big corporations who feel the need to play ball with the government. So it won’t be easy to defeat Biden or the establishment replacement for Biden.

But there is a reason that Trump and Kennedy are the other two most popular candidates right now. It is because they talk about some real issues, even if they don’t always get them right. There is at least a sense that they are acknowledging the pain of the American people.

This is why it is basically a three-way race right now. It is Trump, Kennedy, and the establishment candidate.

The establishment would rather have two of their own candidates running against each other. Then it wouldn’t matter who won. That is why they are trying to censor and slander RFK Jr. It is why they are trying to throw Trump in jail with any possible charge that could stick.

Nikki Haley, Chris Christie, Tim Scott, Mike Pence, and the rest of the Republican establishment candidates are just plain pathetic. I don’t understand why they are running. Are they so delusional that they think they can win? Or are they all there just to try to damage Trump? That’s not working.

It is impossible for the really insincere ones to even pretend to be in favor of the little guy. They can lie, but they can’t lie that much. They don’t even understand what is happening in America. They don’t understand that people just want to be able to work, pay their bills, save a little money, and enjoy some entertainment in their free time.

Instead, a majority of Americans sense that they are getting the short end of the stick. They see their grocery bills go up and continue to go up. They see their car insurance, homeowners insurance, and medical insurance all go up in price. Meanwhile, their 3% annual raise at work barely covers a few of these items.

Americans know that things aren’t right. They are just waiting for someone to articulately point it out.

With the U.S. government toying with a major war with Russia, and coming off of the COVID tyranny, it seems that there isn’t much to be optimistic about for libertarians.

The U.S. empire grows. The federal budget grows. The national debt continues to grow at an astounding pace. Americans are suffering from consumer price inflation and lagging wages, while a major recession looks likely.

Yet, in spite of all this, there are many reasons for a libertarian to be optimistic.

Education Without the State

Homeschooling continues to grow at a rapid pace. And in most states, it isn’t that hard, legally speaking, to homeschool. The biggest hurdle is having a parent available to do it. The biggest obstacle put in place by government is the taxation and inflation that makes it hard for a family to get by on one income.

A Well-Armed Populace

The statistics aren’t really clear, but gun ownership is likely near an all-time high, at least in the last few generations. There are various reasons for people owning a gun, but for most non-criminals, the reason comes back to some sort of symbolism for freedom.

Vaccine Education

Just two years ago, we were under a major assault to take multiple COVID jabs. It was less than two years ago that government mandates entered the scene. In that amount of time, people have fought back and mostly won.

Even though a majority of people ended up getting jabbed (some through coercion), almost nobody is continuing with the boosters.

The really good news for liberty is that the excessive push by the authoritarians have radicalized people in the other direction. Many people have become skeptical of all vaccines. Some are choosing not to give any vaccines to their children only because of what has happened over the last couple of years.

In addition, it has led many people – Americans in particular – to question the entire medical establishment. If a doctor tells you to get a procedure done or to take a drug for something, more and more people aren’t just obediently listening. They at least question the advice and do some of their own research.

The Presidential Candidates

There are a lot of terrible presidential candidates. The good news is that the worst ones on the Republican side are getting almost no traction. They are polling somewhere near zero. This includes Tim Scott, Nikki Haley, Mike Pence, Chris Christie, and others. It is all of the really bad war hawks who are doing poorly.

Dave Smith may run on the Libertarian Party ticket. Tulsi Gabbard may run as an independent. RFK Jr. is stirring up trouble in the Democratic Party. Vivek Ramaswamy is at least talking about some interesting subjects.

You can find faults with any person. Aside from Dave Smith, there are many things a libertarian would have disagreements about with the other candidates. But at least many of them are questioning U.S. foreign policy and are going against some of the establishment narratives.

This means that there has been a mind shift in the American electorate. If people were the same as they were 20 years ago, we would be talking about Mike Pence or Nikki Haley going against Joe Biden or Gavin Newsom. Instead, we get some variation with RFK Jr., and even Trump and DeSantis.

Economic Optimism

This is admittedly a harder topic to be optimistic about. We are likely in for some hard times ahead. But in spite of the government (at all levels) spending almost half of our money and regulating us like crazy, the people acting in the marketplace still find a way to innovate and make the world go round.

The only way the budget will be cut in any significant way is through the laws of economics. What can’t go on has a tendency to stop, and that perfectly describes the growing federal budget and debt.

But one day when the federal government is finally rolled back, we could see a new prosperity that we can’t even imagine now. Imagine the entrepreneurship and innovation and new technology if the state is cut in half. We will be wealthier as a society that most wouldn’t think possible today.

A General Distrust

It is easy to hear people complain that we can no longer trust our media or our government officials. But that should be reason to celebrate.

It’s not like politicians and media pundits just started lying to us recently. This has been going on for all of recorded history. It is a great thing that people aren’t trusting what their political “leaders” are telling them.

It is also incredible that people are no longer holding the FBI and CIA in high esteem. They are no longer these heroic agencies battling evil in the eyes of many. They understand that these agencies are evil themselves, at least at the top. They see that these government agencies are working against the American people and not for them.

This general distrust in the establishment severely weakens the state. It might not be evident now, but it is there.

I believe it was Lew Rockwell that compared the state to a wounded wild animal. It is hurt and dying, but it will be flailing around and will hurt and kill some people in the process of dying.

We are not going to see an overnight dramatic change towards liberty. But the key to gaining long-term liberty is for the populace to distrust the state and to stop being so obedient to the state. That is happening now.

The latest consumer price index (CPI) numbers came out for June 2023. The CPI was up 0.2% for the month, and the year-over-year now stands at 3%, which is slightly lower than was expected.

The less volatile median CPI was up 0.4% for the month with the year-over-year coming in at 6.4%.

It seems that the Fed’s fight against inflation (that it created) is working. If the Fed keeps going with its current policy of gradually reducing its balance sheet and at least not lowering interest rates, then I think it will succeed in its quest for 2% annual price inflation as measured by the government.

Of course, this means that the Fed can’t have any major bailouts for the big banks or the Treasury market or Congress.

The reduced rate of price inflation indicates a slowdown in the economy and a coming recession. It’s not that lower inflation should be associated with a recession, but it is with the way things are happening.

Not the 1970s

It started to look like we were headed for the 1970s again with double-digit price inflation and double-digit interest rates. The 1970s also destroyed Keynesian theory when there was recession with higher inflation.

This isn’t like the 1970s now – at least not yet – because Fed policy is different. The Fed kept creating new money out of thin air and lost a handle on controlling the dollar.

It wasn’t until Paul Volcker became Fed chair in 1979 and started drastically hiking interest rates and shutting off the money tap that the rate of price inflation began to decline. We eventually got the recession (or recessions) of 1981 and 1982.

We are more in the 1980 phase right now. We just never saw interest rates or price inflation reach the levels that were seen in the 1970s.

It’s not to say that the Fed won’t reverse course and lower interest rates and expand its balance sheet again. But as of right now, the Fed is in a tight money mode, and the yield curve is highly inverted.

This all points to a deep recession ahead, which will include a popping of the Everything Bubble.

The Next FOMC Move

The FOMC has a meeting in a couple of weeks. The lower inflation numbers suggest that the Fed will be less likely to go for another rate hike of 25 basis points, but it’s hard to say for sure.

Stocks, bonds, and gold were all up on the day with the news of the lower CPI numbers. It looks like investors were bullish because there is a better chance the Fed will stop raising its target rate.

I think investors are swept up in the last of the mania and are missing the big picture. The lower CPI numbers are good news for consumers, but they shouldn’t be good news for investors. There is a big recession coming if we are to believe the inverted yield curve.

Again, this isn’t the 1970s. We are better off with the lower inflation. But we will probably get a bigger recession because of the size of the bubble.

You can enjoy the prices going up at a slightly slower pace at the grocery store if that is a reason to celebrate. Unfortunately for many, asset prices are likely to fall hard.

The yield curve is still heavily inverted. It has been mostly inverted for all of 2023. This indicates there is likely a recession on the horizon. And with how high asset prices have gone – particularly stocks and real estate – there could be a major asset bubble popping.

While this blog tends to focus on monetary policy, politics, and investments, I want to remind people that their investments are not their number one priority, at least for most people. If you are retired and wealthy, then your investment portfolio may be your number one financial priority.

For most people, their investment portfolio is far less important than maintaining their income. For the majority of people, this means a job. For some, it could mean income from a business. Both of these things are vulnerable in a recession.

We have seen falling real wages in recent years with price inflation exceeding any nominal rise in wages. But at least most people still have 90% or so of their income (in real terms) as compared to a couple of years ago. This can make life more stressful and bit less pleasant, but at least you can pay the most important bills.

If you lose your job – or worse, your own business – then virtually your entire income disappears. If you are married, maybe your spouse has a job or some sort of income. But even there, it is a drastic reduction.

So for most people, it would be better to be more productive at work, to network, and to have an updated resume than to worry about their investment portfolio.

Another Priority

Aside from maintaining your main source of income, I believe the next most important financial thing to prioritize is being out of debt.

If you have a low-interest rate mortgage, then this is probably fine. Even here though, it shouldn’t have a high balance. You can have a 2% mortgage rate, but if it is on a million-dollar loan for your house, then you are highly vulnerable.

Perhaps a low-interest rate loan on a car or student loans is fine too. But again, the overall balance matters. There is a difference between a car loan for $10,000 and a car loan for $50,000.

Credit card debt with any interest rate above zero is just bad. If you can’t pay your credit card bills now, it isn’t going to get any better in a recession. You have to do what it takes to eliminate that debt now. It will only get harder if you ignore it or don’t do something to fix it.

The economy can change quite fast. A house that was worth $600,000 could all of a sudden only be selling for $400,000.

Someone making a nice salary of $150,000 could quickly see that go down during a recession. It might be a choice between the job and a significant salary cut.

If you are out of debt, or mostly out of debt, then it is much easier to scrape by when things get tough. If you are already staring at major debt, it will be that much harder.

Investments

After doing what you can to prepare in terms of maintaining your primary source of income and being out of debt, then you can focus on your investments.

This means diversifying and making sure that any scenario will not wipe you out. If the bond market tanks, will you be ok? If gold falls by $500 per ounce, will that set you back a lot? If stocks fall by 78% – as the Nasdaq did in the early 2000s – will that ruin your retirement and financial security?

As I learned from Harry Browne, you can’t predict the future, and you don’t have to predict the future. If you are afraid of some economic scenario happening (where the world doesn’t end), just ask yourself if you will be ok if it does happen.

If you are afraid the market will crash by 80%, then you don’t have to worry if just 20% of your assets are in stocks. 80% of your portfolio should still be in place and doing fine.

This is why I recommend Harry Browne’s advice to have a permanent portfolio. It will not give you the best investment returns, but it will give you some peace of mind.

Not Enough Fear

While I wouldn’t take political advice from Warren Buffett, he has had some great investing advice over the years. He said to be fearful when others are greedy, and greedy when others are fearful.

While many families are struggling, there seems to be way too little fear out there given the conditions. This is why stock prices are still high. It is why people are still buying expensive cars and upgrading their kitchen (using debt).

The recession will hit people hard when it comes. The one upside is that consumer price inflation may ease. The downside is that the Fed may start another round of money creation if it is needed to save the major banks.

Mortgage rates have gone up significantly in the last year and a half. This makes the monthly payments much more expensive for anyone buying a house if using a mortgage.

You could buy the same house for the same price from 2 years ago and expect to pay a few hundred dollars more per month for a typical house. Of course, it can be far more dramatic if you get a mortgage in the millions.

One would expect housing prices to fall since the cost of a loan is more expensive. Most people buying a house get a mortgage of some kind. There are very few who can just pay for a house out of their bank account and even fewer who actually do.

Supply and demand can be a funny thing. The higher price of a mortgage (the higher interest rate) would indicate that the prices for residential real estate should be going down. Yet, that hasn’t been happening much in most areas.

As always, real estate is local. But because everything is tied to the dollar and interest rates, the trends across the country tend to be similar. While prices may have declined a little from their peak, we have not seen a dramatic fall in prices.

The Supply Side

Real estate is a funny thing because there always seems to be exceptions and different rules for real estate.

In this case, the higher mortgage rates are actually limiting the supply of houses on the market.

I can speak from my own experience on this one. I was smart enough (but really mostly lucky) to refinance my mortgage at just the right time around early 2021. I got a 2% fixed -rate on a 15-year mortgage.

I have absolutely no plans on moving any time soon. If I did have to move, I would probably want to try to rent out my house and keep the mortgage. The rate is so ridiculously low, it wouldn’t make financial sense to sell the house unless there was a very good reason to move.

Most people don’t have a 2% rate, but there are a lot of people with rates around 3 or 4 percent. They are low compared to current rates around 7% for a 30-year fixed mortgage. So unless they are moving to another city or looking for a major change (perhaps a growing family), it is easy to see that most people are going to keep the house with the low mortgage rate.

If someone already owns a house and moves to another house, they will just be paying a much higher rate than they were before in most cases. So they have the incentive to not move.

This is keeping the existing supply of houses off the market to a large extent. It doesn’t prevent new homebuilders, but that takes a lot of time and investment. Most houses bought and sold are not brand new.

There Might Be a Breaking Point

This is bad news for people buying a house now who didn’t previously own one. They still have relatively high prices to contend with, coupled with higher interest rates.

If you are one of these people and you can wait to buy, then I would recommend doing so. You can either wait for interest rates to go down, or wait for prices to go down.

I don’t think this scenario is going to last for a long time. If we hit a deep recession in the next year or so, things can change quite quickly. People desperate for money may sell.

In addition, if the past is any indication, the Fed will lower its target interest rate again. Sure, there is price inflation to deal with, but that could go down with a deep enough recession. We all know the Fed will bail out the banks if needed.

So it isn’t an unrealistic scenario to imagine that interest rates could go back down in the somewhat near future.

Of course, if the Fed goes on another money creation spree, this could just reignite a run in housing.

But it is important to remember that prices can only go up as long as people can afford to pay them. If we hit a deep recession with higher unemployment, many families won’t be able to afford their mortgage with all of the other costs of owning a house. We are already contending with wages lagging behind price inflation.

Conclusion

Housing is highly unpredictable in this environment. The best thing to do, as always, is to think through the fundamentals.

Don’t take on more debt than you can afford. It doesn’t matter if you see a great deal or what the interest rates are. Once you are in the house, will you be able to comfortably afford it?

If you already have a house with a low interest rate mortgage, and you are not severely struggling, then it is probably best to stay where you are.

Moving is expensive anyway. Buying and selling a house isn’t like buying and selling a stock where there are low or no trading fees. Closing costs, moving costs, and other costs are expensive. Aside from a flipping business, you should never buy a house unless you plan to keep it for at least 7 years. 10 years or more is better.

• While July 4th is called Independence Day, it is actually Secession Day. The South is largely looked down upon for trying to secede from the Union in the 1860s, but the American colonists were doing the same thing from the British in the 1770s. And even if slavery was part of the reason, the American colonists owned slaves when separating from the British. So is the motive for secession the only thing that counts on whether it is good or bad? Or is it good or bad just based on who won the war?
• In economics, some people are bothered by positive externalities. It is often used as an excuse for taxation. By this logic, should everyone pay for all of the fireworks on July 4th? I don’t buy much, if any, in the way of fireworks. Yet, many people in my neighborhood set them off. I can go outside and enjoy the show without paying for any of it. The neighbors don’t seem to be bothered by the fact that I am enjoying a show at their expense.
• When the colonists declared independence, taxation coming from the British Crown may have been 1 or 2 percent. Just remember this when you see the national government today spending $6 trillion or more.
• If you want to spread the message of liberty, it doesn’t mean you have to be an outcast from society. In fact, you are more likely to influence others if you act somewhat normal. Don’t ruin your family barbecue by preaching about politics the whole time.
• Where I live, I believe it is legal to set off fireworks during two days of the year – July 4th and New Year’s. I’m not sure if it is technically New Year’s Eve or New Year’s Day, but I think the whole night counts as the day.
• This is where some local civil government makes sense. Maybe it is a reason to not have total anarchy. I really don’t want fireworks going off all the time and having my dog shaking under the table. There are societal norms, and setting off fireworks on July 4th in the U.S. is one of them. It actually makes sense to allow fireworks on this day even though it would normally break the noise code ordinance.
• In 2020 during COVID lockdowns, a lot of people set off fireworks even though the government-funded shows were largely cancelled. This could be seen from two angles. One angle is that people were stupidly celebrating independence and freedom during tyrannical lockdowns. The other angle is that some people were finally defying government orders and went outside to celebrate anyway.
• Happy Secession Day!

Stocks closed out the first half of the year with a boom. All major indexes rose on June 30, capping off a great first half of 2023 for bullish stock investors.

While the Dow rose 3.8% for the first six months of 2023, the S&P 500 was up 15.9%.

But the biggest winner of them all was the Nasdaq. It went up by 31.7% in the first half of 2023. It’s the best first half since 1983 during Reagan’s first term in office. That would be a great 3-year return, and it happened in six months.

To be sure, stocks got hit hard in 2022 when the Fed was aggressively hiking interest rates and slowly draining its balance sheet.

The rate hikes have slowed in 2023, and perhaps even come to a stop at this point. If stocks keep booming though, it might make it more likely that the Fed will raise its target rate again at the next meeting.

The Fed’s balance sheet keeps slowly declining if you ignore the blip in March 2023 when Silicon Valley Bank failed.

This all looks promising for stock investors, especially if they owned stocks the last 6 months. The problem here is that we were already in a major bubble before 2022. So the rise in stocks so far in 2023 will just make the inevitable fall that much worse.

The Yield Curve is Still Inverted

The yield curve for U.S. Treasury rates is still heavily inverted. The 3-month yield finished June at 5.43%. In contrast, the 10-year yield stood at 3.81% and the 30-year stood at 3.85%.

This means that there is a spread of over 150 basis points from short-term yields and long-term yields. This is insane. It seems illogical that someone would invest in a 30-year bond paying 3.85% when you can buy a 3-month Treasury bill at 5.43%.

It actually is insane and illogical unless you think that a deep recession is on the horizon that will knock rates back down.

The inverted yield curve is the most reliable predictor of a coming recession. It didn’t work out in 2020 because the Fed went on an unprecedented money printing spree starting in March 2020. But barring any further virus hysteria, we shouldn’t expect something like that this year.

Also consider that price inflation is a lot higher today than it was in 2020. (That is largely due to what the Fed did in 2020.) So it will not be easy for the Fed to start another round of so-called quantitative easing this time around. I think it will only happen if we see major bank failures or major turmoil in the bond market.

The yield curve was already inverted at the beginning of 2023. So it has been inverted longer than six months. It has only gotten worse since that time.

You can’t get a bigger warning than what we’ve got now. It’s not just that a recession is coming. It’s that a major recession is coming, and the Everything Bubble is likely to implode.

The Higher They Rise

The higher that stocks go in the face of the inverted yield curve, the harder they are likely to fall. It was already a major bubble. It was a major bubble after stocks took a hit in 2022. Now the Nasdaq has added over 31% to its bubble. This is absurd.

What is the basis of having these tech stocks valued at 31% higher than they were 6 months ago? Are these companies that much more profitable now? Are they somehow benefitting from the price inflation? Or do they see the declining rate of price inflation continuing and being a great benefit?

The Nasdaq today is over 2 and a half times what it was at the peak of its bubble in March 2000. That was 23 years ago, but it proceeded to fall 78% from its peak at that time.

Are you ready for something like a 78% drop from its current levels?

I know this. If we see a dramatic fall like this in U.S. stocks over the next couple of years, a lot of hopes and dreams are going to be shattered. A lot of retirements are going to be postponed or ended.

The wealthy people – who have seemed little bothered by the inflation economy of today – will take the biggest percentage hit in a stock market crash. They will also take the biggest percentage hit if there is a real estate crash.

But it will still be felt the worst by middle class America. If a billionaire loses 60% of his wealth, he is still extremely wealthy. If a middle class person has a 401k with $500,000 in it, he will feel it much more if that balance goes to $200,000. That is especially true if the person was looking at a near-term retirement.

Shorting Stocks?

I still advocate a permanent portfolio. This would mean an exposure of 25% to stocks. Even though I see a recession coming, the first half of 2023 was great for stocks. Who could have seen that coming? That is why the permanent portfolio is there to protect wealth, and hopefully grow wealth, in any environment.

With that said, we are in a situation now where it could benefit a speculator who sees the writing on the wall. That writing is the inverted yield curve and the growing bubble in stocks.

The problem with shorting stocks is the timing. If you get the timing wrong, it is easy to lose money quickly. So even if the crash comes to fruition, you may have already lost a great deal of money or just gotten out of the game.

So I caution on speculating too much. The inverse ETFs that are available to bet against rising stocks are usually good for short-term trading. You don’t want to be in them for a long time or you will lose money.

With a very small percentage of money, I may take a gamble soon by shorting stocks. I would really just buy an ETF that shorts stocks.

Since the most insane index at this point is the Nasdaq, I will probably focus on shorting the Nasdaq. Again, this would just be with a relatively small amount of money. I haven’t done it yet, but I think the time is coming soon.

The name of this game is wealth protection. A lot of people are going to be badly hurt when this bubble implodes. We can’t predict how this will play out, but it is relatively easy to take steps now to avoid the things that are predictable or likely to happen.

If you are heavy in stocks, just know that your investments are at high risk right now.

In 2023 and 2024, a presidential candidate with a populist message will have a good chance of winning. Sure, they will get trashed by the establishment and its media, but that comes with the territory.

In this, I am referring to a populist message with a libertarian angle. This isn’t a Bernie Sanders message where we need higher taxes on the rich and more government spending to supposedly help the poor. I am talking about a populist message for middle class America in the form of less government.

The only two major candidates who have any instinct in tapping into the struggles of middle class America are Donald Trump and Robert Kennedy Jr.

The problem is that Trump has no ambitions for fiscal sanity. He oversaw the great COVID fiasco where the government was handing out trillions of dollars to people to not work. It also paid money to businesses because they had been shut down.

Trump is attacking DeSantis because he supposedly wants to cut Social Security. So unless Trump is going to dramatically cut military spending (which won’t happen, the same as it didn’t happen from 2017 to 2021), then overall spending by the federal government isn’t going down.

Of the major party candidates, Kennedy seems to be the best. He has a somewhat populist message, but even he is missing the opportunity to tap into the average middle class American. Whenever he talks about an issue, he should tie it back to the struggling middle class.

Everything Goes Back to the American Family

People get riled up over many issues, especially cultural issues. Sure, people care about immigration, abortion, “woke” ideology, schools, and many other issues. But those agenda issues are often set by the media and the politicians.

If you really get down to it, most families just want to work, save some money, and live a decent life. They certainly care about issues like crime and education, but these are really local issues. Does anyone honestly believe that their local school will get better if the “right” person becomes president?

Most parents want to take their kids to soccer practice, or gymnastics, or whatever activity. They want to be able to take a nice vacation once a year. They want to be able to save some money while not struggling through life because a trip to the grocery store costs $200.

The average American doesn’t care about Vivek Ramaswamy’s desire to bomb Mexican drug cartels. They don’t care about DeSantis taking on woke Disney. They don’t care about Haley, Scott, Christie, and Pence all supposedly wanting to support Ukraine (by prolonging the war).

The average American cares more about the cost of a dozen eggs. They care about the premium they have to pay for their home insurance. They care about the cost of health insurance and the latest car repair.

A Winning Populist Message

If I were promoting a particular candidate and had the opportunity to offer advice to their campaign, I would advise that they tie everything back to the cost of living.

“The American taxpayer is funding the war in Ukraine. It only serves to prolong the war and there is more death and destruction on both sides instead of reaching a peace deal. When you go to the grocery store and see that eggs are five dollars per dozen, just know that your higher grocery bill is partially due to funding these wars overseas.”

“I will oppose this “woke” ideology as president, but a lot of these cultural changes need to happen locally. In order to empower American families to protect their children, they need to have the resources to fight it, including the ability to withdraw their children from the public school system. They shouldn’t be forced to pay for all of the bad stuff coming out of Washington DC while their children are stuck in a bad situation due to a lack of resources.”

“The federal government is spending about $50,000 per household per year. Imagine if the cost of government were cut in half. You could get a new $25,000 roof in one year. You could send your child to private school. You could finally take that vacation you have dreamed of. You could save money while not having to struggle to pay for the monthly bills. Imagine just how much better your life could be with an extra $25,000 per year.”

Someone Try It

A total populist message tying everything back to middle class America has not really been tried in recent history. It is a missed opportunity for political candidates. Trump in 2015/ 2016 was the closest thing to tapping into it.

Political candidates are allowing the media to dictate what they talk about. In the meantime, middle class America is getting screwed.

If you just acknowledge the plight of the middle class in 2023, that will win over a lot of people. They want an advocate. They want someone to acknowledge that they are getting screwed. They want someone to say that life is expensive and that it doesn’t need to be this way.

When it comes to politicians, it seems like most of them get corrupted as soon as they get into office, even if that wasn’t their intention to start. I think the long-term key to gaining greater liberty is in educating people about the benefits of liberty. However, it can still be important as to who is elected to office.

It was very important who the governor of each state was in 2020 and 2021. Most of them declared themselves to be dictators and ordered lockdowns. But some were worse than others. For me, it made a difference living in Florida in 2020 and 2021. If there had been a governor other than Ron DeSantis, things could have gone very differently.

At the level of the presidency, it doesn’t seem like anything ever changes for the better. But it is hard to believe there could be a bigger disaster than Biden. I’m sure there could be, but it is just hard to imagine.

Dementia Isn’t the Problem

I was watching Gutfeld recently on Fox News. It is about the only thing I see on Fox News now with Tucker Carlson gone. They were discussing Biden and what they would say to him if given the opportunity.

A couple of people on the panel said something to the effect that there would be no point in talking to Biden because he wouldn’t understand them. They are basically saying that he has dementia.

That is not the response I would have given. I probably wouldn’t bother talking to Biden either, but it isn’t because he has dementia or wouldn’t be able to comprehend what I’m saying. It’s because he is evil.

There would be no point in trying to reason with Biden because there is no point in reasoning with a criminal unless you have some kind of leverage. If you are just giving advice, then the criminal isn’t going to take your advice unless it benefits him in some way.

Maybe that is the only possible way to approach someone like Biden. As an example, you could say that if he wants a good legacy and to be well liked, he should find a way to negotiate peace in Ukraine. Maybe that would have worked with Bill Clinton, but I’m not even sure that Biden cares about his legacy at this point. If he did, he wouldn’t be following the orders of his handlers on every single point.

You Can’t Cure Dishonesty

If someone is incompetent, you can at least hope to get through to them. You can hope that maybe some competent people will help them out. Someone who is incompetent may accidentally get things right at times too.

If someone is dishonest, it is hard to change their personality. You would have to change them from an immoral person to a moral person. It’s not impossible for someone to change, but it’s unlikely.

Perhaps everyone is dishonest at times in their life. At the very least, you don’t share everything in your mind. But there is a level of dishonesty where you literally don’t care about other people or what happens to them. Your whole life is a giant lie.

Joe Biden is one giant lie. Anything he says of importance is likely a lie, or at least there is some kind of spin to it. The only time he isn’t lying is when he is threatening his enemies (e.g., MAGA Republicans).

So I would much rather have a moral and honest person in office than an immoral person. It is best to have someone who is competent and moral, but I would much prefer a moral person over a competent person who isn’t moral.

I’m not sure which is worse – an immoral and incompetent person (like current day Biden); or an immoral and competent person (like the Clintons).

The Presidential Candidates

Dave Smith isn’t running for president on the Libertarian Party ticket yet. He is smart and moral (even if his language isn’t always clean). He truly does want to advance liberty for the good of humankind.

Taking out Dave Smith, let’s talk about the major party candidates running for president.

I think the most honest person who wants to see America thrive is Robert Kennedy Jr. I have heard and read him enough to know that he really does care about other people and the future of our world. I think he gets some things wrong politically, but I see him overall as being competent too. But just the fact that his heart is in the right place puts him at the top of the list for me.

I struggle with the next person on the list. Donald Trump has a giant ego, and sometimes I do think he cares more about his own image than he cares about the direction of the country. But the two things aren’t mutually exclusive either. He wants a thriving and peaceful America so that he can brag about.

And while Trump has his moral shortcomings, I do think he is somewhat honest for a politician. That is one of the main reasons the establishment hates him so much. They especially hate him when he is honest about foreign policy and the so-called intelligence agencies.

Ron DeSantis is really hard to read. I have no idea if he is a moral person. But like Trump, I think he would want to see the country do well, even if it is just for his own image.

A lot of libertarians like Vivek Ramaswamy, but I do not trust him. He says he is 90% aligned with libertarians, but I don’t really believe it. And even if true, the other 10% is egregious. He wants conflict with China, and he wants to bomb Mexican drug cartels.

I believe Ramaswamy is changing his message constantly and catering to his audience when he speaks. If he is on a libertarian podcast, he will sound more libertarian. So I can’t really trust him.

All of the other Republicans are absolutely terrible. Some are more competent than others, but they are all immoral. I can judge that just from their foreign policy views. Christ Christie, Mike Pence, Nikki Haley, and Tim Scott are all terrible. Even if they are smart, I would never support them.

Of course, Biden is evil, so I would never support him even if he were competent.

Conclusion

If you ever detect dishonesty coming from someone running for political office, your instincts are probably correct. You shouldn’t support them, even if they seem to be saying some of the right things.

Have you ever known anyone to become more libertarian once they get in office? Maybe it’s happened, but I can’t think of any recent examples.

Most people go the other way. If we ever got a President Ramaswamy, he would quickly forget about getting rid of the Department of Education, and he would focus on all of the areas where he is really bad.

I have slight hope that if RFK Jr. were to become president, he would actually attempt to make peace in the world.