In August 2022, I wrote “an argument for not paying extra on your mortgage“. I would like to expand on this a bit.

I generally fall into the conservative camp when it comes to money management and investing. I haven’t always been this way. But even when I was younger, I would still throw some extra money towards my mortgage.

I now have a ridiculously low mortgage rate at 2%, which is fixed. It is so low that it just doesn’t make sense to pay it down. Maybe if we had a deflationary depression and I had a bunch of money laying around, I would consider it then.

Even during more regular times with lower price inflation, I hear many financial talking heads recommend to never pay down the mortgage in most cases. They think you can do something better with your money.

In other words, they are arguing that you can get a better rate of return on the money that you would have used to pay down or pay off your mortgage. And maybe you can get a better rate. The question is: Will you get a better rate?

Guaranteed Return

I have heard the argument for a long time now that if you have a relatively low interest rate on your mortgage, then just take any money you would use to pay down the mortgage and invest it in the stock market. You will supposedly get a better return over time.

But this may or may not be true. And that’s really the whole point. If you have a mortgage rate of 4%, then you will likely have to get a return of 5% or more to come out ahead if it isn’t in a tax-sheltered account like a Roth IRA. If your money is in a regular brokerage account, then you will owe taxes on gains and dividends.

Even aside from taxes, you will still have to get a 4% return on stocks to break even as compared to paying down the mortgage with a 4% interest rate.

Historically, the U.S. stock market has returned higher than a 4% return over time. The problem is that we aren’t living in history. We are living now, and we are planning for the future.

Talk to someone in Japan who invested in Japanese stocks in 1989 and is still down today, even in nominal terms.

The point is that if you pay down the mortgage with a 4% interest rate, you are effectively getting a 4% tax-free return on your money. There is no guarantee you will get that with stocks. In fact, you might even lose money in the stock market.

Inflation Doesn’t Matter, Returns Matter

I keep hearing that it doesn’t make sense to pay down low-interest debt in today’s environment of higher inflation (price inflation). But I want it to be clear that it isn’t rising consumer prices that matter in this decision.

If you have $100,000 sitting in the bank earning 1% interest and losing 8% annually to price inflation, then you are better off taking the money and paying off a $100,000 mortgage with a 4% interest rate, or even a 2% interest rate rather than have it sit in the bank.

The key is that this isn’t your only option. You could buy assets that have a near 100% guarantee such as Treasury bills.

With higher interest rates today, you can actually get a decent nominal return in Treasury bills, and you can also look at Treasury Inflation-Protected Securities (TIPS).

If you can get a higher return after taxes that is nearly guaranteed, then this makes more sense than paying down your mortgage.

The important point is that the price inflation rate doesn’t really matter in this calculation. What matters is the rates of return you can get. It isn’t the rates of return you might be able to get. It is the returns you can get with a near guarantee.

If you are considering paying down your mortgage, the whole point is that you are getting the guarantee of not having to pay that interest.

Other Factors

There are many other factors to consider when paying down your mortgage. The person with $100,000 in the bank earning 1% may have good reasons to keep that money there.

It is important for most people to have an emergency fund and to have some liquidity. This is certainly a valid reason for keeping money in the bank and getting a low return.

Sometimes people want liquidity for more than an emergency expense too. Sometimes there are opportunities in business or investments that may come up. All of this should be considered.

There are many reasons for and against paying down a mortgage, and many of them are personal.

But you shouldn’t opt to never pay down your mortgage just because the rate of price inflation is high. The interest rates are what really matter. Sure, they tend to be higher with higher price inflation, but don’t confuse the two.

The U.S. Department of Energy has said with “low confidence” that COVID-19 originated in a lab. In other words, the lab leak theory may be correct. So all of the people called crackpot conspiracy theorists a couple of years ago may have been correct.

It’s not clear why the Department of Energy is weighing in on the origins of COVID, but it is obviously one of many arms of the U.S. government. Why would they be releasing such a statement now if it was meant to be released? Is it to prepare us for what might come out later?

If COVID did indeed originate in a lab, then why would it be much of a reach to theorize that it may have been intentionally leaked instead of being an accident? Of course, even if the release was an accident, it is hard to call it an accident when it was human beings engineering a virus.

It’s possible that the U.S. government is putting this out there as a distraction. It is also possible that it is to make China look like the bad guy. The problem is that it is implicating elements of the U.S. government as mass murderers.

Who Funded Wuhan?

Just because the lab was in China, it doesn’t mean it was solely the Chinese responsible for it all. In fact, it looks like Dr. Fauci and the NIH actually funded the so-called gain-of-function research.

Even though such research had been blocked previously, Fauci just went through some third parties and did the research overseas. But it was still American taxpayer money funding it.

Even if the virus wasn’t intentionally leaked, it was still in existence because of the work of Fauci and the NIH.

It is Fauci himself who has said that millions of people have died from the virus. I might contend that this number is overstated and that some of the deaths are from hospital mistreatment, which also comes from Fauci. But there is little question there has been widespread death and destruction, especially with the lockdowns and vaccines.

So at the very least, if some government agencies think that the virus was leaked from a lab, shouldn’t that lead to more investigations? Shouldn’t that ultimately lead to prosecutions of government officials, including Fauci? Unfortunately, “should” is different than “will”.

Genocide

Even if the virus was leaked unintentionally, there should still be prosecutions.

If you get into a car accident and kill someone, you may be charged with manslaughter even if you weren’t drinking or driving particularly recklessly. If you just made an unintentional mistake, you can be charged.

But this is much worse than that here, and it is on a much grander scale. These people were funding research to make viruses more virulent and more deadly. I don’t know if irony is the right word here, but it is hard to overlook that the reason for gain-of-function research is supposedly to prevent pandemics. But the gain-of-function research is what led to the whole COVID disaster in the first place.

If Fauci did indeed fund some of this research, even if indirectly – and all accounts look like that is the case – then he is partially responsible for all of the COVID deaths and all of the death and destruction as a result of bad policies supposedly due to COVID.

When you tally it all up, this easily fits the definition of a genocide. Maybe there is a gentler word if it was done unintentionally, but it is still mass murder. And it is hard to say it was unintentional when Fauci and company were breaking the law and concealing their activity.

Also, if this were unintentional, then what about the coverup? And if things were unintentional or there were “just mistakes made” with COVID, then the power elite would have actually done something right along the way. Just about every single major thing that was done was harmful to the general population.

Conclusion

I don’t know why the government is all of a sudden admitting that it may have been a lab leak after all. I suppose they count on the American people having a short memory, which is usually the case.

They are also counting on people not getting too upset over this notion. That may or may not be the case.

I suspect that anyone paying close attention to this story from the Department of Energy and thinking through the implications are already on the side of knowing that the government has been lying all along.

So maybe this doesn’t change anything. At the same time, it is one more piece of the COVID fake narrative to fall.

I can’t say for certain that COVID came from a lab. There’s not much I can say for certain. But it is an important question, and one that should be asked. So why were the people who were floating this possibility a couple of years ago smeared and censored?

Sometimes the coverup is worse than the crime. In this situation, I don’t think that’s the case because the crime looks to be something along the lines of genocide. I wonder if anyone will ever be brought to justice for it.

We typically associate higher unemployment with hard economic times. Right now, the unemployment rate is very low, so does that reason that the economy is strong?

First, we have to distinguish between correlation and cause and effect. Higher unemployment doesn’t cause the economy to be bad. Perhaps a bad economy can cause higher unemployment, but even here we have to be careful with the details.

Another mistake that feeds into this is that the economy is weak when we are in a recession, and the economy is at least relatively strong when we aren’t in a recession. But a recession is a correction from previous mistakes. It is a process of correcting the allocation of resources.

A recession is just when the worst of the pain is typically felt because of the adjustment that is occurring. But the mistakes were already made, mostly with central bank policy and government policies/ spending overall. In fact, if the government and central bank do not intervene much, the recession is the healing process.

Reallocating Resources, Including Labor

Part of having a correction and reallocation of resources towards consumer demand is having higher unemployment. This is because work is shifting to areas of greater productivity and away from activities that are unsustainable.

Let’s say that food prices are skyrocketing in an artificial boom phase while people are getting swimming pools put in their backyards. When the recession arrives, the price for pools (the labor and materials) goes way down due to far less consumer demand. People aren’t buying luxury goods and services as they were during the boom time.

Yet, food prices may not be going down as much or at all. People still need to eat, and you can only make so many substitutions in terms of food. So the market is sending a signal that we need fewer pools and more food. The people who were building pools need to go work for food production companies and grocery stores.

To be sure, we live in a world with a high division of labor. So the exact people who are no longer in demand for installing pools do not have to be the same people who go into the food production business. But the wages will start to reflect where workers are needed.

In the transition, no matter how it shakes out, there will be higher unemployment as people shift to other jobs. So it is especially painful for those who have to change jobs and are left unemployed in between.

Today’s Job Market and Wages

The reason the low unemployment rate right now is not indicative of a strong economy is because wages are not keeping up with price inflation.

Some people don’t trust the government’s statistics on unemployment, but I think the trend is close enough. Most people who want a job today can get a job. It just may not be the job they want or at the wage they desire.

So the unemployment is low, but wages aren’t keeping up. And it is deceptive because of the inflation game. You may be getting a 5% annual raise at work, but that means that your salary is actually declining because you owe taxes on that money, and it is below the rate of price inflation, even according to the government’s own statistics.

The fact that unemployment is low does not tell us how strong the economy is. The one positive aspect is that it means the labor market is clearing. In other words, any interventions by the state are not enough to cause significant unemployment.

It’s interesting that the inflation created by the government/ Federal Reserve actually negates much of the harm from minimum wage laws.

Even if there were no minimum wage laws, most people would be getting paid at or above the current minimum wage anyway at this time. This is why the labor market is clearing. And to be sure, it is good in this one sense. It is better for people to be working than not working, no matter the conditions of the overall economy.

But the low unemployment rate doesn’t mean that living standards aren’t declining. Since real wages are going down, people are not able to maintain their same lifestyle without saving less or going into debt.

A Recession Ahead?

It looks likely that there will be a recession in 2023 or 2024. The yield curve is highly inverted, which is the best indicator.

If and when we get a hard recession, the unemployment rate is likely to increase. It is possible it may not be as bad as in other recessions even if the recession itself is as bad or worse.

The key is that wages have to be flexible for adjustment. There is always a demand for labor at some price. It’s just a question of how low that price (the wage) will go.

From an individual standpoint, the best thing most people can do to prepare for a recession is to secure their employment to the best extent possible. If you have marketable skills that are in high demand, then there is less to worry about. But it still doesn’t mean that your salary might not go down.

If price inflation continues higher, then perhaps nominal wages will just stay about the same as part of the adjustment. This would be a drop in real wages to the extent there is price inflation. But most people would rather take a pay cut than lose their job. At least they have options.

In conclusion, don’t let the low unemployment rate fool you. Real wages are still going down, and the unemployment picture could change quickly with a recession.

Donald Trump, in his role as former president, recently gave a short speech about the war in Ukraine and the U.S. government’s involvement.

This was Trump at his finest. Sure, he bragged a bit as usual, but his language really spelled out the enemy. He referred to ” the warmongers and America-last globalists, the deep state, the Pentagon, the State Department, and the national security-industrial complex.”

He spoke of himself not starting any wars while in office because he rejected the advice of the generals, bureaucrats, and so-called diplomats. He named Victoria Nuland, one of the architects of the coup in Ukraine in 2014, as one of the culprits for our disastrous foreign policy.

Aside from Trump stroking his own ego, a libertarian could have written this speech. He was completely right on everything he said that didn’t involve his bragging.

He said we never had it so good when he was president, which is kind of hard to take seriously coming off of COVID lockdowns. But his overall message of peace was a great one, and it is hard to believe this is the Republican favorite. This is the same party that supported George W. Bush and his evil wars earlier this century.

While I think people like Ron Paul laid the groundwork, Trump has certainly brought the Republican Party outside of the establishment to a more pro peace position. You can call it “America first” or whatever, but less war is less war.

Words Don’t Match Actions

The problem is that Trump’s four years as president doesn’t really match his rhetoric. He didn’t start any new major wars as president to his credit, but he did allow the continuation of conflicts that were already happening. This includes Iraq, Afghanistan, Syria, and Yemen. He also almost did start a war with Iran.

He tried to withdraw from some of those conflicts, but his own people wouldn’t allow it.

And that’s really where the problem comes in. He talks about warmongers in his speech, but Trump surrounded himself with warmongers. He had people such as Mike Pompeo, John Bolton, and Nikki Haley around him. These are people who opposed Trump’s foreign policy, but he put them in positions of power anyway.

It’s not just that these people differed a bit from Trump on foreign policy. They actually opposed Trump in many ways. When Trump tried to withdraw from Syria, his advisors and cabinet members spoke up and said that he didn’t really mean it. They were essentially disobeying Trump’s orders in order to continue the wars.

It is impossible to find people who think exactly like you. But why did Trump surround himself with the people who completely opposed him on the most important issue? It is easy to make excuses and say that Trump had to play ball with the establishment in order to get some of their support, but what good does that do if they are going to undermine everything good you have to offer?

Trump put Douglas Macgregor in as an advisor in November 2020 after Trump had already been declared as defeated in the election. Trump could have put Macgregor in there when it actually mattered, but that isn’t what happened.

What About 2025?

Trump is running for president again. If he is elected and sworn into office again, he will be president in January 2025. What will change his time around?

I really like Trump’s pro peace stance on Ukraine. Maybe he is just taking advantage of the sentiment out there. He sees people frustrated that they are struggling to pay their bills while Washington DC ships off tens of billions of dollars to Ukraine.

The problem is that it doesn’t do much good if he is going to surround himself with bad people and bend to the whims of the establishment.

And it isn’t just foreign policy where this happens. Trump is the lockdown president who somehow managed to let Fauci dictate policy to the entire country in 2020. Thankfully, a few states defied these policies relatively early on.

And that’s where Ron DeSantis comes in. DeSantis has a major advantage over Trump when it comes to anything COVID related, including lockdowns and vaccines. It is less clear on foreign policy where DeSantis stands, although he hasn’t been enthusiastic about sending money and weapons to Ukraine.

If DeSantis does take a hard stand against the warmongers, then I may trust DeSantis more because he tends to not surround himself with people who hate him. But we can’t assume that DeSantis will be pro peace.

Trump should be the nominee if he plays his cards right. He played them right with this speech on Ukraine. He didn’t play them right when he was attacking DeSantis.

Trump is extremely frustrating for people who want liberty. I feel like when he has done some really good things, he goes and does something horrible. When I am really down on him and think little of him, he somehow redeems himself a bit as with his attack on the war hawks.

It will be interesting to see how the Republican primaries play out next year. At the very least, it is good that there is some opposition to the U.S. involvement in the war in Ukraine. It isn’t just an echo of what is coming from the media and Washington DC as we’ve often had in the past.

It is almost the end of February 2023, and the yield curve is still highly inverted. Just about any measure shows an inversion at this point, and it is quite dramatic.

Some people look at the 10-year yield versus the 2-year yield. Some use the 10-year versus the 3-month (my preferred metric). I have seen some use the 30-year versus the 3-month. They are all inverted.

It is interesting to go back and look at last year. The 2-year and 10-year inverted around the beginning of July 2022. The 2-year yield went above the 10-year yield when they were around 3%.

It was sometime in October 2022 when the 3-month yield finally went higher than the 10-year yield. A few weeks after that and the 3-month went consistently higher than the 30-year.

Perhaps the most notable thing is to look at the beginning of 2022. The short-term yields were almost at zero. Even at the end of February 2022, they were near zero. It is hard to believe how far they have risen over the course of one year.

It is easy to forget that the Fed’s fight against inflation (that it created) really started about a year ago. The Fed never really had a period of stable money.

In 2021, the Fed was still expanding its balance sheet. It was even still expanding at the beginning of 2022. It quickly went from loose money to tight money. The Fed almost immediately went from balance sheet expansion to raising its target federal funds rate.

This actually just shows the complete incompetence of the people at the Fed and the establishment financial community in general. It was already clear that price inflation was rising in late 2021. Why didn’t they stop creating new money out of thin air at that point?

Now we are in a situation where price inflation is not under control, so the Fed is still essentially forced to keep raising its target rate and slowly drain its balance sheet. But it is doing this in the face of an already heavily inverted yield curve.

The Winds Can Change Quickly

Just as the Fed’s stance from loose money to tight money changed quickly, so too can the prospects for the entire economy.

All signals point to a recession. The biggest signal is the highly inverted yield curve.

It’s hard to say how long it will stay inverted, but it actually doesn’t matter that much at this point. It has been highly inverted for so long that a recession is baked into the cake. This is assuming we don’t see a 2020 event again where society is locked down and the Fed goes on a massive money creation spree.

The yield curve will likely flatten before the worst of the recession hits. The worst of the recession typically happens after the yield curve had already been inverted. I don’t see why it would be different this time.

The recession will most likely start in 2023, but it is quite possible it might not show up until 2024. Things seem to happen slowly and then all of a sudden. That’s true of both life and the financial markets.

It is surprising how many in the financial media are actually admitting that there may be a recession coming. But most of them say it will be mild. So even if you thrive on being a contrarian, the contrary position may not be that there will be no recession. The contrary position is that the recession will be a lot worse than mild.

Most people are not ready for what is to come, even though the warning signals are there.

Nikki Haley, former governor of South Carolina, has announced that she is running for president on the Republican ticket for the 2024 election.

While Trump’s popularity has seemed to fade with some, a majority of Republican voters don’t really want to go back to the days of an establishment Republican figure.

You could argue that Trump and DeSantis both promote establishment policies in their own way, but these two are generally opposed by the establishment figures in Washington DC who seek to maintain the status quo.

Trump or DeSantis is by far the most likely outcome right now for the Republican nomination. Maybe Haley is hoping they will tear each other apart, but I don’t think it will matter.

It’s hard to say what Nikki Haley’s positioning is here. Is she just trying to take Trump down a notch for the establishment? Is she hoping to play somewhat nice and have Trump pick her as a running mate? Or is she hoping to actually win the nomination and the presidency?

I haven’t been impressed at all with Trump lately. Depending on what happens from now until the election, I may or may not vote for him as the lesser of two evils. I will more likely vote for Dave Smith.

I can absolutely declare that if Trump picks Nikki Haley as his running mate in the VP slot, there is no chance I will vote for that ticket.

Don’t Let Her Looks Fool You

Nikki Haley is an attractive woman. When she speaks, she seems down to earth. She seems like a decent person if you don’t actually pay attention to what she is saying.

The problem is that she is a bloodthirsty war hawk. She would be one of the worst possible people to have as president if you want a peaceful foreign policy.

That is the number one issue that the president has the most control over, and it is the one issue where she is absolutely clear. She is a total interventionist, and she will not hesitate to use the military to carry out her goals.

On other issues, she is mostly bland and predictable. She will occasionally say a few good things about the free market, but you can take it to the bank that her number one obsession is foreign policy, and not in a good way.

Haley wouldn’t be capable of being a fiscal conservative because any spending cut domestically would be put to use to bomb and invade other countries.

The few times I’ve heard her speak since announcing her presidential run, everything she says is fluff. It is mostly platitudes. And the only place where she is clear is that she is a war hawk through and through.

Parts of the establishment and the left will criticize her, but not in the way they criticize Trump. Most of the left is accepting of her foreign policy as long as they don’t have Trump. She would be perfectly acceptable to the establishment as the next president. Even Fox News is being quite generous in their coverage of her.

Why Did She Oppose Trump?

Let’s remember back before 2016 when Trump was running for the Republican nomination. Nikki Haley was a critic of Trump.

She opposed him for similar reasons as many other establishment Republicans opposed Trump. She didn’t like his foreign policy ideas. She thought Trump might actually pursue a more peaceful foreign policy.

But once Trump got the nomination and his popularity showed with the Republicans outside of DC, she cozied up to him. It is much the same way that many others did, such as Lindsey Graham and John Bolton and Mike Pompeo.

Trump stupidly appointed her to be the U.S. ambassador to the United Nations. Why did Trump feel like he owed her anything? Could he have not found anyone else to take the job?

Nikki Haley’s presence actually just reminds me of how ineffectual Trump was as president. He stupidly surrounded himself with people who originally opposed him. Why didn’t he surround himself with the people who supported his campaign from the very beginning?

Nikki Haley was never an ally with Trump. She just played the game. And now she is running for president against the man who appointed her to her last major job.

I hope she falls flat on her face. Her foreign policy views should be shunned by every libertarian. She is so bad on foreign policy, it doesn’t even matter what her other views are.

It will be interesting to see how Trump deals with her. We all know that Trump just can’t ignore her. Anyway, I would rather see Trump attacking Nikki Haley than DeSantis at this point.

Trump needs to play his cards right here. He obviously shouldn’t go after her physical appearance in any way. He needs a good nickname for her that spells out the fact that she is a war hawk. She can be “Bloodthirsty Nikki”. Or maybe “Nikki the War Maker”. It would be the truth.