There was no massive red wave of Republican victories across the United States on Tuesday.  It was a mixed bag overall, but there were definitely winners and losers.

As I write this, neither major party has a clear majority in the House or Senate.  It looks like the Republicans will get a very slim majority in the House.  In the Senate, it looks like Georgia is headed for a runoff, which will favor the Democrats.  It will probably end up being 50/50 in the Senate, which means that the Democrats will get the deciding vote with Harris as vice president.

As I write this, there is still only 67% reporting in the Arizona Senate race and the Arizona governor race.  There is only 77% reporting in the Nevada Senate race.  In some California House races, the reporting totals are well under 50%.  This is almost a full day after the polls closed.

If you don’t want accusations of fraud and “threats to our democracy”, then maybe you can report all of the vote totals in a timely manner.  But obfuscation and confusion is the name of the game.

The Winners

Unfortunately, despite losing seats in the House, the Democrats are in the win column because it should have been so much worse.  This will only embolden the party of chaos and destruction, which means the American people as a whole take a loss.

It’s not that I think the Republicans would have been great in any way, but they would have been a roadblock to Biden and company’s destruction agenda.  Hopefully the Republicans will at least get a majority in the House so as to slow things down and create some gridlock.

On the Republican side, Ron DeSantis is the huge winner, along with the state of Florida.  DeSantis went from getting about 50% of the vote in 2018 to getting about 60% this time around.  He absolutely crushed his opponent.  He won by 1.5 million votes.

In fact, all of Florida did well for Republicans.  It is at least encouraging that DeSantis was rewarded for the being one of the few governors who locked down the least during COVID.  The only one who beats him on that front is Kristi Noem of South Dakota, who also had a big victory.

It looks like Florida is a red state now, and it is largely owed to DeSantis.  There were a lot of people who moved to Florida in the last 2 years to escape the craziness.  From personal experience, I can tell you that I did not vote for DeSantis in 2018, but I voted for him this time.  I know DeSantis is not a libertarian, but I wanted a strong message sent that COVID lockdowns and mandates are not acceptable.

For the Senate, I ended up voting for the Libertarian Party candidate and not for Marco Rubio.  I actually would have voted for Rubio if I thought he was in any danger of losing, only because I want the Republicans to have a majority in the Senate.  Or more accurately, I want the Democrats to lose the majority in the Senate.

The Losers

I already mentioned that the American people in general are on the losing side from the election (whether they know it or not).  They will be the ones suffering from inflation, government spending, the threats of war with Russia, the threats of more COVID mandates, and all of the totalitarian tactics being thrown at them by Biden and company.

Aside from the American people, I think Donald Trump was the big loser on Tuesday.  If you think about it, DeSantis did not seek Trump’s endorsement.  He did not want Trump out campaigning for him in Florida.  It would have only hurt DeSantis.

Trump had a victory with J.D. Vance winning in Ohio.  It is still not clear what will happen with Kari Lake in Arizona.

Trump completely bombed with his endorsement of Dr. Oz in Pennsylvania, who went down to a guy who makes Joe Biden look articulate.

Trump made two huge errors leading up to the election because he can’t control his own ego.  First, he took an unnecessary swipe at Ron DeSantis.  He referred to him as “Ron DeSanctimonious”.

Second, Trump announced that he would be making an announcement on November 15.  So while the headlines weren’t blaring that Trump is seeking the presidency in 2024, he was saying this without directly saying it.

This was right before the mid-terms.  This could only hurt the Republicans across the country.  Of course, we don’t know what impact it had, but it doesn’t look good.

2024

With Trump candidates not having a great showing in the election, and with DeSantis coming out looking great, you have to wonder how this will impact the next two years.

It is becoming clearer to Republicans who support Trump that DeSantis is more likable and more polished than Trump.  And if Trump is going to pick a fight with DeSantis because he sees him as a threat, it just looks bad for Trump.  He looks insecure, which he probably is.

As a Floridian, I would rather see DeSantis stay as governor.  I would like for libertarians to put some mild pressure on him to improve things in Florida.

I think DeSantis will stay on the sidelines for a while and watch what happens.  He will see in the coming months how much momentum Trump has within the Republican Party.  He will get a sense of whether he should enter the race for the presidency.

DeSantis has some appeal to independents that Trump doesn’t have.  I think Tuesday night showed this.

Trump is 76 years old now, and the establishment is out to get him.  Of course, they will be out in full force to get DeSantis too if he runs for president.  But Trump’s future is not certain at this point, and I think DeSantis will be ready to step in the presidential race should anything change.

I don’t think Trump is lost at this point, but he definitely took some punches on Tuesday night.  If he keeps misplaying his hand, he will find that DeSantis has become the leader of the Republican Party.

Emily Oster, writing for The Atlantic, has suggested that we just declare a pandemic amnesty.  If you want the full side of her story, you’ll have to read it for yourself.

She tells a story from April 2020 when her family went hiking.  At one point, another child got close to her then-4-year-old son, and he yelled, “social distancing”.

Oster then writes that these precautions were misguided and that outdoor transmission was rare.  She then declares, “But the thing is: We didn’t know.”

But the thing is, Emily, some of us did know.  And we weren’t even doctors or scientists.

You didn’t need a PhD in virology to tell you that a virus doesn’t typically transmit outside.  You also didn’t have to be an expert statistician to realize that even if you did contract COVID, it was less harmful than the flu for younger people.

(I say that with the caveat that it became more dangerous for those who sought medical treatment, as the Emily Osters of the world would advocate that you be put on Remdesivir and a ventilator.)

It sounds like Emily might have to ask for amnesty from her son one day.  He was only 4, and he was yelling “social distancing” to another child.  I wonder where he learned that.  Now that he is likely full of mRNA and spike proteins, I’m sure Emily has taught him to be less paranoid about a virus that was no threat to him whatsoever in the first place.

Emily is suggesting that we just put everything behind us and call it a day.  Who cares about the lockdowns, the beatings, the beratings, the closed businesses, the lost jobs, the fear instilled in so many people, and the vaccine injuries?  Oh well, let’s just declare a truce, now that me and my cohorts have ruined your life.

In her article, Emily said that we lacked definitive data on the efficacies of the vaccines.  She then declares that, “The mRNA vaccines have won out.”

So she wants some kind of amnesty, presumably for herself and those on her side, yet she is still spreading misinformation.  What is your definitive data, Emily, that says mRNA vaccines have won out?  Is it the tens of thousands of deaths reported to VAERS?  Is it the fact that they don’t stop transmission or infection?  Or is it that they greatly weaken your immune system over time?

How can we declare an amnesty when you haven’t even come close to reaching the truth yet?

An Amnesty From Violence?

I think there are times when it is best to agree to disagree and just move on.  And sometimes one side was wrong and the right side doesn’t have to rub it.  Sometimes people do just make mistakes that should be forgiven.

Of course, when someone makes a mistake, they should usually issue some kind of an apology or admission of being wrong before there is forgiveness.

But the COVID policies of the last 2 and a half years go way beyond this.  It would have been one thing if we had just been sold hysteria over a virus and people had been unnecessarily fearful.

The biggest problem is that many of us didn’t buy into the hysteria, and we wanted to live our lives as normal, but we were not allowed.

The “experts” in Emily’s camp were advocating all of the bad government policies that put a boot on our collective throats.

Most people were told they had to stay at home except for “essential” activities.  Businesses deemed “non-essential” were forced to shut their doors or be punished.  If they tried to defy, then people with guns would show up to tell them to obey or else.

We were forced to wear masks in many places because of government orders.  We were forced to fund bailouts for those being impacted by the lockdowns.  We were forced to fund research and development of vaccines, and then more money to market them.

And the big topper is that many millions of Americans were forced to get injected with these so-called vaccines or else lose their livelihood.

Was Emily and company ever advocating on my behalf saying that I shouldn’t have to get a needle in the arm or lose my job?  Was she saying that vaccination should be strictly voluntary?

Emily and company put us through absolute hell for more than 2 years.  There have been many lives ruined due to the fear, the lockdowns, and the vaccine mandates.

Virtually all government action involves the initiation of violence or threat of violence.  You may not see the violence, but if you disobey, it is there.

If someone sticks a gun in your belly and demands your money, what would your reaction be a year later if he asks for amnesty?  Maybe you could forgive the person.  Maybe you could show some grace.  But it doesn’t mean there are no consequences.

You Want Amnesty?

If Emily really wants amnesty, I am willing to consider it for her under a few conditions.

First, admit that you were wrong and vow to never spout off again about something you don’t know about.

Second, find another job where you aren’t influencing others because you got almost everything wrong.

Third, take a vow that you will never again advocate the use of force (including government force) ever again for any political or social goals.

If you do that, I am willing to show you some grace and leave you alone.  Although just remember that some of us wanted to be left alone in 2020 and 2021 from people like you, but you wouldn’t permit it.

For anyone who was COVID fearful but was against using government force in imposing their views, I am willing to move on.

But if you were advocating the use of violence to impose your will on others, I can’t just forgive and forget without there being any consequences for your actions.

The FOMC raised its target federal funds rate this week by 75 basis points.  This is being done by the Federal Reserve to fight the inflation that it created in the first place.

While the Fed is indicating that it could slow down in its tightening depending on economic data, the fact remains that price inflation is still high, even according to the government’s own statistics.

I have said that the only things that will get the Fed to reverse course before inflation is under control is for bank failures or major turmoil in the bond market.  The Fed is not going to reverse course just because we are in a recession or the stock market is dropping.

If and when we enter a recession, it is possible that prices will come down.  Or perhaps more accurately, prices will go up at a slower pace.

But what happens if we enter a hard recession with price inflation still raging at 7 or 8 percent?

The Fed has not faced a situation like this since the 1970s and early 1980s.  We know how that one went.  The Fed, under Paul Volcker, engaged in a tight money policy with high interest rates in order to get price inflation under control.  It also drove the economy into multiple recessions.

While the official inflation numbers were higher at that time, so were interest rates.  Right now, we have a situation of very negative real interest rates, even after the Fed hikes.  Price inflation is still vastly exceeding long-term and short-term rates.

Another difference between now and the late 1970s is that the debt is far worse.  The official debt, not including unfunded liabilities, sits at $31 trillion.  As interest rates go higher and some of this debt is rolled over into higher interest debt, the interest payments for the government (i.e., the American taxpayer) will surge.

We also have about 14 years of extremely loose monetary policy.  The Fed exploded the money supply after the 2008 financial crisis hit, but we never had the consequences of significantly higher consumer prices until recently.  So we have a lot of misallocated resources that are going to correct at some point.

On top of this, the yield curve is inverted.  The 3-month yield is now higher than the 10-year yield.  The 2-year yield has been higher than the 10-year yield for several months, and it now sits over 50 basis points higher.

So the biggest recession indicator has been triggered, and the Fed is raising rates and reducing its balance sheet with this going on.  There is little doubt at this point that there will be a recession in 2023.

After an incredibly strong month for the Dow in October, stocks resumed their fall this week.  We should expect a lot of volatility going forward, but I think the damage to stocks has only begun.

The Everything Bubble has reached its peak and has started to fall.  It may be a fall for the ages.  It is also incredible because just about every asset class has seen a bubble at once.  The only major exception I can think of is precious metals.

This means that your wealth is not really safe anywhere.  The best you can do is diversify and stay out of debt.  I still recommend a permanent portfolio setup, although even that will see its down days.

The name of the game right now is wealth preservation.  If you have something saved up, try to keep it.

I think there will be opportunities to make money down the road when everything gets beaten down.  I’m sure there really will be bargains when there is blood in the streets.

If the government resumes creating money any time soon, then that could change the whole game.  But I don’t expect it in the next several months unless major financial institutions get into trouble.

For now, prepare for a major recession ahead.  If the Fed reverses course, then it will be time to look for more speculations in mining stocks and other assets.

As I write this, Election Day is just over a week away.  Even the mainstream (i.e., establishment) media is admitting there may be a red wave.

The “red” is referring to Republican, but the quality of the Republicans up for election matters.

First, I do believe there will be this red wave.  I think the Republicans will easily take a majority in the House of Representatives.  The Senate is a bit more unclear.

I know there has been a lot of talk about voter fraud since the 2020 election.  There has also been a lot of censorship of talk about voter fraud.  There are some who are wondering if that will be a factor in these mid-term elections.

There is voter fraud in virtually every national election, at least to some degree.  It is just a question of whether it is limited in scope and if it has any impact.

For the House, there are 435 elections.  It is quite difficult to have widespread fraud to make a major difference.  There could certainly be fraud that tips the scale in five or ten races.  But if the Republicans get a massive wave of voters compared to the Democrats, then it won’t matter much.  They will still pick up a majority.

It could matter in the Senate.  It would be something similar to what was seen in the 2020 presidential election.  In all of the really close states, vote counting seemed to stop in the middle of the night, and it was generally the big cities (Detroit, Milwaukee, Atlanta, Phoenix) where things seemed to get strange.

This could certainly happen with the races for senators and governors.  It is hopeful that it won’t be as bad, as I do think local Republicans are a little bit more prepared than last time, even though these big cities are dominated by Democrats.

Why It Does Matter

It is very important that Republicans at least take control of the House.  I say this as someone who thinks that elections are overhyped and that both major parties are bad.

The last two years have been horrific.  They have been far worse than I could have imagined, and I am a cynical libertarian.  Joe Biden declared that 100 million people had to get medical injections or they would not be allowed to work.  They would not be allowed to feed their families.

Luckily there was enough pushback in a substantial minority not getting jabbed.  It was also fortunate that the Supreme Court struck down a large portion of the mandate, even though millions of people still ended up being subjected to it.

There are many other things aside from the vaccine mandates.  Biden has been funneling tens of billions of dollars to Ukraine and the military-industrial complex in order to prolong the war in Ukraine.  Russia is not going to leave Ukraine until they get assurance that U.S. missiles won’t be on the Russian border and the ethnic Russians in eastern Ukraine are protected.

There is not one Democrat in Congress who has opposed funding this war.  While most Republicans have also been guilty of supporting the funding, at least some Republicans have spoken against it.

There are many other bad things Biden and the Democrats have done and continue to do.  They continue to spend like crazy and promote their so-called green agenda.  They continue the culture war and are actively trying to tear down Western Civilization.

Biden just declared that some student loan debt would be forgiven.  He can just declare anything, and if it is struck down by the courts, “Oh well, nothing lost.”  There are no consequences for him acting like a dictator.

This is why we need a red wave.  There have to be consequences for this recklessness.  Imagine if the Democrats keep control of Congress.  They will just be that much more emboldened to continue with their destruction.

Most Republicans will not be great.  I heard Blake Masters (Senate candidate in Arizona) on Ron Paul’s show and on Dave Smith’s show.  He was good compared to most other people running for national office, but he was wishy-washy at times.  Whenever he used the word “basically”, I cringed.  When someone says, “I basically opposing getting involved in Ukraine”, it probably means they don’t really oppose it.  He is probably acting along the lines of Rand Paul.  He won’t be really bold on some things, but he will be far better than most politicians.

Kari Lake, running for governor of Arizona, is really good.  I understand she isn’t a libertarian, but she is good on a lot of major issues.  But the most important thing is that she is really bold.  She shows courage.  She is like Trump in a lot of ways, except less sloppy.

There are several other decent candidates running for office this November.  This is encouraging.  The Republicans are becoming less hawkish on foreign policy, and they are mostly less bad on other issues compared to Democrats.

I know that Mitch McConnell and Lindsey Graham are total disasters.  But I also know that there are people out there like Marjorie Taylor Greene who will not hold back and will be mostly good for liberty.

So the red wave does matter.  We need the opposition to Biden and his destructive policies.  We need more gridlock.

And slowly, the Republicans are getting a little better.  The establishment Republicans are losing ground, and they know it.

I think the Republicans will take the House.  They may take the Senate.  I hope the decent ones get elected.  It will be a step in the right direction.

There are already many signs pointing to a recession ahead.  We are, after all, in the Everything Bubble.

The last piece of confirmation I have been looking for just came.  The 3-month yield is now higher than the 10-year yield.  The mostly inverted yield curve points to a major recession in 2023.

Some people look at the 2-year vs. 10-year yields for inversion.  These have been inverted for several months.  The 2-year has frequently been 40 basis points or more higher than the 10-year yield.

I prefer to see an inversion of the 3-month yield and the 10-year yield for recession confirmation.  Of course, nothing is guaranteed.  We should have seen a deep recession in 2020 after the curve inverted in 2019.  But we got COVID hysteria and trillions of dollars of fresh money from the Fed, which delayed and exacerbated the inevitable.

Now we have high consumer price inflation, even according to the government’s own statistics.  The Fed can’t just create trillions of dollars more in new money to fight the next recession; otherwise they risk losing control of the dollar.  The Fed may be made up of a bunch of Keynesians, but they don’t want hyperinflation.

So the yield curve is now inverted while the Fed continues to hike its target interest rate and slowly draining its balance sheet.  If you think stocks have fallen hard in 2022 so far, hold on to your hat.  Things may have just gotten started.  The same goes for housing in most areas.

The Numbers

The 3-month yield closed above the 10-year yield on October 18, 2022 by 3 basis points (.03%).  The 10-year yield jumped the next day, and it was no longer inverted.

On October 25, the 10-year yield started to go back down, while the 3-month yield continued higher.  In just 3 days, the 10-year yield has dropped almost 30 basis points from 4.25% to 3.96%.  The 3-month yield now sits at 4.13%.

In fact, as of this writing, the yield on a 30-year bond is actually slightly lower than on a 3-month Treasury bill.  Who in their right mind would accept a lower interest rate for 30 years as compared to 3 months?

The answer is somebody who expects long-term rates to fall due to a really bad recession.

The bond market is typically thought of as the smart market.  The stock market doesn’t have this reputation unless you talk to a bullish stock investor.

Of course, markets themselves are neither smart nor stupid.  But the mania investors go into stocks.  Bond investors are not just trying to make a quick buck.  They are often just trying to preserve capital.

The bond market tends to be a better predictor of the future economy.  And there is no clearer sign that a recession is on the horizon than an inverted yield curve.

More Confirmation

I already thought a recession was coming.  The speculative mania in stocks, real estate, crypto, and nearly everything else has been extraordinary up until this year.  It all came on the heels of the Fed’s easy money policies.

With consumer price inflation nearing double digits, the limits seem to have been reached.  The major inversion of the 2-year and 10-year yields was already pointing to trouble ahead.  I wasn’t sure if we would see an inversion of the 3-month and the 10-year.  It took some time, and here we are.

And the Fed isn’t done raising rates.  There is another meeting next week where we will see another major hike to fight the inflation that the Fed itself created.

I’m not sure that people are quite prepared for what we are about to see.  Government spending is already through the roof.  While a major recession should point to lower interest rates (as investors seek safety in U.S. Treasury securities), who is going to buy this debt at low interest rates in the long run if not the Fed?

The Fed is actually slowly selling off debt at this point.  What will happen to the trillion-dollar deficits?  If interest rates continue to go up, the burden of the interest payments on the debt will become quite significant.

If we are facing a major recession and a popping of the Everything Bubble, what happens if price inflation doesn’t come down to the Fed’s 2% number?  Imagine if the Fed is still raising its target rate in the middle of a brutal recession.  The last time anything like this was seen in the United States was in the 1970s and very early 1980s.

There are warning signs everywhere that things are going to get bad.  The inverted yield curve with the Fed continuing to tighten monetary policy by itself is enough to know just how ugly things could get.

Stocks will not go straight down.  In fact, if you like to day trade, it will be a dream for people who know what they are doing.  There will be many up days too.  There will be a lot of volatility.  But there will be more and bigger down days than up days.

As someone who follows the Austrian school of economics, I am hesitant to make predictions about the future.  We can’t predict human action with certainty.

In this case, I think it is a near certainty that there will be a recession in 2023, and it is going to get ugly.  The best hope is that the Fed allows it to happen and the government is forced to scale back its spending.  The system needs to be cleansed of the malinvestment that has occurred, particularly since 2008.

I often refer to the “establishment” in my writings.  Admittedly, it is not an easy term to define.  Sometimes I will refer to the “ruling elite” as a substitute.  Occasionally I will also use the term “deep state”.

From Wikipedia, “The Establishment is a term used to describe a dominant group or elite that controls a polity or an organization.”

In the case of the United States, it isn’t only politicians that are part of the establishment.  It can include people with wealth or influence, including the media.

It is easy to identify certain people as belonging to the establishment.  But there is no clear-cut definition, and the lines definitely get blurred.

Hillary Clinton and Barack Obama are establishment people, as is Joe Biden.  George W. Bush was not as favored by the media, but him and Dick Cheney certainly hold a place as part of the establishment.

I do not consider Donald Trump as part of the establishment.  Some will claim that he is, but I don’t think the establishment forces would be so desperate to tear him down if that were the case.

Ronald Reagan is a bit trickier.  I would characterize him as someone that wasn’t really part of the establishment, but the establishment could at least deal with him.  They would have preferred Walter Mondale, but they could accept Reagan, as he wouldn’t fly too far off the establishment path.

Sometimes the establishment will allow some opposition so as to satisfy their opponents.  I don’t mean their political opponents, but rather the general population who do not generally accept the establishment narratives.

You have to wonder how things would have played out if the establishment (including much of the media) had not so vehemently opposed Donald Trump and had not been so desperate to get anything to stick to him.

The Trump supporters would have been more satisfied, and they would probably be a lot quieter than they are now.  They probably would have accepted a large degree of the status quo with some changes around the edges.

Instead, the establishment declared an all-out war against Trump, which has only emboldened his supporters.  You now have many Trump supporters questioning whether the FBI and Department of Homeland Security should even exist because they see these agencies as corrupt to the bone.

So in that sense, the establishment overplaying its hand with Trump has actually moved some people in a more libertarian direction, which isn’t insignificant in the long run.

Not Everyone Wants Destruction Like Biden

The curious thing about the Biden White House is that it has created an environment of chaos and destruction.  The Biden handlers are purposely trying to tear down Western civilization.  It has gotten even more absurd lately where they are willing to risk a nuclear war for their little games.

Biden has been terrible on almost everything.  To this day, he is creating havoc with his mandates for “vaccination”.  His economic policies are terrible, as the government spending continues.  His foreign policy is mostly terrible, as he funnels tens of billions of dollars to Ukraine (and the military-industrial complex) to continue the war.  One of the few decent things Biden has done is to end the occupation of Afghanistan, but even there he managed to bungle the withdrawal.

The disaster of Biden really culminated when he gave a primetime speech attacking “MAGA Republicans”.  It wasn’t a speech attacking Donald Trump.  It was a speech attacking Trump supporters, which is a major difference.  And now he is using the “Justice Department” and the FBI to go after any influential Trump supporter.

While Biden is the president of total chaos, not everyone who is part of the establishment is like Biden and his handlers.

Henry Kissinger, who is famous as a long-time war hawk, has warned to tamp down tensions with Russia.  The 99-year-old man is more worried about nuclear war than the idiots and criminals in the Biden administration.

There are many establishment Republicans in Congress who will not be as destructive in office as Biden and many of the Democrats.  They may not be particularly good on important issues, but they also aren’t necessarily purposely trying to tear down civilization.

There are differences, and this should be recognized.  Marco Rubio is part of the establishment, but he is generally better than Lindsey Graham.  And while Rand Paul can play ball with establishment forces at times, he is better than Marco Rubio.

In terms of political parties, the Republicans are better than the Democrats these days.  Surprisingly, even on foreign policy, the Republicans are not as bad as the Democrats.  At least there is some opposition from Republicans on sending money and weapons to Ukraine.

If you really want to look at how the establishment is not uniform, look at the Federal Reserve right now.  The Fed is on a mission to get inflation under control (that it created).  Some people theorize that the Fed will control monetary policy to help incumbents or to help certain politicians who are part of the ruling elite.

But Jerome Powell and company are doing absolutely no favors for Biden and the Democrats right now.  They are continuing to raise interest rates and engage in a policy of tight money, which is hurting the stock market and exposing the bad economy.  They are doing this for the longer run goal of controlling inflation.

This can only hurt the Democrats in the short run.  The Fed is working against the Democrats for this election.  It just tells you that the Fed doesn’t really care if the Republicans or Democrats control Congress.  If anything, they might want Republican control for a little sanity.

Again, just because you are part of the establishment or the ruling elite, it doesn’t mean you have the goal of total chaos.  Most people in powerful positions just want to maintain the status quo of being part of the ruling elite.  They don’t want total chaos.

I say all of this to give hope to people.  The crazies running the Biden White House are not the inevitable rulers for years to come.  The FBI raids of Trump supporters do not have to last forever.  Even within the FBI, there are some decent people who see what is happening.

It is easy for libertarians to just throw up their hands and declare that everything is corrupt and that everyone working for the federal government is corrupt.  This is not at all true.  And even within the establishment, there are varying degrees of evil, and there are varying goals.

Sometimes it isn’t so bad if the establishment on one side fights the establishment on the other side.  Meanwhile, more and more people are learning the truth about how the ruling elite are not there to protect them and help them.

There are a lot of reasons to be pessimistic these days, but there are reasons for long-term optimism as well.  We are not destined to be ruled by Biden and his goons for a long time to come.  More and more people are awakening to the evils of the establishment, which is why the establishment is working so hard to shut us up.

The establishment feels threatened, which is why they are fighting so hard right now.  The process in the years to come isn’t going to be pretty, but there is a real chance that we could come out the other side with much greater liberty than any of us have had in our lifetimes.

Steve Bannon was just sentenced to 4 months in prison for not appearing before Congress.

In case you didn’t know how the game works, people in Congress can lie all the time.  They can even lie about things that start wars, which end up killing hundreds of thousands of people.  But they don’t get into any legal trouble for this.  They typically don’t even get into any political trouble.

But if you lie before the lying people in Congress, then you may find yourself in jail.  If you don’t show up in front of Congress when the lying criminals want you to, then you may find yourself in jail like Steve Bannon.

There have been a lot of Trump supporters and associates who have found themselves in legal trouble going back to 2016.  This evidently now includes Trump himself since the FBI raided his home.

If you are anti Trump, then you probably think all of these people in legal trouble (some of whom have gone or are going to prison) just shows that Trump is a bad guy.  It is proof to you that nobody is above the law and Trump associates with a bunch of criminals.

Trump has associated with a bunch of criminals, but they don’t seem to be the ones in legal trouble.  John Bolton and Mike Pompeo never found themselves in legal trouble or being investigated, let alone being sent to prison.

We have seen George Papadopoulos, Michael Flynn, Carter Page, Roger Stone, and Steve Bannon, just to name some big ones, who have found themselves against the “Justice” Department and the intelligence agencies.

What is it about these people?  Are they really just bad people?  Are they the criminals?

America First and Anti Establishment

Again, John Bolton and Mike Pompeo have been fine.  The FBI isn’t investigating Nikki Haley as far as we know.  Merrick Garland isn’t raiding the home of Bill Barr.

All of the people getting in trouble are those who go against the establishment.  They also question U.S. foreign policy, much like Trump has done at times despite hiring some war hawks.

So the people being investigated and ending up in jail are the same people who question U.S. interventionism overseas.  That is such a coincidence.

What are the chances that all of the criminals just happen to question overseas wars and interventions?  It’s amazing how it all works out like that.

It’s not that all of these people were as anti war as someone like Ron Paul.  But they definitely questioned U.S. foreign policy.

If Michael Flynn, instead of advocating dialogue and getting along with Russia, had advocated ramping up tensions with Russia, do you think he would have found himself in legal trouble?

So for all of the anti Trump people who just think these people are getting what they deserve, ask yourself why none of the hardcore war hawks find themselves in any legal trouble?  Are Mike Pompeo and John Bolton better people than Michael Flynn and George Papadopoulos?

If you defy the establishment and you challenge the military-industrial complex, the “Justice” Department and the so-called intelligence agencies are making it clear what will happen to you if you have any influence.

There is new legislation that passed in California that will intimidate doctors from speaking out against COVID hysteria and vaccines.

California’s AB2098 states that doctors who are deemed to spread misinformation or disinformation related to COVID-19 are subject to being charged with unprofessional conduct by a review board.  In other words, if a doctor says something that the medical establishment doesn’t like, then the doctor may have his or her license pulled.

My hope is that more people examine what was previously a given.  In this case, why do doctors need a license issued by the state to practice medicine?

In a true free market, the government wouldn’t be licensing such things.  It doesn’t mean that licenses wouldn’t exist.  Maybe Underwriters Laboratories or some other company that specializes in certifications would issue licenses. Customers could go to whomever they wanted, but could shop around based on the level or type of license that a physician possesses.

Since we have long been down the road of government-licensed doctors, it makes it easier for legislation like this horrid bill coming out of California.  It basically prohibits free speech, and it stifles any debate within the medical or scientific community.

Consensus

The bill is written to say that misinformation is when you go against the scientific consensus.  Of course, when they say consensus, they really mean the consensus of the state bureaucrats and those on their payroll.

It is interesting that the bill declares that, “Major news outlets have reported that some of the most dangerous propagators of inaccurate information regarding the COVID-19 vaccines are licensed health care professionals.”  I can’t disagree with that statement at all.  But even taken in the way it is meant, there would be no consensus.

Of course there will be consensus if this legislation is enforced.  How could there not be?  If you stray from the official opinion, then your career will be ruined.  So by definition, the consensus will automatically be whatever the official board determines it to be.

And isn’t this really the problem with the state prohibiting any speech (other than threats of violence)?  You can start with the most absurd example, but if the government doesn’t want you saying it, there is a reason they don’t want you saying it.

When governments try to make it a crime to criticize a war, then you know it is the people who are trying to shut you up who are the criminals.  They are obviously trying to hide something or not wanting another opinion shared to the public.

In the case of vaccines, the people trying to shut you up are the criminals.  They don’t want to engage in debate.  They just want to censor.  All they can do is repeat over and over that the shots are “safe and effective”.  They are drones.

Who gets to decide what is misinformation?  Who checks the checkers?

According to Biden’s press secretary, an extremist is someone who doesn’t go along with the majority.  So I guess if you aren’t with the majority, then you aren’t part of the consensus.  If you aren’t with the consensus, then you are an extremist.

Apparently Karine Jean-Pierre would have been an extremist in 1840, or else she would have been an advocate for slavery.

It’s amazing we have gotten to this point.  The good news is that more people have awakened because of these tactics. The establishment has way overstepped their bounds.

If this California legislation holds, then expect more doctors to leave California.  The people in California will live in a complete echo chamber.  They can go to any doctor and they will be told the same thing.  It won’t just be vaccines.

If millions and millions of Americans die from the COVID vaccines, it won’t matter in California.  They will stick with their consensus of state-funded bureaucrats.  It doesn’t matter what the facts are.  The only thing that matters is what the consensus says.

If you live in California, does this make you want to stay there?  I hope you are healthy and don’t need a doctor for anything important.  You may as well have a robot treating you.  You can just type in your symptoms, and it will spit out the drugs to take.  It will all be approved by “the scientific consensus”.

The CPI numbers came in for September 2022 showing an increase of 0.4%, which was slightly higher than expected.  The year-over-year now stands at 8.2%.

The less volatile median CPI came in at 0.7%.  The year-over-year median CPI just hit a high of 7%.

Stocks originally tanked on the news in the morning, but then quickly recovered and rocketed much higher.  The overall swing was quite dramatic, and it is a little puzzling.

With this CPI reading, it is evident that the Fed will continue to raise its target federal funds rate this year, and the balance sheet will continue its slow decline.

This is in the face of an already somewhat inverted yield curve.

While the 10-year yield is still slightly higher than the 3-month yield, just about everything else has disaster written all over it.

The 6-month yield exceeds the 30-year yield.  So an investor is willing to take a lower yield locked in for 30 years than for 6 months.  This means that bond investors are not expecting price inflation to remain elevated in the long run.  It also means that bond investors are expecting a recession in the near term.

The problem for the Fed is that it can’t worry about a recession too much because it is more worried about the dollar.

We All Eat

Price inflation doesn’t hit everyone equally.  It tends to favor debtors, but only to a point.  It needs to be fixed-rate debt.  It tends to favor those with hard assets.  It tends to hurt those on a fixed income.

It is also complicated because everyone has different expenses.  They buy different things.  One thing that everyone consumes is food.  The price of food continues to go higher.  It is generally outpacing the overall price inflation rate.  It is hurting nearly everyone.

This is why the upcoming election shouldn’t go well for those in power (among other reasons).  The amazing thing is that Congress continues to spend recklessly, perhaps as bad as ever, while the Fed is currently saying “no” to buying government debt.

While the Fed and the politicians in DC do tend to work hand-in-hand, there may be a small element of truth when it comes to the notion of Fed independence.  I don’t think the central bank wants to destroy the dollar.  They don’t want to destroy their own power.

I think the Fed will keep tightening until price inflation really is under control.  There are a few exceptions though.  The only things that could derail the Fed’s tightening are major trouble in the bond market and trouble with major financial institutions.

I think the Fed always stands ready to bail out the major banks and to make sure there is no serious talk of default on U.S. government debt (unless it is defaulting only on Russia).

I keep saying that a major drop in the stock market isn’t going to make the Fed reverse course.  We’ve had major drops before.  The Fed is definitely more concerned about getting price inflation under control than the price of stocks.

The Fed Has Some Control, But There Are Choices

While central planning a major economy doesn’t work for the people it is being planned on, the central bank does have tools to control things.

I recently wrote about Ben Bernanke, and how he correctly stated that the central bank has a digital printing press and is always capable of creating “positive inflation”.  This has been made evident the last couple of years.

The Fed can almost always control things the other way.  Unless total faith in the dollar is lost, the Fed can always bring price inflation down.  The Fed could vote tomorrow to raise its target rate by 300 basis points and to sell off $1 trillion in Treasury bills.

That would bring price inflation down really quick.  It would also crash the stock market and the entire economy.  It would really disrupt the bond market.  So the Fed doesn’t want to do anything that dramatic, but it certainly could if bringing down inflation was the only goal.

The Fed is trying to bring down price inflation in a controlled manner.  That is what we should expect.  But there is no escaping the malinvestment that has occurred over the last 14 years when Ben Bernanke started the Fed on an unprecedented monetary inflation run.

The Fed has choices.  They may not be good choices, but there are choices.  Right now, I think there is more of an emphasis on reducing price inflation.  The Fed members don’t care if the Democrats get wiped out of office.  They might care if it was Trump running for president, but even some establishment people probably prefer the Republicans to take over Congress now.

Again, expect the Fed to keep tightening until price inflation comes down significantly.  They will put up with a declining stock market.  They will put up with a recession.  They just don’t want a completely chaotic bond market, and they don’t want major banks defaulting.  Those are the only two things that will change Fed policy until price inflation comes down.

In the continuation of our bizarro world, Ben Bernanke has been awarded a Nobel Prize in economics.  He is actually sharing it with two other people for their work on bailing out financial institutions and covering up economic problems with more money printing.

Ok, so it isn’t exactly framed that way from the academy that awards the prize.  But that is really the heart of it.

This is on par with Barack Obama winning a Nobel Peace Prize, but at least in that case Obama hadn’t yet done anything.  He proceeded to make war in Libya, Syria, and Yemen.  He helped foment a coup in Ukraine and continue other wars.  But hey, you can’t make peace without breaking a few hundred thousand eggs.

Bernanke is winning this prize with it being well-known what he has already done.  He presided over the financial crisis of 2008, and he brought the most unprecedented monetary inflation in modern U.S. history.

Some people will criticize this award going to Bernanke and pointing out that he was responsible for the 2008 financial crisis.  This isn’t really correct, at least in his role as chairman.  Bernanke, as Fed chair, did start to tighten monetary policy, which then gave us the financial crisis and major recession.  But this was baked into the cake.  It was already set up under the Greenspan Fed.

So it wasn’t really Bernanke as Fed chair that was responsible for the initial problems in 2008 and 2009.  The main problem with Bernanke was the Fed’s response under his “leadership”.

When the financial crisis hit in September 2008, the Fed’s balance sheet was around 900 billion dollars.  It exploded to over $4 trillion by 2014.

Bernanke’s inflation bailed out banks and other financial institutions.  This, after all, is the Fed’s main purpose.  It also enabled the first trillion-dollar annual deficits coming out of Washington DC.  If Congress didn’t have a central bank backing them up, their spending would be far more limited.

Bernanke really set the stage for where we are today with massive bubbles and malinvestment.  This was exaggerated more in 2020 and 2021 with the response to COVID.

Bernanke is part of the problem.  He is certainly not solely responsible for where we are today, but he was a big part of the system that gave us our present situation.

Helicopter Ben

Some may have forgotten – or never knew – that Bernanke was known as Helicopter Ben back in the day, even before becoming Fed chair.  He somewhat famously spoke in 2002 to Milton Friedman on his birthday and apologized on behalf of the Fed for not printing enough money during the Great Depression.  He assured everyone that the Fed would never let that happen again.  He wasn’t lying.

Bernanke spoke again in 2002 on the subject of deflation.

Bernanke correctly observed that the Fed has a digital printing press and that it can create positive inflation at any time by credibly threatening to use it.  Jerome Powell has carried on that legacy and has certainly managed to create price inflation above the Fed’s 2 percent target.

Bernanke talked about a helicopter drop of money, so as to quickly inject money into the system.  It is basically what we saw in 2020 when the government started mailing checks to nearly everyone.

I’m not sure if Bernanke ever told us what to do if we hit high price inflation while the economy is headed into recession and business defaults linger.  Should the Fed focus on fighting inflation (that it created), or should it intervene to prevent bubbles from popping and financial institutions from getting into more trouble?

The Bank of England recently told us which way it will go.  It has already returned to bond buying, as the central bankers tell us that they have to support the pension fund obligations.

The Fed has not reversed course yet, but it also hasn’t been tested yet.  For now, we have tight money.  Interest rates are going up, and the balance sheet is very slowly going down.  But it could change very quickly if there is trouble with major banks or with the bond market.  I don’t think another 20% drop in the stock market is going to change anything for now.

Is it an Honor?

With Bernanke winning the Nobel Prize, I’m not sure if this cheapens it for F.A. Hayek fans.  But the prize was cheapened a long time ago.  You almost have to be a Keynesian nowadays in order to win the prize.

This is why supporters of Ludwig von Mises should never fret over him not winning the Nobel Prize or really getting any major acknowledgements from the powers-that-be.

Mises wasn’t just a great economist in spite of not winning the Nobel Prize.  He didn’t win the Nobel Prize precisely because he was so radically correct in his economic thought.  Hayek was the compromise person.  Hayek was also an exception to the rule, and that happened a long time ago (1974).

Mises was perhaps the greatest economist ever, although there were better writers for the layperson than Mises.  The people awarding these prizes today have probably never read Mises, and they probably wouldn’t understand him.  They only understand state solutions when it comes to economics, which is why Helicopter Ben was one of the chosen ones.