The FOMC released its latest monetary policy statement on December 15, 2021.  The Fed will increase its taper, while still maintaining its target interest rate near zero.

The increased taper just means that the Fed will increase its balance sheet at a slower pace.  It is decelerating the pace of monetary inflation.  If it continues on this path, then its current quantitative easing (or whatever term they’re using) should come to an end in the spring of 2022.

Jerome Powell said it wasn’t appropriate to change its federal funds target rate until the balance sheet expansion is over.  In other words, once the Fed stops inflating, then it might slowly increase interest rates.

Also interesting is that Powell said the Fed is no longer shooting for price inflation over 2%.  If that’s the case, then they should probably be slamming on the brakes faster than they are now.

Since the CPI is at almost 7% year-over-year, the Fed should probably stop all monetary inflation right now if they want to bring it back to 2%.

Of course, the Fed has to balance its concern of higher inflation with trashing the economic boom.  If they are too aggressive in stopping inflation, we could see a quick popping of the Everything Bubble.

This is presumably why the Fed is speeding up its taper while not stopping its monetary inflation completely at once.  They didn’t want to spook the markets.

Stocks went up after the Fed decision, while gold went down.  But things reversed on Thursday with gold going up and a more mixed stock market.  The Nasdaq was down big on Thursday.

While stocks have been somewhat volatile lately, they are still somewhat holding up.  The indexes still aren’t that far from all-time highs, even with the volatility.

We may not see the big crash of the Everything Bubble until we see an inverted yield curve.  In order for this to happen, we are going to have to see short-term rates go up a bit.  It is hard to have an inverted yield curve when short-term rates are near zero.

If and when we get an inverted yield curve, it will still take some time.  There is some lag between this and when the downturn actually happens.  So we could still be a couple of years out from a major downturn.

As I’ve said before, it is especially hard to tell right now because we did have an inverted yield curve in 2019.  The very brief recession (if you call it that) that came on in March 2020 is blamed strictly on COVID and the lockdowns.  And the Fed started creating new money like crazy before the downturn even happened.

So it is impossible to say if we need another inverted yield curve in order to see the next recession.  But if we do, then we’ll have to wait a couple of years.

This isn’t to say that stocks will keep roaring.  It’s also not to say that some sectors won’t see a major fall.

I am starting to think that so-called cryptocurrencies will be the canary in the coalmine.  These are the ultimate speculation of the last few years, and I think they could easily fall before stocks and real estate fall.

They may all go down in tandem, but it wouldn’t surprise me if cryptocurrencies lead the way and precede the fall in the big asset classes.

I don’t recommend any heavy shorts against stocks right now, as there might still be legs to run this bull market a bit farther.  I am not heavily betting on stocks right now, but I am also not heavily betting against them.

If we get an inverted yield curve in 2022, then I will consider taking some bets against stocks.

Alan Greenspan is currently 95 years old.  He was chairman of the Federal Reserve (the Fed) from 1987 to 2006.  He once wrote a great essay on gold and economic freedom, which was published by Ayn Rand.

During his time as Fed chair, Greenspan largely sold out to the establishment.  Or maybe he sought to be part of the establishment all along and just went along with Ayn Rand when it was convenient.

When Ron Paul was in Congress, he used to enjoy questioning Greenspan.  One time, Greenspan said something to the effect that the Fed had advanced to where it could almost mimic the gold standard.

Just last year, Greenspan warned about growing debt and inflation, so it’s not clear how this is consistent with his previous statements.

Greenspan also signed his essay for Ron Paul one time and said he stands by every word, yet it is completely inconsistent with his actions as Fed chair.

Perhaps Greenspan is correct that the Fed could somewhat mimic a gold standard.  The problem is that it won’t.

You could also say that Congress could balance the budget.  But given the opportunity for power, it is unlikely to ever do so again except perhaps when forced to by the laws of economics.

You have to wonder if Greenspan would still make these comments about the Fed being able to mimic the gold standard.  With the explosion in the Fed’s balance sheet and the official CPI numbers getting closer to double digits, I would like to ask Greenspan the following:  How’s that working out for you?

Well, it’s working ok for Greenspan, but how is it working out for middle class America?  Most people aren’t getting annual raises at their corporate job in the neighborhood of 7%.

A Major Reason to Criticize the Central Bank

There are many reasons to criticize a central bank, or in this case, the Fed.  The Fed cannot properly allocate resources.  The Fed’s monetary inflation redistributes wealth and is immoral.  The Fed can’t know the proper price of money or the interest rate.  Only the free market can properly allocate capital in accordance with consumer demands.

With all of that said, one of the biggest reasons to criticize the Fed is the same reason libertarians criticize politicians and bureaucrats.  The problem is that the power will not be used for the good of the people or for the stated intentions.

Or as Harry Browne liked to say: The problem isn’t the abuse of power; it’s the power to abuse.

Again, the Fed could try to mimic the gold standard.  If it did, things would probably be pretty good.  I would contend that it is impossible to mimic what the free market would have done, but maybe the experts could get somewhat close.  We could probably go along with a very mild inflation rate where the money supply grows at a rate that is close to the overall economy (not that this is necessary).  We might even see some mild price deflation if this happened.

But this isn’t going to happen because it is politicians and bureaucrats in charge.  They have favors to do.  They have bailouts to give.  They have deficit spending to finance.  They have many promises to make.

The Fed isn’t going to restrain itself any more than politicians in Congress restrain themselves.  It’s not that they are all pure evil, but they tend to have a bias in doing things that benefit themselves and those close to them.

In other words, this statement Greenspan made many years ago about the Fed being able to mimic a gold standard is completely naïve at best.

When you give monopoly power over the money supply to an institution, you should probably expect that the institution won’t have the noblest of intentions.

Even if Greenspan was a great Fed chair (he wasn’t) and was really looking out for the good of the people, it doesn’t mean that every Fed chair and Fed member will be this way from now until the end of time.

This is why inflation is the natural state of the world when we have central banking.  They can’t help themselves, just as Congress can’t help but continue massive spending.

As long as we have central banks that have a monopoly over money, we will continue to see inflation.  There may be brief periods of deflation because the central bank overdid things, but we always return to a state of inflation.  Prices rise and the purchasing power of the money goes down.

The latest consumer price index (CPI) numbers were released for November 2021.  The CPI went up 0.8% for November and now stands at 6.8% year-over-year.

The less volatile median CPI went up as well.  It increased 0.5% for the month of November.  Year-over-year, the median CPI is now up 3.5%.

If you take the CPI just from the last 6 months, the picture is even worse.  Annualized, it would exceed 7 percent.

Here is a bit of a rhetorical question.  When you get your annual raise at work, are you getting 7% or more?

My guess is that most people in the corporate world are not getting 7% unless it involves a promotion.  So it isn’t much of a cost-of-living raise since most people make less.  If you get a 5% raise with 7% price inflation, you are losing money.

If you actually do get a 7% raise (most don’t), then you are still behind because you pay taxes on the additional amount.  So you may actually need a 9 or 10 percent raise at your job in order to pay the taxes and keep up with the 7% cost-of-living increase.

Oh, and that doesn’t give you anything extra for your work experience.  Does it make sense that someone would make the same amount or less, adjusted for inflation, after working 10 years as compared to after working 5 years?

In some jobs this may make sense, but hopefully in most lines of work the employee becomes more productive as they gain experience.

So if you want to increase your after-tax income adjusted for inflation, then you better be constantly looking for promotions and job changes.  If you are an entrepreneur, you better find a way to deal with the increased costs.

Wall Street Shrugs

But according to the stock traders, inflation doesn’t really matter.  If anything, they prefer higher inflation.  It just means that stock prices can go higher.

The hotter inflation numbers didn’t stifle Wall Street.  The party goes on.  The stock bulls keep winning until they don’t.

With price inflation hitting highs not seen for about 4 decades, it should send signals to the Fed that price inflation is not transitory unless they make it so.  This means that the Fed has to stop creating new money out of thin air.

The Fed announced its beginning of the taper, which means it is now inflating at a slower pace than before.  But it is still inflating.  And the higher CPI numbers don’t seem to be scaring many investors as stocks continue to go up.  They don’t seem to be worried that the Fed might adopt a tight money policy.

There is also little concern that companies will be squeezed on their profits due to higher costs.

There is an economic fallacy that higher costs for businesses can just be passed on to the consumers.  Actually, if someone gets this far in their economic thinking, it is an accomplishment.

It is true to a certain extent that higher costs for businesses will push final consumer prices higher.  But there are limits to this, and higher costs don’t guarantee higher revenues.

If McDonald’s has to start paying $20 per hour in order to retain staff, while also paying more for food, then it will likely have to raise prices in order to be profitable.  But what if most people don’t want to buy a cheeseburger from McDonald’s if it costs them 5 dollars?  It may only be worth it at 2 dollars or less.  For more luxurious items, this is even more true.

In many situations, consumers are willingly paying the higher prices right now.  It is seen as a boom time, and people feel wealthy.  Unfortunately, they probably feel wealthier than they should, as some of it is an illusion.  Thank the Fed and the government for the massive misallocation of resources.

At some point, things will start to break.  Consumers will tighten up.  The acceleration of prices will hopefully retreat, but with it will come major economic pain.  Companies’ profitability – or lack of profitability – will be exposed.  Even the big tech companies aren’t immune to all of this.

We are in an Everything Bubble.  The higher CPI numbers reflect this.  The boom is unsustainable.  When it finally ends, it isn’t going to be pretty.

The other day, I heard Biden proclaim that 6 million new jobs had been created during his time as president.  Is this something that he should take credit for?  Perhaps more important, does it even really matter?

It is common for a president to say that he has created X number of new jobs.  To give a tiny bit of credit to Biden – or more likely his speechwriters – he said “the economy has created 6 million jobs”.

It would have been better to say that businesses and entrepreneurs created new jobs, but at least he didn’t claim direct credit for creating the new jobs.  When the federal government spends trillions of dollars per year, it is pretty easy to create some new jobs (while destroying others).

In my book Free Market Economics Made Easy, Chapter 4 is titled “Let’s Not Create Any Unnecessary New Jobs”.  I point out that the reason we have jobs is because we live in a world of limited resources.  People need to work in order to produce things to consume.

While people need an income in order to buys things and survive (and prosper), the jobs themselves aren’t what gives us prosperity.  It is the production of goods and services that we are able to consume.

There is always work to be done in this world.  If there weren’t work to do, then we would live in a world of unlimited resources, and we would already be wealthy beyond imagination.  But this isn’t reality.  People have to work in order for us to have goods and services to consume.

The goal isn’t to create more jobs.  The goal is to create more goods and services.  The number of new jobs is meaningless.  In a free market, there is always work available to almost anybody who wants to work.  The question just becomes – at what price (wage)?

2021 Exposes the Fallacy

This economic fallacy of job creation has been exposed in 2021 for anyone who gives it a little thought.

Just from personal experience, I see many businesses desperate to hire people.  I have actually seen limited services due to a worker shortage.  There have been some retail stores and restaurants that have had to close down or reduce their open hours due to a lack of staffing.

Of course, these places could hire someone quickly at the right wage.  But a small business or fast food place wouldn’t be able to make a profit if they have to hire a relatively low-skilled worker at, say, $30 per hour.

I have seen McDonald’s advertising to pay as much as $15 per hour in a place that wouldn’t be considered a really high cost-of-living area.  So their value menu isn’t going to be as much of a value as it once was.

The problem in our economy isn’t a lack of jobs.  The problem is a lack of production.  This has hit home in 2020 and 2021.  It doesn’t matter how many jobs there are if there is no toilet paper on the shelves.  It really doesn’t matter how many jobs there are if food isn’t being delivered to the grocery stores.

Employment itself is not what makes us wealthy.  It is the efficient production of goods and services, along with the advancement of technology.  But even with advanced technology, you need production to put it to use.

At the end of Chapter 4 in my book, I write:

“In conclusion, it shouldn’t be a goal to create unnecessary jobs.  It should be a goal to create wealth.  By creating wealth, we are further satisfying our desires.  This increases our standard of living and makes our lives easier and more enjoyable.  Instead of hunting for your food tonight, you can stay at home in air conditioning while surfing the Internet and listening to your favorite music.”

There are many lessons to be learned from 2020 and 2021.  The idea of job creation as a goal has been proven wrong.  It has been made obvious that the key to economic prosperity is production.  In order to consume stuff, the stuff has to be produced first.

The Omicron variant is here, according to the experts.  If you rearrange the letters in Omicron, you get moronic.

It makes you wonder who came up with the name.  Are they literally just trolling people now?

About 25% of the population knows the so-called COVID experts are a bunch of lying liars.  Another 25% suspect something is wrong.  About 50% will do whatever they are told by the experts, who are deemed experts by the establishment media and the establishment politicians and bureaucrats.

The half of the country that believes most of the lies will believe just about anything at this point.  If Fauci announces that you have to hop in circles on one foot and cluck like a chicken in order to keep the virus away, I think a substantial number of people will do it.

If the Omicron variant is actually a thing, then it is apparently weaker than the original COVID and other variants.  If that’s the case, then we should actually hope for its spread.  People can gain natural immunity without getting significantly sick.

But natural immunity is no longer part of the official science.  Injections of mRNA (called vaccines) are the only possible way to fight the virus according to Dr. Science.

Will there ever be an end to this?  When a new variant of the sniffles comes out, will we be hearing more about lockdowns, new vaccines, vaccine passports, etc.?

The so-called vaccines don’t prevent infection, and they don’t prevent transmission.  The best that can be claimed now is that they make symptoms milder than they would have been.  But even if this were true, the efficacy wanes after just a few months, so now on to boosters.

What if we are told that you should just get a booster once a month?  How many people will line up?

Why is it that countries with high vaccination rates are seeing an all-time high in COVID cases?  What kind of vaccines are these?

I see life going back to mostly normal around me.  But every time Biden is set to give a speech, I cringe.  What society-destroying policy will he announce next?

I actually have to pay attention to the speeches given by President Idiot because it sometimes directly impacts me.  Will I need a vaccine card to work?  Will I need a vaccine card to fly by airplane?  Will the government be imposing fines and penalties for not getting jabbed?

For all of the people infected with Trump Derangement Syndrome (TDS), all they had to do was shut off the news and social media.  If you didn’t hear about his latest tweet, then there was nothing to get upset over.  Trump’s actual policies probably had almost no effect on most Americans.

You can shut off the television and try to ignore Biden, but it doesn’t mean that you won’t get an email from HR telling you that you have to show your vaccine card or else lose your job.

If you show up at the airport, you will be forced to wear a mask.  If you are flying from outside of the country, now you will have to present a negative test to get on the plane.

This whole thing would be amusing if it weren’t so disastrous.  The powers-that-be are telling the population that they are “moronic”, but they are too busy lecturing the unvaxxed to see that they are being duped.

Most of these people will never admit that they were wrong.  It doesn’t matter how much the vaccines don’t stop the spread.  It doesn’t matter how many deaths or other adverse effects happen from the vaccines.  If it isn’t spelled out in a CNN article or on NBC Nightly News, then it didn’t happen.

Close your eyes.  Trust the experts.  Follow the science.  Be scared of the Moronic – I mean, the Omicron.

Jerome Powell, also known as Jay Powell, is the current chair of the Federal Reserve (the Fed).  He was actually nominated to the Board of Governors in 2012 by Barack Obama.  He became Fed chair in 2018 after being nominated by Donald Trump.

Joe Biden has now renominated Powell for a second term.  He still has to be confirmed by the Senate.

We should expect that Powell will easily be confirmed, but it will be interesting to see just who opposes his renomination.  It may be one of those situations where the harder core right wing and left wing vote together in opposition.  Meanwhile, you can fully expect Mitt Romney and Chuck Schumer to vote in unison in supporting Powell.

According to Biden and his supporters, Trump is the worst human being on earth, so it may be a bit curious why Biden would keep a Fed chair who was put in place by Trump.  It is probably because Trump heavily criticized Powell once in office.

Unfortunately, the reason Trump criticized Powell wasn’t for the right reason.  Although Trump mentioned a bubble stock market fueled by low interest rates (courtesy of the Fed) when he was running for office, the script changed quickly once Trump became president.  He then criticized Powell for being too tight with interest rates.  Trump didn’t want anything to risk his beloved economy and stock market boom (which was no longer referred to as a bubble).

Trump appointed a lot of bad people, and Powell is no exception.  With that said, he wasn’t the worst appointment either. I don’t necessarily think Powell was a Trump enemy like John Bolton, Christopher Wray, and even the fake Mike Pompeo.  Trump appointed a bunch of war hawks and criminals who made sure to stomp out any idea of world peace.

In this sense, Jerome Powell was better.  The Fed chair is not part of the president’s cabinet as many of the other appointments are, but the president obviously wants someone as an ally.  For Fed chair, it really probably didn’t matter who Trump appointed, as it would have been a Keynesian hack.  If Trump had nominated someone like Judy Shelton as Fed chair, the Senate wouldn’t have confirmed her.

With Powell staying on as Fed chair, it will be business as usual.  But it would have been business as usual even if it had been someone different.  This means that we will continue to see monetary inflation, interest rate tampering, and bailouts when deemed necessary.  It also means that Congress will continue to be subsidized in its deficit spending.

It should be clear by now that nothing is going to change at the Fed except when economic conditions change.  The price inflation numbers have certainly gone up this year, and most Americans are recognizing it.  How long will this be tolerated?

Although most Americans don’t fully understand inflation, I think many have a sense that the Federal Reserve, as central bank, has some kind of role.  They also sense that it is related to government spending, even if they can’t quite articulate it.

The only thing that will force the Fed to scale back (i.e., stop inflating) is significantly higher price inflation.  If we officially hit double-digit annual price inflation, it will be difficult for the Fed not to pull back.

This will mark the end of the stock market boom, at least for a while.  Maybe the stock market boom (bubble) is already coming to an end in anticipation of this.

If things go bad quickly, it will be interesting if Biden tries to pin the blame on Powell.

Trump nominates Powell, and then Trump criticizes him.  Biden nominates Powell, and then Biden criticizes him.

Of course, if the economy gets bad quickly, then Biden will be taking a lot of the blame as president.  His approval ratings are already in the tank even with the stock market hitting all-time highs.  Imagine if stocks fall 30% or more.  Biden’s wife may have to trick him to leave the White House with some ice cream and then quickly flee the scene with him.

Kamala Harris is the one person even more unpopular than Biden.  Maybe she can blame Powell too.  If she does that, Powell’s popularity may actually rise.

We’ll see if it’s possible to ever get someone somewhat reasonable back in the position of Fed chair.  For all of his faults, Paul Volcker was about as decent as you can get in that position.

If someone like Volcker came in now and did what he did, we would see the Everything Bubble pop in spectacular fashion.

There were probably a lot of Thanksgiving gatherings across America where family and friends discussed (or argued) politics.  In particular, the COVID vaccines and vaccine mandates must have been a hot topic since tens of millions of Americans are threatened with losing their jobs if they don’t get jabbed.

If what we are being told about the vaccine rates are true, and approximately 30% of eligible Americans are not considered vaccinated, then you can imagine that there is a divide in most large family gatherings.

Sure, if you go to a leftist city, then chances are good that everyone will be vaccinated in a group of 6 or 8 people.  Also, some of the hardcore vaccine enthusiasts may not invite unvaccinated family members for dinner.  I doubt it would be as true going the other way.

Hopefully, in most cases, politics wasn’t actually discussed during dinner.  If it is at all, then it should be light.  I think to stir up controversy while eating dinner is impolite.

To be sure, there are probably just as many households that didn’t have any major arguments.  I know several vaccinated people who don’t want to shove their ideas down anyone else’s throat, or in this case, stick it in their arm.

But inevitably, you are going to have some vaccine enthusiasts who will shame others and even suggest that it should be mandated by the government.

When this happens, it is important not to cede the moral high ground.  It is quite clear that the COVID vaccines do not prevent transmission.  The CDC director admitted this a few months ago.  So the only rational argument for getting vaccinated is to protect yourself.  The only selling point for the vaccines at this point, which is waning quickly (kind of like the vaccines), is that you will be less likely to become seriously ill if you do contract COVID.

So there is no good excuse for using force.  When the government mandates vaccines, they are using the threat of violence, which is how government does what it does.

With the attempted mandates coming from the White House, it is a threat of violence against employers.  You are not allowed to freely associate with your employer.  If the employer doesn’t obey and allows unvaccinated employees (or in some cities, unvaccinated customers), then the employer is subject to fines.  If those fines aren’t paid, then eventually men with badges and guns will show up to throw the responsible party in jail.

Even though government agents aren’t literally holding you down and pushing a needle in your arm, they are using the threat of violence.

This should be made crystal clear to those advocating vaccine mandates.  They are resorting to violence to get their way.

For this conversation, it doesn’t matter how many people have supposedly died of COVID.  It doesn’t matter how many cases there were yesterday.  It doesn’t matter if vaccines are really safe and effective.  What matters is the use of violence.

I know a lot of people who are against the vaccine mandates.  Many of them are against the vaccines themselves, as they do not think they are as safe or effective as what we’ve been told by the establishment media.  But I don’t know anyone who wants to use the threat of force to prevent another person from getting the shot.

I don’t know anyone who said that people should be forced to leave their house, even if they are scared of the virus.  They aren’t telling people that they have to go eat at a restaurant.

I also don’t know anyone who said that all mask wearing should be forbidden.  Most people on the pro freedom side are exactly that.  They want to be free to choose for themselves.

Aside from claiming the moral high ground, you can also appeal to people’s self interest.  Ask these questions of your vaccine-obsessed friends.  When your house is burning down, would you rather a group of unvaccinated firefighters show up, or none at all?  Saying that you want vaccinated firefighters to show up timely is not an option in this scenario.

Would you rather have unvaccinated truckers delivering goods to the store shelves, or would you rather they sit home unemployed on welfare?  And what price are you willing to pay?  If half of the food shelves in your grocery store are empty, is that worth it to fire a bunch of unvaccinated truckers?

When people use violence in order to achieve their goals, there are reactions and there are consequences.  There is no free lunch in the use of violence.  People advocating violence must be made aware that they are in fact using violence, and there are deep ramifications in society for the use of initiatory violence.

We are in an Everything Bubble.  It doesn’t mean that literally everything is in a bubble, but most major asset classes are likely in some kind of a bubble.  The two major categories are stocks (equities) and real estate.  If and when these two things pop, a lot of damage will be inflicted.  Tens of millions of Americans will feel the pain.

Then there are the new asset classes, if you can even call them that.  These are “things” that have been created in recent times that are being used for speculation.  Mostly, I am thinking of cryptocurrencies and non-fungible tokens (NFTs).

The term cryptocurrency is a misnomer.  They certainly don’t serve as a currency.  Even the biggest player, Bitcoin, is not used as money in any widespread sense.  The few things that you can buy using Bitcoin are still priced in dollars or some other currency.  You just pay the conversion price.

Cryptos and NFTs are probably the biggest bubbles because most of these could go to zero.  It is a joke that all cryptos combined recently hit a market cap of over $3 trillion.  They are all just made up things.  You are owning a bunch of computer code.

There are now thousands of these cryptos, and most of them will eventually go bust.  They will go to zero or something close to zero.  In fact, all of them, including Bitcoin, will eventually reach this fate.  A bitcoin may still be worth something because of the few techie nerds who hang on for dear life.  It will become a novelty.  It’s kind of like how you can buy an old $100 trillion Zimbabwe note for a few bucks on Ebay.  It is a novelty to show off to your friends or to use as a homeschool lesson on money for your kids.

People who are heavily “invested” in cryptos and NFTs will be hit the hardest when the Everything Bubble pops.  But they don’t necessarily have the most in terms of wealth.  A 28-year old who put all $20,000 of his money into crypto to see it wiped out is in a better position than a 60-year old who is about to retire who sees their one-million dollar stock portfolio decline by 80%.

Before addressing stocks, it is important to mention that bonds may or may not be in a bubble.  If we have a deep recession without massive monetary inflation, then bonds might do well in the short run as investors seek safety.  So while bonds are probably in a bubble because of the Federal Reserve, they could be propped up for many years to come.  It certainly isn’t clear one way or the other.

The one asset class that probably isn’t in much of a bubble is certain commodities, particularly precious metals.  Gold and silver have not been terrible, but they have been terrible compared to other asset classes like stocks and real estate in recent times.

The Buy-and-Hold Strategy Works, Until it Doesn’t

There are many people who haven’t gotten involved in speculating in things like cryptocurrencies.  Or if they have, it has only been dipping a toe in the water with maybe 1 or 2 percent of their net worth.

Instead, they employ a strategy of buying mostly equities.  They follow the Warren Buffett advice of buying and holding index funds that invest in the broad U.S. stock market.  They don’t actually follow what Buffett did to get extremely wealthy.  They just follow his words.

Up until now, this strategy has mostly paid off as long as someone sticks to it.  There have been some major downturns such as 2000 to 2002, and again in 2008 and early 2009.  There was also a big, but very brief, downturn in March 2020.  But every single time, if you just held on long enough, you would recover any losses and then see big gains.

This strategy would not have worked in Japan starting in the late 1980s.  If you had invested in the Japanese market in 1989 near the peak, you would still be down in nominal terms today.  Over 30 years should certainly qualify as “the long term”.

In the U.S., every time there is a major dip in the market, it has paid off to just hold on.  Even better, it really paid off to buy more stocks with any cash sitting on the sidelines.

I saw people buying in late March 2020, and they weren’t doing so because they were predicting that the Fed would double its balance sheet.  They just figured that the market always goes up over a longer period of time.  And again, this has worked up until now.

The problem for most of these people is that they haven’t collected any substantial portion of their paper gains.  If you don’t sell, then did you really make a gain?

Yes, anyone can sell at any time.  This is particularly true today with online brokerage accounts.  When the market is open, you can sell almost instantaneously.  And with most stocks and mutual funds, there are plenty of buyers waiting.

The problem, once again, is that most people don’t sell.  I mean, why would you sell unless you plan to buy something else right away?  If the market always goes up, then it is better to be making money than not making money.  At least, that is the theory.

What if we have a stock market crash of 50%?  What if we have a market crash of 80%?  Worse than that, what if we have a major crash and stocks don’t recover any time soon?

As we saw with Japan, this isn’t an impossible scenario.  Even if we saw stocks fall by 50% and then slowly get back to where we are today over the course of 15 years, how is that going to sit with some people?  What about the people who were planning to retire in less than 15 years from now?

We have no idea how this is going to play out.  But at some point, if we don’t move into hyperinflation, there is going to be some kind of reversion to the mean.

When you consider that the Nasdaq has gone up more than 10-fold since the low in 2002, it should make you wonder when this will end.  Has our economy really seen such massive growth to justify these stock prices?  Is the American economy that much more productive today than it was, say, 10 years ago?

We just don’t know when it will all come crashing down.  In the meantime, more conservative investors will be seen as the losers.  And that will be true until it isn’t any more.

So we don’t know when this strategy of buy-and-hold stock index funds will come crashing down.  But we can be pretty certain that it will at some point.  And the higher things go now, the harder they will fall later.

Tens of millions of people are going to see their retirement plans ruined.  They will have to work longer than they expected.  They will have to save more than they expected.

They currently think there is a free lunch of getting an almost guaranteed return of at least 10% per year.  And if stocks drop, just buy more and then you can make 20% or more the next year.

This is unsustainable.  When it stops, it is going to be quite painful for a lot of people.

The U.S. economy will go on.  We will continue to see some productivity gains and technological breakthroughs.  But millions of individuals will have to adjust their lives and their living standards when their buy-and-hold strategy no longer works.

I have only praised Joe Biden once since him becoming president.  That was for withdrawing troops from Afghanistan. Of course, even with that, he (or his administration) managed to botch the operation of withdrawal.

Also, I think Biden was boxed in on the Afghanistan issue.  Trump had made a deal with the Taliban to withdraw in 2021.  The only two choices were to withdraw or face major violence.  Not withdrawing would have ultimately led to a major surge in troops and probably a much bigger disaster than what we saw.

Biden has been a complete disaster in every other way.  The worst thing he has done is imposing vaccine mandates.  But his whole administration is either incompetent or evil.  It is more corrupt and evil than incompetent, but there are elements of both.

At the same time, I don’t want to blame Biden or his administration for things that aren’t problems or aren’t his fault.  I cringe when I hear conservatives bashing Biden for being soft on China.  I don’t know what this means other than they think Biden should provoke war.

I mean, if Biden is doing corrupt deals with the Chinese government, then say this.  But I wouldn’t characterize that as being soft on China.

One of the latest things where conservatives are bashing Biden is on the topic of inflation.  When most people refer to inflation, they are talking about rising prices.  They aren’t talking about the Austrian school of economics use of the term to refer to an increase in the money supply.

So now we get to hear the term “Bidenflation”.  This is referring to the higher price inflation that most Americans are experiencing.

So is it fair to blame Biden for the price inflation that is running higher?  We aren’t quite at the levels of the 1970s yet, but we are getting a lot closer to double digit annual price inflation, even by the government’s own metrics.

A Nuanced Explanation

Ultimately, it is the Federal Reserve (the Fed) responsible for the price inflation, because it is the Fed that is responsible for the monetary inflation that makes the price inflation possible.  When the central bank more than doubles its balance sheet in a period of less than 2 years, it is not surprising when prices start increasing at a faster pace.  It may only be surprising in the sense that this didn’t happen after the Fed’s monetary inflation after the financial crisis in 2008.

If we blame the Fed though, we ultimately also have to blame Congress and the president.  Congress authorized the existence of the Fed as a monopolist central bank.  If the willpower was there, Congress could get rid of the Fed, or at least its monopoly power of controlling the money supply and setting short-term interest rates.  At the same time, let’s remember that the president nominates the Fed chair, which is then approved by the Senate.

Of course, there is no talk of repealing the Fed or even scaling back its power.  So in this sense, Biden is only responsible to the degree that every other president since 1913 has been responsible.

I do think Biden is more directly responsible in the sense that he and his handlers are promoting massive federal spending.  He is pushing these multi-trillion dollar bills on top of the already bloated budget.  We would have massive deficits without these additional spending bills.  Biden also pushed these expanded child tax credits so that he could get credit for sending tens of millions of checks to families.

(I encourage tax cuts, but these are child tax credits, which means that even some people who pay little or no federal income tax will receive money.  Also, since no spending is being cut, it is just rearranging who gets the money.)

To be sure, Donald Trump did the same thing.  If Trump were still in office, I believe that price inflation would be almost just as bad.  Maybe we wouldn’t have had these additional spending bills coming through, but the overall trend would be the same.

The stimulus checks started under Trump.   The massive lockdown bailouts happened under Trump.  The deficit exploded in 2020 when Trump was president.  I don’t think this would have reversed had Trump stayed in office.  Also, when Trump criticized Jerome Powell (Trump’s pick for Fed chair), it was because he wasn’t being loose enough with monetary policy.

Still, Biden is president now, and he is pushing the massive spending that is happening now.  This spending is inflationary because it is all deficit spending.  The money has to come from somewhere.  Either the debt is bought up by the Fed (through money creation), or it is bought up by other parties that could drive interest rates up.

The Fed has said it is now tapering, meaning it will create a little less new money than it had been doing before.  But if interest rates go up because other parties have to buy up some of the debt, then it is hard to imagine the Fed not stepping in and increasing its purchases (i.e., money creation).

So I think Joe Biden is partially responsible for the high price inflation that we are currently seeing.  I am glad that many Americans are blaming Biden just because he is such a destructive president.

At that same time, it is important to understand why Biden is partially at fault and that the Fed is the party that is actually creating the inflation.  If people don’t grasp this, then we will see more economic destruction in the future, with or without Biden as president.

After Aaron Rodgers tested positive for COVID-19, it was publicly learned that he was unvaccinated.  When previously asked if he was vaccinated, Rodgers answered that he was immunized.

What Rodgers said was kind of like what the establishment media does to everyone else when discussing most political issues.  It may have been factually correct, but it wasn’t truthful.

Rodgers missed a game because of his positive test and his status of being unvaccinated for COVID-19.  Due to NFL rules, he had to wait at least 10 days before returning.  If he had not been in the second-class status of the unvaccinated, he may have been able to return sooner with negative tests.

After everything came out, Rodgers did an interview over video, and he threw all of his cards out on the table.  He said he realized he was in the crosshairs of the woke mob and he wanted to tell his side of the story before being cancelled.  This was the reason that he wasn’t upfront about his vaccination status in the first place.

Rodgers said he didn’t need to investigate at least two of the vaccines and the criminal activities of the vaccine companies because he was already allergic.  The funniest thing Rodgers said was that if he had the flu, he would be playing on Sunday.

I caught a segment on ESPN of First Take, where the panelists in unanimity attacked Rodgers.  Michael Irvin seemed to take great offense at Rodgers saying he is a “critical thinker”.  I think Irvin wants to assure us that he is a critical thinker too.

Stephen A. Smith had to get all serious and call Aaron Rodgers a national embarrassment.  Smith criticized Rodgers for not being truthful over the summer.  About the only thing where I agree with Smith is that Rodgers was deliberately deceitful.  But I can fully understand why Rodgers did this.  It was because he didn’t want hacks like Smith who shill for the establishment to go on the attack against him.

Smith points out that Carson Wentz and Kirk Cousins aren’t vaccinated and they are still playing.  He asks if there is a witch-hunt against them, and responds to his own question that they are playing every week.

Hey, Stephen A., there’s a difference between a witch-hunt and not playing.  I recall seeing several stories of these quarterbacks being criticized.  I also know that the NFL gives them incredibly strict protocols that the vaccinated players aren’t subject to.

Then Smith says that your medical history is a private matter, but not with the issue of vaccines.  Why this one thing Stephen A.?  Is that because society has dictated to you what the one exception is when it comes to divulging your medical status?

The kicker for me is when Smith cites Kyrie Irving and says Kyrie deserves more credit than Rodgers because he manned up and cost himself money.  The joke here is that I have watched this show on ESPN one other time for longer than 10 seconds in the last year.  That one other segment I saw consisted of Stephen A. Smith relentlessly attacking Kyrie Irving for abandoning his team and not being a team player for not getting vaccinated.

If Rodgers had come out at the beginning of the season and said he wasn’t vaccinated and had no plans to get vaccinated, I’m sure the hack named Stephen A. Smith and all of the other attack dogs for the establishment would have been all over him at that time.

One Thing I Never Heard Mentioned

There was something I never heard mentioned by Stephen A. Smith or the ESPN panel.  In fact, in all of the stories I saw about Rodgers testing positive for COVID-19, with the exception of the interview with Rodgers himself, there was something I never heard mentioned from anyone.

I never heard anyone say, “We are praying for Aaron and his quick recovery.”

I never heard anyone say, “We hope Aaron gets better soon.”

I never heard anyone say, “I hope Aaron is able to survive his battle with COVID-19.”

Outside of the interview itself, I never heard anything to this effect at all.  That’s because nobody was concerned or even pretending to be concerned about his health status.

What kind of a pandemic is that?  There is this massive obsession to get everyone vaccinated.  Rodgers didn’t get vaccinated, and he tested positive for COVID-19.  But nobody was suggesting that he might die.  Nobody was suggesting that he was really sick and might have to go to the hospital.

Rodgers isn’t young by NFL standards.  He is 37 years old and will shortly turn 38.  But he is relatively young, and he is in incredible shape.  COVID, if that’s what he had, was nothing to him.  Why would someone like this want to get an injection with possible side effects, some of which are serious?  If he actually had COVID, then he has far greater immunity at this point than anyone who is vaccinated who didn’t have it.

How can anyone take this seriously any more?  Everyone should be left alone to make their own decisions.  It is especially absurd that young and healthy people have to overturn their lives due to a virus that is highly unlikely to inflict any serious harm on them.  It is especially criminal what is being done to children.

You can watch a college football game with a hundred thousand people packed into a stadium, but then your kid has to go to school with a mask on and stay in a bubble and not be near anyone else.  It is a joke.

This is why I don’t think a lot of the COVID hysterics are honest.  If they are honest, they are incredibly dumb on this issue.  Nobody was questioning the health status of Aaron Rodgers.  Even the dumb media forgot to do it.

If Rodgers had been vaccinated, they would have been sure to say that he has mild symptoms because he was vaccinated.  They never say that he had mild symptoms because he is in good physical shape.  They never mention that he had mild symptoms in the same sentence as him being unvaccinated.

I have long-thought that Aaron Rodgers is one of the most intelligent players in football with his decision-making on the field.  Apparently he is a critical thinker off the field too.  Does that bother you Michael Irvin?