Alan Greenspan, at the age of 94, recently gave a short interview on CNBC.  He warned about the growing debt and inflation.

Greenspan was the chairman of the Federal Reserve from 1987 to 2006.  He associated with Ayn Rand in his early days and wrote, in my opinion, one of the best essays ever on gold and central bank inflation.  His essay was published in Rand’s book Capitalism: The Unknown Ideal.

While Greenspan’s office was not an elected one (he was appointed by Reagan), he unfortunately ended up being like most people who get into government.  And despite what some people argue about the Fed being a private bank, let’s face it that it is a political office.

Once in office, Greenspan seemed to abandon his commitment to the free market and gold as a use for money.  He actually had the nerve to say that the Fed had advanced to where it could almost mimic a gold standard.  He had to invent crazy answers like these when questioned by Ron Paul.

I have been highly critical of Greenspan over the years because I know he knows better.  He wrote some great things on gold and how deficit spending is a scheme for the confiscation of wealth.  He wrote that, without gold, there is no way to protect savings from confiscation through inflation.  He knew this at a relatively young age, but he didn’t use his knowledge to do good in the world, especially when he became Fed chair.

I am not even accusing Greenspan of outright lying.  He just didn’t speak the truth when he had many opportunities to do so.

With all of that said, he is still interesting to listen to.  He also still shows some sympathy for the free market, or at least against outrageous government interventions in the economy.

So I take his warning seriously about inflation.  I am warning about the same thing too, but it’s actually nice to hear some confirmation coming from a former Fed chair.  While I think Greenspan could have spoken the truth more in the past, I also don’t think he wants to see the whole system implode.

Actually, I don’t think the current chair – Jerome Powell – wants to see the system implode either. But he is less sympathetic to the free market starting out than Greenspan was, and Powell may be a little more clueless.

If you use the Bureau of Labor Statistics (BLS) inflation calculator and plug in the number 100 into August 1987, it becomes 173 dollars in January 2006.  This means that from the time Greenspan took office to the time Greenspan left office, the dollar inflated by 73% according to the government’s own statistics.  The unsustainable housing boom occurred on Greenspan’s watch.

It’s nowhere near the worst outcome for a central banker, but it’s not the best either.  So when Greenspan warns of inflation, he is obviously thinking it will be quite a bit higher than when he was in office.

The CPI

The latest CPI numbers were released for August 2020.  The median CPI went up 0.3% in August.  The CPI went up 0.4% for the month, and this is after going up 0.6% the previous month.

Using the CPI and the “CPI less food and energy”, prices have gone up over 1% over the last two months.  If this becomes a trend, we will have double-digit annual price inflation not far down the road.

This isn’t a prediction, but a warning.  The Fed has created massive amounts of money in 2020.  The balance sheet is up nearly $3 trillion.  Much of this new money is going directly to individuals through stimulus and unemployment benefits.  Some of it went to business owners, many of whom were forced to close down.

It’s no surprise that Powell recently announced that the Fed would target 2% inflation as an average over time.  The Fed already uses a metric that comes in below the CPI.  Now it wants to average, which makes no sense at all.  If you have had five years of no price inflation, why should the Fed shoot for 10% inflation this year to make up for it?

It makes no sense, but it’s not supposed to make sense.  It is an excuse for the Fed to keep creating money and keep interest rates low, even when the official price inflation exceeds its 2% target. I’m sure Greenspan must recognize this too.

If the CPI keeps accelerating, I don’t know how the Fed gets out of this.  Congress is relying on the Fed to buy up most of its debt. And there is no sign of the spending out of DC slowing down.  They were already running a trillion-dollar annual deficit before March 2020 when the economy was essentially shut down.

I don’t know if we will see a 1970s-like scenario again.  It’s possible we may not, and it’s possible it could be worse.

There are a lot of moving parts with the supply of money, the demand for money, and lending. I am not predicting double-digit price inflation, but I am warning about the possibility.  You should prepare accordingly with some investments in hard assets.

Even though governors and mayors across the country have gained great power in 2020 – consider the lockdowns and mask mandates – the federal government has also gained power in some aspects.

To be sure, the federal government already had great power, especially when it comes to spending and making war overseas.  We have also had an administrative state for a long time, where bureaucratic alphabet agencies are allowed to essentially write their own laws.

With the fear of a virus in 2020, the federal government is spending more money than ever, and it is doing so through Federal Reserve monetary policy.  We have also seen the power of the “health” agencies. Much of this power already existed, but it has become more obvious now.  For example, the FDA can just arbitrarily approve or disapprove (i.e., prohibit) of certain drugs and treatments.

Unfortunately, it has gone way beyond medicine.  The CDC issued a nationwide order that halts “residential evictions to prevent the further spread of COVID-19.” That’s right.  The CDC is now playing national landlord, effectively destroying property rights for the millions of landlords everywhere.

It would have been hard to imagine a halt on evictions in February 2020, let alone the orders coming down from the CDC.  But here we are in the year 2020, where the CDC director gets to issue a statement that has far-reaching implications for rental housing everywhere in the country.

This is partially Trump’s fault.  He may be doing this for political reasons.  He doesn’t want to see people thrown out of their residence right before the election.  I think, even from a political standpoint, he is miscalculating.  If anything, the eviction moratorium is probably making more people mad and resentful.  I just don’t know how much they’ll blame Trump.

The left sometimes accuses Trump of wanting to be a dictator.  Yet, when he actually does something somewhat dictatorial, they don’t oppose him.  They have no trouble with him acting like a dictator as long as it is violating property rights.  Of course, these were the same people clamoring for Trump to implement a national shutdown and a national mask mandate.

When property owners complain about having to keep people who don’t pay their rent, you may hear a response that this CDC directive does not give a green light to renters to not pay their rent.  They have to fill out a form and show that they have been adversely impacted and are unable to pay.

But it really does give a green light not to pay rent for many.  It is not hard to imagine that millions of people will take advantage of this and stop paying rent or start paying a reduced amount.

If you own a property and are renting it out for $1,000 per month, it would be easy for a tenant to say that they can only afford to pay $500 per month.  If you were the property owner, what would you do? If you don’t accept this offer, you are risking getting nothing.  You have may have your own mortgage to pay.  You certainly still have to pay property taxes and other expenses. If the person pays you nothing, how long will it take to get an eviction now?

I wrote previously about regime uncertainty.  While I put a bigger focus on government shutting down private businesses arbitrarily, there is big concern for real estate too.

Who will want to be a property-owning landlord at this point?  I know there are many still willing to take the risk.  I also know there are many who want to get out of this business because they would be severely hurt by having a tenant not paying rent for many months straight.

Being a landlord doesn’t mean you’re rich.  It is a very slow path to building wealth for most people.  They hope that a tenant can cover the monthly expenses, on average, while the mortgage slowly gets paid down over a long period of time.  I have at least 4 close friends who are landlords, and they are all middle class.  I was a landlord up until a few years ago. I rented out a condo that I had lived in for 8 years.  I didn’t want to sell in 2010 when the housing market was down.  I ended up selling a couple of years ago. With what is going on now, I am glad that I did.

What Happened to UBI and Welfare?

There is another unbelievable aspect of this whole moratorium on rent.  It is being done at a time when we have had unprecedented levels of welfare.

Since March 2020, we have had stimulus checks go out to most American adults for $1,200 a piece, plus another $500 for children.

For most anyone who lost their job, they were getting a bonus $600 per week from the federal government for unemployment.  This was on top of state unemployment, which meant unemployed people were collecting close to $1,000 per week.  Something around two-thirds of those on unemployment were getting paid higher in unemployment benefits than they were making at their job.

The extra $600 per week ended at the end of July.  With Trump’s directive (again, no pushback of being a dictator by the left on this one), the unemployment is $300 to $400 extra per week in most states on top of regular unemployment.

There is also still talk of another so-called stimulus bill, but this may not happen because of political party fighting.

So here is the big question.  If Americans have been given stimulus checks and massive unemployment benefits, then why can’t they pay their rent?

This just shows why every libertarian should be against any concept of a Universal Basic Income (UBI).  It isn’t a clean replacement for the welfare state.  It is an added piece of welfare to the welfare state.

Renters tend to be people on the lower-income scale.  There are obviously a lot of exceptions, but I am just saying this generally speaking.  But anyone who lost their job this year who was on the lower-income scale would have been making more money than they were before.  So there is no reason they couldn’t pay rent.

Unemployment didn’t impact middle and high-income earners as much, but it certainly did impact many. These people tend to be homeowners.  The halt in evictions doesn’t do them any good.  They need a halt from getting evicted by their mortgage holder.  They could really use a moratorium on paying property taxes.  Couldn’t we all?

Now, there are, no doubt, some people who are renters who were previously making a good middle class salary, or maybe even more.  Someone may have been earning $90,000 per year previously, and now is collecting unemployment for half that amount.  This theoretical person may actually have trouble making the rent payments.

But this person is accustomed to living on $90,000 per year.  This person may be renting a 2,500 square foot house for $2,000 per month.  Why should the landlord have to subsidize this?  Even if the person has a family, there is no reason he couldn’t move to a 1,000 square foot apartment.  Maybe he won’t like it, but the landlord not getting paid doesn’t particularly like it either.

In conclusion, this CDC directive is a vast overreach of power, and it is a violation of property rights.  It also doesn’t make any sense when put in context of the UBI-like stimulus and unemployment benefits we have already seen.  If the federal government wants to bail out renters, why not just get the Fed to create the money and pay it all?  This is a somewhat rhetorical question, but maybe I shouldn’t give out these ideas because someone may take it seriously.

This will have an impact in the future.  There is far less incentive for someone to become a landlord and provide housing for those who can’t afford to buy.  This will result in less housing and higher prices for tenants. It will also lead to a request for maximum security deposits.

California, the leftist paradise that it is, has the biggest homeless problem in the United States. Housing costs are enormous there. If you want to put the rest of the country on a course to be like California with widespread homelessness, I can think of no better action than what the CDC just did.

“The most outrageous lies that can be invented will find believers if a man only tells them with all his might.” ~Mark Twain

How easy it is to make people believe a lie, and [how] hard it is to undo that work again!” ~Mark Twain

I didn’t expect to spend a good portion of my time in 2020 talking and writing about a virus. But it is only necessary because of the gullibility of people.  I wouldn’t be talking about this much, if at all, if there were no government shutdowns, and if I didn’t feel like I was walking in a hospital every place I go.

The establishment sold fear.  They sold it hard. And it worked.

We already had two very different political worlds in America going into 2020.  There are obviously great degrees of variation in this, but it is still reality.

Now there are two very different worlds in terms of coronavirus fear.  There are the pro mask people and the anti mask people. Actually, I don’t know of anyone who is anti mask in the sense that they believe others should be prohibited from wearing one.  They just don’t want to be compelled to wear one, and they think it’s stupid.

So maybe it is more accurate to make the dividing lines between people who are in favor of quarantining and those who are against quarantining.  But again, I don’t know of anyone who is against quarantining in the sense that they believe others should be prohibited from quarantining.  I don’t know of anyone who says that people have to leave their house and not distance themselves from others.  The people against quarantining just don’t want to be forced to stay inside their house, and they don’t want to be prohibited from meeting up with others of like mind.

I have said from day one that anyone who is fearful of the virus is allowed to stay home, to distance, and to take any other precautions on their own, as long as they don’t interfere with the rights of others.

It is really the use of government force in response to the virus that gets to the heart of the matter.  I know of a couple of libertarians who were terrified of the virus, but they did not favor government-imposed lockdowns.  I’m sure there are a few people who are very pro mask who don’t believe everyone should be forced to wear one.  But the people who fall into these camps are so small as to be almost irrelevant.  But if someone believes the media hysteria of the coronavirus but doesn’t believe in any government force in response, then I will consider that person on my side, even if I may discount their opinion on the virus itself.

Digging in Deep

The problem I see at this point is that I don’t know how some people are going to change their position.  They have dug in so deep, how can they possibly reverse their stance at this point?

If 99% of people get back to a somewhat normal life – something at least resembling February 2020 in America – then I could see the remaining 1% just giving up and pretending like everything is fine now without addressing some of their previous concerns.

I have heard several people say that they won’t go back to normal until there is a vaccine. But what if a vaccine never comes? Are they literally going to stay locked up in their house for the rest of their life?

I know of many people who have shifted their opinion since March 2020.  This includes conservatives and libertarians.  I can’t really think of any people on the political left who have changed their mind on the threat of the virus, but I’m sure there are a few somewhere.  Some have at least softened their stance.

The conservatives and libertarians I am speaking of were very fearful of the virus back in March 2020.  For some reason, they believed the hype coming from the people who have continually lied to them in the past.  I don’t understand how you can assume that the same establishment media that will lie to you to get us into a war would not be lying about the seriousness of a virus. Sure, there were supposedly expert epidemiologists warning us of the dangers, but the establishment media also finds national security experts who tell us to go to war.

Anyway, the people I do know, or know of, who have had a change of heart, have done so in a variety of ways.  Some flat out will admit that they were bamboozled, but this isn’t many.  Some will just pretend like they never did change their mind and that they knew is was overblown hysteria from the beginning.  I find most people though are somewhere in between.  They will slightly admit that they have had a change in opinion.  They might say that we know more about the virus now and that it isn’t as big of a threat as was thought in March, and there is definitely some truth to that.

It has now been about 6 months since the hysteria started, and some have been quite aggressive with their views since the beginning.  I have been firm in my beliefs since the beginning of this, so it is no problem for me to get back to a normal life.  I don’t have any explaining to do when I walk into a store without a mask because I never wore one in the first place unless it was absolutely mandatory.

But what about the other side?  What about the people who were telling others that they were going to kill granny if they go to the store without a mask?  How do they back down from this position?  Even if the coronavirus completely goes away, there is always somebody out there with the flu.

Not Backing Down

Earlier this week, footage was released of Nancy Pelosi walking in a hair salon without a mask. She was getting her hair done, even though salons in California are essentially shut down.  And Pelosi has, of course, been a hardcore proponent of mask wearing and promoting any kind of fear of the virus that she can.

In good leftist fashion, she attacked the salon owner for supposedly setting her up.  It is Pelosi who wants the apology.

Many people on the right are calling her a hypocrite, and rightly so.  People hate hypocrisy.  But I think there is something worse about this than just the hypocrisy.

Looking at Pelosi’s actions – going to a salon and not wearing a mask – it tells us that she doesn’t believe the things she is saying.  She knows there is no safety issue with going inside a salon and not wearing a mask.  Yet, as a politician, she strongly endorses all of the government-imposed measures that are done in the name of safety.

In other words, Nancy Pelosi knows this stuff is fake.  She knows that there is no major safety issue.  Yet, she doesn’t mind lying about it for political points, even though it has wrecked hundreds of thousands of small businesses and resulted in tens of millions of people unemployed.

Unfortunately, most people on the left will tune this out.  They will call it a rightwing talking point.  They may not even like Pelosi, but they will not concede a point to the other side.

I also witnessed this in the reaction to the news that the CDC website classifies only 6% of the total COVID-19 deaths as being the sole cause of death.  For the other 94% of people, there were co-morbidities. In other words, someone could be dying of cancer and test positive for COVID-19, and they would be listed as a coronavirus death.  This has been something that the non-fear side has been pointing out for a long time now.

It is amusing watching the responses to this on my Facebook feed.  Again, the fear people just dig in deeper.  They have to explain it away.  It is nice to see them on the defensive though.

I have seen numerous posts pointing out that just because someone has other health issues, it doesn’t mean they deserve to die.  They will say that they could have lived a long life with other ailments and that the coronavirus put them over the edge that they otherwise wouldn’t have gone over.  I have seen many variations of this, and they speak to us as if we are completely stupid.

They are saying these things as if most of us didn’t comprehend this before their enlightening post. I have seen a few people say that 94% of deaths had nothing to do with coronavirus, and this is not accurate if you are basing your argument on the CDC website.  It is certainly plausible that some of these people would have lived significantly longer had they not contracted the virus.  I really don’t even know this for sure, but I do concede that the CDC statistic itself doesn’t mean we can assume that the 94% with co-morbidities would have died in the same timeframe anyway.

But here is the frustrating and rather unbelievable part.  The fear side won’t concede anything with this.  They won’t concede that a lot of these people would have died anyway in a short timeframe.  They won’t concede that maybe a good portion of these people would have died at the same time with or without the coronavirus.  They have their death count, and they’re sticking to it.

This little piece of information put out by the CDC is quite relevant no matter how you slice it. It shows what many of us have been pointing out for many months.  The death count, at minimum, is vastly overstated, and doctors and hospitals have been incentivized to label everything a COVID-19 death that they can.

In other words, it doesn’t matter what comes out now.  Even when something comes out like this from the CDC, an agency which the fear side relies on so heavily, it doesn’t change anyone’s opinion, or at least not visibly.  They just dig in harder.  They can’t concede that, at least, maybe the death count has been overinflated.  They will never admit that they were wrong, no matter what comes out.

The best we can hope for is that a majority of others find a way to get back to a somewhat normal life.  When the fear side sees other people going out and having fun, then maybe they’ll slowly get back into society and just not address their previous fears.

I don’t think most people on the fear side are like Nancy Pelosi.  They don’t see it all as a political move.  A majority on the fear side really are fearful.  But since it has become a political issue, it becomes harder for them to back down.  Of course, it was their side that made it a political issue in the first place by supporting the use of government to use force on people. They didn’t have to forcibly shut down private businesses.  They could have just chosen not to go themselves.

The worst thing about these people is that they think they are smarter than they are, and they think the other side is dumber than they are.  Some of the people on the fear side really are intelligent people when it comes to many things.  But they vastly overestimate their own intelligence, and they lack humility. I can see it just in the tone of the Facebook posts and comments that I see.  These people think they are vastly superior, intellectually speaking, so they think it is ok to mold society in their own vision.  This is the vision of the political left.

I have had many people talk down to me on this issue.  They talk to me like I’m an idiot.  So how can these same people ever admit that they were lied to?  How can they admit that they were suckered by the media hype of a virus?  The answer is that they will never admit it.

The best we can hope for is that they quietly drop the fear selling, and they drop their masks. They are just waiting for a statement from the CDC “experts” giving the all-clear sign.  Then they can take credit for their policies of lockdowns and mask wearing and say that, thanks to them, we can go back to a somewhat normal life again.  That is the only way I see that we can get back to a somewhat normal life.  Let’s hope.

I believe this is Tech Bubble 2.  The first tech bubble was in the late 1990s, which popped in the early 2000s.

To be sure, this tech bubble looks a bit different.  In January 2020, I asked whether we would see the Dow hit 30,000, and I also wondered whether the Nasdaq would hit 10,000.  Then the coronavirus fear struck, along with widespread government shutdowns.  That sent stocks on a quick nosedive in March.

But something strange happened in the midst of what is likely a severe recession.  The federal government sent out massive stimulus checks to nearly everyone, along with $600 per week unemployment bonuses for the tens of millions of newly unemployed Americans.  This meant that a majority of people on unemployment were making more money than they were working.

This was all done courtesy of the Federal Reserve, which allowed massive deficit spending. The Fed created about $3 trillion in new money in the matter of a few months.

So when it comes to judging the stock market, never underestimate the power of the Fed to juice things up.  I guess we also shouldn’t underestimate sending a bunch of young adults home to sit on the couch with thousands of new dollars deposited into their accounts. It makes it a lot easier – with regard to both time and money – to sit on the couch and buy a few shares of Tesla through the Robinhood app.

Now here we are, starting September 2020, and I am wondering if the Nasdaq will hit 12,000 soon. This is 20% above the mark that I set 7 months ago when there weren’t tens of millions of unemployed people and hundreds of thousands of businesses shut down.  It was before there was massive rioting in cities across the country.  It was before Manhattan was essentially abandoned.  It was before businesses had to worry about following new pages of regulations and wondering if they would be shut down again next week.

At the end of 2019 and beginning of 2020, I said that the theme for 2020 would be the massive stock market bubble.  I thought it was a bubble then, so you can just imagine what I think now. It is really beyond ridiculous.

There is so much money sloshing through our economy, it is hard to say when all of this will implode.  The Fed is basically promising inflation for a long time to come.

The broad market has done really well over the last several months, but the Nasdaq has been extraordinary.  Amazon actually makes a little bit of sense because people are staying home more and ordering more things online.  Even Apple makes a little bit of sense, although not too much.

Tesla is beyond ridiculous when it is worth more than many of the other major car companies combined.  Even though Tesla produces cars, it is still in the technology realm because people are betting on the company for its innovations.  They are banking on the car company to come up with the next great car battery that can run much longer or recharge much faster.

Overall, the stock market doesn’t make much sense right now other than the factors mentioned above. There are always individual stocks that do well though, even in a bear market.

Unsustainability

I just want to emphasize that there are limits as to what the Fed can do.  It has already surpassed what I thought was possible. It nearly quintupled its balance sheet from 2008 to 2014 without causing really high price inflation.  And now it is on the verge of doubling it again.

But there are limits. The ultimate limit is hyperinflation, and I don’t think the Fed wants to go there.

I also want to emphasize that monetary inflation doesn’t automatically mean higher stock prices. For the most part, this wasn’t the case in the 1970s.  When price inflation gets out of control, it really distorts the economy. It becomes harder to run a profitable business.  It isn’t good for business.

You could see a scenario where price inflation is going up 10% annually, while stocks are going up 5% annually on average.  This would mean that stocks are still going higher nominally, but stockholders are still losing money in real terms.

But the movements in the near future are not going to be gradual or smooth for the most part. We are going to see wild swings, and eventually we are going to see a major crash similar to what started in the year 2000.

The crazy thing is that the Nasdaq peaked just above the 5,000 mark in the first tech bubble.  We are now getting close to 12,000, which is more than double what the last bubble was.  So even if prices have doubled in the last 20 years, the Nasdaq is still in a bigger bubble now than it was then.

While there was a recession in 2001, it was nothing close to what we have now.  The debt and spending are magnitudes worse, and the wreckage from the government shutdowns is still looming and continuing.  On top of this, let’s remember that we still haven’t had a correction from the massive Fed intervention that has taken place since the 2008 financial crisis.

In conclusion, I am very bearish on this market.  I believe it is going to crash very hard one day, and it is going to hurt a lot of people really hard.  It is impossible to predict when that day will be.  Maybe it will come with the uncertainty of the presidential election.  Maybe it will come in early 2021.  Maybe it will somehow hold on for another couple of years, although I rather doubt it.

I had already predicted a major drop in 2020 based on the inverted yield curve that we saw last year.  But the government shutdowns and the Fed’s response in creating trillions of new dollars have changed all of that by giving another blast of stimulus to stock investors.

The economy is already ugly.  There is a disconnect with the stock market.  I don’t expect that disconnect to continue for a long time, and I don’t think the overall economy will be booming again any time soon.  Stocks will eventually be hit hard.

The chairman of the Federal Reserve, Jerome Powell, has spoken.  The Fed will take a different approach going forward with regard to inflation.

Powell’s definition of inflation is not increasing the money supply, which the Fed is doing often. Powell is talking about price inflation.  Even here, the Fed doesn’t use the commonly used CPI number.  It has its own metric that it uses called the PCE.

The Fed has had a goal of 2% inflation.  Again, this is in reference to price inflation and not the money supply.

It is ridiculous in the first place that this would be a goal.  It is devaluing the money that people hold by 2% per year.  When you compound this, it means that prices will double about every 36 years.  This is assuming that the Fed’s metric is accurate, which is not likely.

There is no reason that we need inflation.  In a free market economy with free money, we would most likely see mild price deflation over time.  You would have increased technology and production.  Instead, the Fed, as one of its mandates, tries to steal this benefit away from consumers.

Contrary to popular thinking, you don’t need an increasing money supply with increased production. Your money will simply buy more, and there is nothing wrong with this.  This is what has largely happened with electronics (computers, televisions, etc.) over the last few decades.  People still go out and buy these things.  They get the benefit of paying cheaper prices, or getting better products, or some combination of those two.

The FOMC Updates Its Goals Statement

With Powell’s speech, the FOMC officially updated its “statement on longer-run goals and monetary policy strategy”.

On price inflation, the statement reads as follows:

“On price stability, the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2 percent by noting that it ‘seeks to achieve inflation that averages 2 percent over time.’  To this end, the revised statement states that ‘following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.’”

I take this to mean that the Fed is actually a little worried about price inflation for the first time in a while.  This is essentially what the Fed is saying now:

“Don’t worry if we blow past our 2 percent inflation target, even with the more understated PCE metric that we use.  We can easily go up to 3 or 4 percent inflation without slamming on the brakes. We can keep interest rates low and keep the funds flowing to Congress to fund the massive debt, even when prices are rising substantially more than what they already have been.”

The Fed has created about $3 trillion out of thin air recently.  It is unprecedented, and it isn’t going to stop.  It will temporarily flatten like it has over the last couple of months.  But the general trend will still be up for its balance sheet because the federal government is going to continue to run multi-trillion dollar deficits every year.

So when the Fed’s official measure of price inflation goes above 2%, it will point to its new long-term goals and say there is nothing to worry about.  They will insist that they can keep interest rates near zero and keep expanding the balance sheet.

Unemployment Concerns for Low-Income People?

The other big part of the new goals statement is a bit puzzling.  I won’t quote it here because it is just confusing, but it is in regards to unemployment.

According to this CNBC article, “While the shift appears to be a matter of verbiage, Powell said it is significant.”

Powell said, “This change reflects our appreciation for the benefits of a strong labor market, particularly for many in low – and moderate – income communities.  This change may appear subtle, but it reflects our view that a robust job market can be sustained without causing an outbreak of inflation.”

So I guess the Fed will now show its “appreciation” for a strong labor market.  What does this even mean?  There hasn’t been much appreciation for these workers since March when tens of millions of them were forced out of their jobs. Stock investors aren’t showing much appreciation because they continue to send stocks to all-time highs while many of these tens of millions of people remain unemployed.  In fact, the stock market it basically saying that these people are irrelevant.

It’s also interesting that Powell and the Fed would be stressing the importance of paying attention to low-income workers.  While the majority of people forced out of work would probably fall into this category, I would think that it would be middle and upper income people who are in a much tougher position right now if they lost a job.

First, take someone who was making $10 per hour working at an ice cream shop.  Let’s say that person was forced out of work because a governor or mayor deemed the business to be non-essential.  Now that worker is sitting at home collecting unemployment.  Up through the end of July, he was probably collecting around $900 per week.  That would be the state unemployment plus the $600 weekly bonus coming from the federal government and financed by the Fed. This unemployed person is making more than double what he was making before.  And when his unemployment dries up, it probably won’t be that difficult finding another job that pays $10 per hour.

Now let’s take someone who was making $100,000 per year and supporting a family.  That person loses his job.  Maybe he collects half his salary in unemployment up until the end of July when the amount gets reduced.  This person has a mortgage payment, and he has to provide food, clothing, health insurance, and other basic needs for his family. Plus, it won’t be that easy finding another job with a comparable salary.

But Powell and company want to show their appreciation for the guy who was scooping ice cream for $10 per hour.  I’m not saying that we shouldn’t be sympathetic for anyone who loses their job, but the young person (probably living with his parents) scooping ice cream who loses his job is in a much less difficult situation.

Of course, the Fed’s idea of showing “appreciation” means more manipulation of interest rates and the money supply.  That is really all it can do.  In the long run, this tends to hurt poorer people and people on fixed income, as the value of their money depreciates over time.

The only thing I can conclude from this Fed announcement is that we will continue to see a lot more monetary inflation.  That is all it has at this point, and it is just making up an excuse in advance for when it starts to show up more in consumer prices.  This is why I remain bullish on gold.

There are some parallels between the Great Depression and now.  We are in tough economic times, but I don’t believe we have seen anywhere near the worst yet.

We are a much wealthier society than what was the case leading into the Great Depression. Obviously technology has helped us through a great deal.  Actually, I would argue that most of the government-imposed shutdowns never would have happened if not for our current technology.  Even 20 years ago, it wouldn’t have been possible to send tens of millions of people home to do their jobs.

It is also easy to take our high living standards for granted.  It was a bit of a shock in March and April to go to the store and see shelves cleared out.  I have only seen that before when a hurricane was about to hit.  In this case, it wasn’t just toilet paper.  Even meat and vegetables were largely gone off the shelves.

It showed how fragile our whole system is.  On the other hand, it also showed how resilient our system is if it is allowed to function.  When the market is relatively free, it is amazing how supply and demand can rearrange things quickly, and the seemingly right amount of products appear on the shelves.

As a follower of Austrian school economics, I believe that the central bank’s easy monetary policy of the 1920s set up America for the beginning of the Great Depression. A recession quickly became a depression due to increased involvement from government.  Both Hoover and Roosevelt were highly interventionist presidents when it came to the economy.  It was especially hard for the economy to recover when the government was trying to enact price controls and prevent wages from falling.  It also marked the beginning of a big welfare state.

One other factor that sometimes gets overlooked is the uncertainty, especially when it came to government policies.  Robert Higgs wrote extensively on what he called regime uncertainty and applied it to the Great Depression.  He said that the uncertainty of future government policies helped create an environment where investment and entrepreneurship were highly discouraged.

Regime uncertainty could prove to be highly detrimental to our economy now in the year 2020, and it could impact the economy for a long time to come.

The Next Flu?

I have asked rhetorically whether we will have to wear face masks forever because there is always some kind of flu virus out there.  I have questioned whether governors or mayors (or maybe future presidents) will just shut down the economy again any time a new virus or contagious disease gets some media attention.

If I am wondering these things, you have to think that many others are wondering the same thing. This would be especially true of investors and entrepreneurs.

There are still many businesses that are shut down due to government orders.  Most of these orders are not even really laws. They mostly came from governor and mayor orders without a legislature.  2020 has been a sight to see, and it’s not done yet.  It was amazing how a fearful populace so easily gave up their liberty.

For the brick and mortar businesses that are open, they are having to follow all of these ridiculous regulations.  They get to put up glass walls and stick lines and arrows all over their floors.  They get to play the mask police too.  Much of this is government imposed, but it is also imposed by public opinion.

If it were all voluntary, it would obviously be better.  But it is still harmful to businesses even if they are just responding to public fear.  They get angry comments that they should require masks.  They get angry comments that they shouldn’t require masks.  They get angry comments that they aren’t enforcing their mask policies good enough.  On top of it, the big businesses have lawyers telling them they better follow certain precautions for liability reasons.

How would you like to be a business owner right now who owns or leases a building that customers enter?  And what is to say that something similar won’t happen again next year or the year after that? Who is to say that we won’t still be hunkered down from the coronavirus this time next year?  I would never have guessed that this nonsense reaction would have lasted this long in the first place.

Many restaurants and other small businesses have closed.  They have closed for good.  Even if customer demand somewhat comes back for dining out, who would want to start up such a business to replace one of the restaurants that has already closed down permanently?

You are not secure in your property rights.  You can open up a nice new restaurant, and now you know the government can just shut it down at any time.

It isn’t hard to imagine hearing this now or in the future: “There is a new strain of the flu out there.  It may kill up to 100,000 Americans this year.  It’s time for small non-essential businesses to close down temporarily until we get a vaccine or get this thing under control.”

If this isn’t regime uncertainty, I don’t know what is.  And it is coming from all levels of government.  If the president doesn’t shut you down, the governor may. If the governor doesn’t shut you down, the mayor may do it.

This will be especially true in big cities.  I don’t see how New York is coming back from this any time soon.  It has been decimated.  Rent would have to be incredibly cheap for anyone to start a business there now.  Even with that, I don’t think the risk would be worth it.  On top of the threat of government shutdowns, you also have to deal with the potential threat of rioters without police protection. This is an added layer of uncertainty for the big cities.

Real Estate

Regime uncertainty also plays a factor in real estate.  Manhattan will obviously continue to be a disaster in every way, but we don’t even have to look at big cities.

I know there has actually been an increased demand for houses in many areas.  It is typically in the suburbs because people are trying to escape the big cities.  They are trying to escape the downtown areas.  This makes sense in terms of buying a house to live in.

I have to wonder though about the rental market.  Anyone who owns investment real estate has to be nervous.  It has been this way since March.  It is really devastating for a landlord to hear government officials effectively say that people don’t have to pay their rent.

They don’t exactly say it this way, but they say that they want a moratorium on evictions.  In other words, you don’t have to pay your rent and you won’t get kicked out any time soon.

Thankfully, the large majority of people are still paying their rent.  But you wouldn’t want to be a landlord stuck in a situation where you have someone renting who is not paying.  Depending on where you live, you may not be able to evict the person, even if they have the money to pay rent.  And if you can evict, you know that the courts are probably backed up in a lot of places.  How many months should a landlord have to go without getting paid any rent while the landlord still has to pay the mortgage and expenses of the property?

I have been an advocate in the past of investing in residential real estate for people who are in the right position financially.  I am rethinking this now.  I already would have said to avoid places like California or any other state that has a low regard for property rights.  This is especially true now.  But even in a more friendly state, I would be concerned now, especially when there are rules coming down from Washington DC.

Again, why am I going to buy residential real estate as an investment when the government can come along at any time and tell my renters that they essentially don’t have to pay? This has all of a sudden become far more risky for real estate investors.

Who would want to be a landlord in California?  The added regime uncertainty when it comes to property rights (or lack of) for real estate investors will further discourage the process.  It will end up reducing supplies and making rents more expensive, and it will add to the epidemic of homelessness.

If I were looking at buying rental real estate, I would be incredibly careful about where I’m buying.  Governments all over have shown that your property isn’t really your property.

And this is just for residential real estate.  I won’t even get into commercial real estate.  Maybe some of those high-rise buildings that sit mostly empty in downtowns across America can be converted into residential real estate.  But who would even want to make that investment at this point?

Investment

This all impacts investing in general too.  Many entrepreneurs rely on investors for capital.  It doesn’t just come from bank loans.

Who would want to be an investor in any brick and mortar business right now?

You might say that the stock market is booming, which is true right now.  But notice what is happening.  The investing is going towards big companies.  These are not start-up companies.  They are companies that are either deemed “essential” or they are tech companies.

It is still surprising how much of a boom there is in the stock market (as of right now) given the devastation that has taken place over the last 6 months.  I underestimated the power of massive unemployment checks and young people sitting at home with nothing to do. So they get on a trading app and use their extra money to seemingly make some easy money by pushing a few buttons on their phone.

It all reminds me of the tech bubble in the late 1990s.  But regardless of what happens with stocks, this isn’t new investment. It is people trading shares. There is a buyer and seller on each side of the equation, but the price at which the shares are being traded is higher than before.

This is largely gambling at this point.  It is hard to call it investing.  Seeing the prices of Amazon, Tesla, and Apple go higher is not a sign of American prosperity.  It is not a sign of investment.  If anything, it is a sign that people would rather digitally trade in and out of shares than use their money to start a business or buy investment real estate.  From this standpoint, the stock investing actually seems rational.

Conclusion

Regime uncertainty is going to have a major impact on our economy going forward.  If you are going to start a business, do it all online.  You don’t want to have a physical presence.  Otherwise, a governor or mayor could shut you down at any time.

The idea of property rights has been dealt a blow in 2020.  It is hard to get this back.  It will be especially hard this time, not knowing if and when the population will be so easily led into fear the next time a new virus appears.

I have no idea if we will see another Great Depression.  Regardless, our living standards will be greatly impacted.  The Federal Reserve’s monetary policy has done great harm and will continue to do great harm.  The federal government’s massive spending and regulations have done great harm and will continue to do great harm.

Now we also have to worry about the whims of governors and mayors who have been unofficially granted the power to shut down private businesses.  This is regime uncertainty not seen since the Great Depression, and it is coming from all levels of government.

When Jo Jorgensen won the Libertarian Party (LP) nomination for president, I was mildly optimistic, and maybe even a little excited.  I thought she was the best nominee since at least 2004 when Michael Badnarik ran, and I still believe this today.

My idea of “the best nominee” may be different from other people’s idea.  There is a reason that Gary Johnson was the nominee twice in a row.  Some Libertarians liked the prestige of having a former governor run on the ticket.

For me, I want someone who is going to advance the cause of liberty.  I think there is an almost zero chance of the LP nominee actually winning the election.  This has been true since the party’s existence beginning in the 1970s.

For this reason, there are some Libertarians who believe it is a waste of time to run a presidential candidate until there is a realistic chance of winning.  I disagree with this.

While the establishment media doesn’t pay much attention to third-party candidates, having a Libertarian Party presidential candidate does provide opportunities that otherwise wouldn’t exist.  The main opportunity is outreach.

The LP nominee always gets some attention.  Some of it is negative, and the attention that is given by the establishment outlets is a tiny fraction of what is given to the two big parties. But there is still attention nonetheless.

I became a radical libertarian because of Harry Browne.  My journey is a little different because I didn’t start following Harry Browne until after the 2000 election.  I was mildly familiar with him in 2000.  I think it is because I saw a story on him on Fox News. I just remember someone talking about an ad the Browne campaign had where there was a wrecking ball knocking down the IRS building, representing that Harry Browne wanted to eliminate the IRS and the income tax with it.

I believe the LP candidate should function similar to what Ron Paul did in 2007/ 2008, and again in 2011/ 2012.  You want to teach people the benefits of liberty, and you want to convert people towards libertarianism. That should be the number one goal.  This is also what Harry Browne did in 1996 and 2000.  Jo Jorgensen should know something about this since she was Browne’s running mate in 1996.

The only way to achieve greater liberty in society is by changing public opinion so that more people are sympathetic to the cause of liberty.  It isn’t a matter of getting the most votes, especially when you have no chance of winning.

I understand that some Libertarians care a lot about vote totals because of ballot access. While I don’t completely ignore this argument, I don’t think ballot access will do much good unless we actually have people who are willing to consider the libertarian message.

Of course, vote totals in themselves don’t do much, except they could send a message to others that there are people who are not in line with the status quo.

Even electing Libertarian Party candidates to major offices won’t do much unless the public is behind them.  I remember back in 2007 when some people would suggest that Ron Paul should not talk about foreign policy and should almost pretend to have a different stance than what he actually had.  Luckily for Ron Paul and us, he didn’t much take this advice, especially in the debates.

It doesn’t do much good in tricking someone to vote for a candidate because they are hiding their true views.  This is especially true for a Libertarian candidate.  If the LP presidential candidate moderates his or her views and then gets elected (which won’t happen anyway), what good does it do?  Is that person going to step into office and say, “Just kidding, I really am going to withdraw all troops from overseas tomorrow morning”?

For anyone who moderates their views in the campaign, I wouldn’t trust them to do what is right anyway if elected to office.  Most people go the other way.  Once they get into office, they favor bigger government than what they campaigned on.  They tend to enact the worst policies that were part of their campaign, and at best ignore the things that would have actually brought greater liberty.

Therefore, I believe it is important – vitally important – for the LP presidential candidate to be radical and firm in libertarian principles.

You can deliver your message in a way that resonates with people, but the message should always be about selling more liberty.

Jo’s Messaging

Unfortunately, I have been disappointed in some of the messaging coming from the Jo Jorgensen campaign.  I still believe she is a better candidate than Gary Johnson was, but she is falling well short for me.

I don’t expect a perfect candidate.  I don’t have to agree with every specific thing, and I don’t have to agree with the focus of every message.  But what Jo is doing, and perhaps more importantly, what she is missing, is bad for the libertarian movement.

Jo’s Twitter account has sent out messages pandering to Black Lives Matter, and it really does come across as pandering.  It is fine if she offers some solutions to issues raised, such as ending qualified immunity, ending civil asset forfeiture, and ending the federal war on drugs.  And to be sure, she has done some of this.  But her main message at times seems to be pandering to the political left.

She said, “It is not enough to be passively not racist, we must be actively anti-racist.”  What does this even mean?  And who will hear that message and decide to flip their vote to Jo Jorgensen?  I think that question answers itself.

When it was announced that Kamala Harris would be Biden’s running mate, Jo tweeted out, “I’m glad that Joe Biden has brought another woman into the race; the vice presidency shouldn’t be a boys’ club.  When I think about the millions of girls and young women across America, I think they deserve a voice this year when it comes to the top job in the country.”

Sure, Kamala Harris is an authoritarian, establishment, war hawk, but let’s cheer that she is a woman.  Who is Jo trying to appeal to in this?  Does she think that a bunch of women who are Democrats are all of a sudden going to switch their vote to Jo?  Again, the question answers itself.

I also saw a tweet from Jo’s account talking about abortion and a woman’s right to choose.  I know this is a contentious issue within the libertarian community, but I don’t know why she would send something like this.  Is she trying to turn away anyone who believes that abortion is murder?  As president, she would have no role in this issue anyway, except to push for overturning Roe vs. Wade on constitutional and decentralization grounds.

I have seen suggestions that Jo may not be running her own Twitter account.  If that is the case, then she should have fired whoever is running it a while ago.  She should be controlling the words that are sent out in her name.

For me, even worse than the bad messages are the missed opportunities.

I haven’t followed a lot of what she has said and done, but it is easy to get someone’s general message when you watch them a few times.  She is usually good on the big issues from a libertarian standpoint, but messaging matters.  The focus of your attention matters.

Jo is getting involved in the culture wars.  She is allowing the establishment media to dictate what she talks about instead of creating her own narrative.  It may be impossible to avoid talking about the culture wars, but why put so much focus on it without even really selling a message of liberty?

We still have wars raging on overseas.  If Black Lives Matter, do Foreign Lives Matter?  Do Foreign Black Lives Matter?  Unfortunately, to most Americans, foreign lives really don’t seem to matter.  There are probably at least a thousand times the number of foreigners who die at the hands of U.S. bombs and interventions than there are black Americans who die at the hands of police brutality.  Of course, Jo would never say this because it might upset the people she is trying to pander to. 

While I think war and interventions are always a major issue, there is another major issue that Jo is mostly ignoring at her own peril.  She has been handed an issue in the year 2020 that is a populist issue and one where she can easily sell libertarianism.

The issue is the American middle class.  There are 50 million people who have filed for some kind of unemployment this year.  There are tens of millions of more people who are struggling financially and are scared at what comes next in this crazy world.  There are hundreds of thousands of people who have had to shut down their businesses due to government.  We have seen the debt run up by several trillions of dollars in the matter of months.  We have seen the Federal Reserve balance sheet expand by nearly $3 trillion in the matter of months.  We are hearing about contact tracing and forced vaccination.

In terms of government shutdowns, it is largely due to governors and mayors.  Still, she can speak to it as a human being, and the federal government is largely responsible for pushing the propaganda that resulted in the fear and the subsequent shutdowns.

She should talk about the hundreds of thousands of small businesses that were forced to close that may never reopen again.  She should talk about the tens of millions of people who were forced out of their jobs.  She should talk about the anxiety and depression that largely get ignored in place of more virus fear propaganda.

She should speak boldly about libertarian solutions.  She should state that the answer to the economic problems is not more government spending and regulation.  The answer is less.  We need a dramatic reduction of spending from the federal level instead of having these resources consumed and misallocated by politicians and bureaucrats.

She should speak boldly about the damage being done by the Federal Reserve – the nation’s central bank.  She should point out that the monetary inflation will be very harmful and will only serve to enrich the already-wealthy people at the expense of the rest of the American people.

Jo should show empathy for the tens of millions of Americans who are really hurting right now, largely because of government policy.  This is a message that resonates.  It is a message that sells.  And when people are hurting, they are open to hearing a new message.

Instead, Jo is pandering to cultural leftists who won’t vote for her anyway.  If she focuses her message on the struggling American middle class, she may actually convert people towards libertarianism.  She may inadvertently get a few million more votes than she otherwise would have.

If she sold this message and ended up receiving five million votes in the general election, there would be no mistaking these votes as votes against the status quo and votes in favor of smaller government.

There is a real opportunity in 2020 for libertarians to sell a principled message of smaller government, while also exploiting a populist issue.  What normal American doesn’t want more prosperity at this point?

Unfortunately, Jo Jorgensen has largely failed up to this point in selling a strong libertarian message.  So far, it is just another election year of disappointment.

I don’t know whether or not I will vote for Jo at this point, and I am not trying to tell anyone else what to do.  It is still a vote against the establishment and the status quo. But it would be nice to vote for someone for more than a protest vote.  To paraphrase Jo: It is not enough to be passively not an advocate of the establishment; we must be actively anti-establishment.

Happy Birthday to Ron Paul. He turns 85 years today, August 20.

Ron Paul has done more for the cause of liberty than any person in modern times. Perhaps he has done more for liberty than anyone in all of history.

We would be in a lot worse shape today if it weren’t for Ron Paul. There are hundreds of thousands of people in the U.S. alone who are hardcore libertarians because they found Ron Paul. Most of those came from his two presidential runs as a Republican.

There are many great things about Ron Paul. He is a family man and a good man. Maybe he isn’t the best or most charismatic speaker when compared to other public figures, but this is part of what makes him genuine and believable. He has remained principled and continues to deliver his message for liberty.

Ron could have easily retired a long time ago and spent his days relaxing. But that is not Ron. He has a personal devotion to the cause of liberty, and it brings him joy in spreading his message to others.

He has particularly been a voice of sanity in 2020 with all that has happened. Despite his age and his son having a partially removed lung and testing positive for coronavirus, Ron has warned us from the beginning not to fall for the media hype and propaganda regarding the virus. Ron says that kids need to go outside and play football. I wish more people had listened to this doctor’s advice from the beginning.

Thank you, Ron Paul, for everything you have done and continue to do.

I follow the FIRE community.  That stands for Financial Independence, Retire Early.  I am more into following FI than FIRE actually.  If you had asked me when I was younger, I would have said that I wanted to retire early.  I wouldn’t say that now.

I want financial independence for the flexibility.  I want to be able to work on the things that I want to work on.  Maybe you could call that retirement, but I don’t think most would.  I like going to the beach, but I don’t want to do it all the time.  I still want to be productive.

I like following the FIRE movement because it is entertaining to me, and I get some good ideas.  You can learn different ways that people make more money, save more money, and are more efficient with their time and resources.

The one area where I tend to disagree with the typical FIRE person is when it comes to investing. A large portion of the FIRE community advocates investing most or all of your money in low-cost mutual funds. They will say that stocks historically always go up in the long run.

I have pointed out the example of stocks in Japan, which peaked in 1989.  Over 30 years later, they are still down by nearly 50% from the peak.  Nobody has given me a good explanation on why that can’t happen here, meaning the United States.

I don’t predict it will happen here, but it shows it’s possible.  And Japan is a first-world country, so it isn’t an unrealistic example.

To be sure, there are some FIRE people who are more in my camp.  I have seen gold mentioned as a possible hedge against inflation by a few people.  There may even be a few people who like the permanent portfolio concept.  But it is safe to say that a vocal majority favors mostly stocks for an investment portfolio.  They also tend to be more positive about retirement accounts.  I’ll say that most people should probably take an employer match for a 401k, but that’s it. Many FIRE people will say to max out a 401k.

Aside from the concept of investing mostly in stocks, it also bugs me when I hear people downplay the benefits of paying off a home mortgage.  There is the classic argument of whether to invest or pay down a mortgage.  And I get that there are good arguments for either one.  But I disagree with those who are adamant about not paying down a mortgage. And the only reason for this is because they assume that you should be able to get a greater rate of return from investing than the interest rate on your loan.

Dave Ramsey on Mortgages

I recently saw a clip of Dave Ramsey taking a call about the subject of paying off a mortgage. He talked about his baby steps. He talked about studying millionaires and how most millionaires pay off their mortgage and save for retirement.

He makes the profound point that you wouldn’t want to borrow money to invest.

To be sure, he says that you should save 15% of your income towards retirement before paying down your mortgage.  So that in itself may be a little contradictory about not borrowing to invest.  However, I understand the concept and the rationale. This is especially true for people who get an employer retirement contribution match.

I have written about Dave Ramsey before, and I have just about the same opinion of him today as I did 10 years ago.  I think he offers a lot of wisdom, but I believe he gets the investing side wrong.  I wrote about Dave Ramsey and Suze Orman back in 2011.

I follow the FIRE movement because I find it is more advanced and more detailed in discussing financial topics.  People get into things that Dave Ramsey just wouldn’t dive deep into.  But it is nice to go back to Dave Ramsey from time to time for some simple, but much-needed financial advice.

When I watched this short video of him talking about paying off a mortgage, it reminded me that many people in the FIRE community could stand to listen to some of this. While the FIRE people tend to be more advanced than Dave Ramsey listeners, I think some FIRE people get too advanced for their own good.  This is especially true when they think they should never pay off their mortgage because they can make such high returns investing in the stock market.

Anyway, I appreciated what I heard from Ramsey.  I agree with him that it is wise in most situations to pay down a mortgage if you are in a good position to do so.  I think more FIRE people should take this advice.

Dave Ramsey on Gold

After all of that, I remembered why I didn’t care for Dave Ramsey at times.  I saw a recent video of him talking about hyperinflation and gold.  He unequivocally says not to buy gold.

He says it is just a golden-colored rock.  He says it’s no different than a green piece of paper with a picture of a president on it.  This is completely wrong because the green pieces of paper we call dollars are essentially forced on us.  And let’s not forget they originated as certificates for gold.

Gold has been used as a form of money for thousands of years.  It was chosen in the open marketplace.  It also does have uses other than being money, which can’t really be said for dollars.  Gold has industrial uses, and it is used for jewelry.

The worst part of this gold segment is when he said that the price of gold doesn’t have to go up in hyperinflation.  He says the dollar isn’t tied to gold any more.

Isn’t that the point?

Ramsey says that gold goes up in price when there is a perceived shortage.  He talks about gold going up in “value”.  I find it hard to believe that somebody with Ramsey’s wisdom doesn’t understand that gold would go up in price with more money in circulation, all else being equal.

He uses the word “value”, but it’s not that gold necessarily goes up in value.  It is that it holds its value, unlike the dollar or any other fiat currency.

There is no question that gold goes up and down in price based on a lot of factors, including perceived shortages or perceived over supplies.  It also tends to go up with more money in circulation. This would be especially true in a hyperinflation situation where the demand for a fiat currency goes way down. People are spending their depreciating money quickly to convert it to hard assets before prices go even higher.

So, after all of these years, it is still frustrating that Dave Ramsey has such a bad grasp on economics and monetary policy.  Remember, in this video, he wasn’t saying that hyperinflation was out of the question.  He was saying that he doesn’t recommend gold under any circumstances.

The crazy thing is that we don’t even need hyperinflation to get a massive rise in the dollar price of gold.  I wouldn’t consider 15 to 20 percent annual price inflation to be hyperinflation, but I would imagine that gold would go a lot higher in such an environment.

In conclusion, as I stated almost a decade ago, listen to Dave Ramsey when it comes to managing money and debt, but ignore him when it comes to investing.  I would recommend the same strategy when dealing with a majority of people in the FIRE movement.

We finally learned this week that Kamala Harris has been chosen by Joe Biden to be his running mate.  Perhaps more accurately, the establishment has chosen Harris to be Biden’s running mate.  Maybe even more accurately, the establishment has chosen Harris to be president of the United States.

I wasn’t sure if Biden would actually be the Democratic nominee.  I guess they are going forward with him for now, gaffes, blunders, and all.

If Biden wins and takes office in January 2021, I think it is highly unlikely that he would finish a full four years in office.  He would be 78 years of age when taking office and 82 when finishing.  It would be hard to imagine that his cognitive decline would stop, especially with how rigorous the job is.

Even if Biden stayed about the same from where he is now, that may not be acceptable.  There are moments where Biden seems ok, but you never know when he will get off track and say something really stupid or start tripping over his words.  The establishment media can often provide cover-up for scandals, crimes, corruption, personal affairs, and a host of other things, but it is hard to disguise continued verbal gaffes, especially when that person is president of the United States.

Biden serves one purpose at this point.  In the eyes of the establishment, he has to defeat Trump in November. After that, they can discard him like an old rag.  Biden already did the establishment a major favor in defeating Bernie Sanders. They just need Biden to hold on for three more months and give them one more victory.  They are hoping he doesn’t say anything too outrageous during that time.  That is why his campaigning will be limited, at least when it comes to him speaking.

If Biden wins, Kamala Harris will likely become president.  She was soundly defeated in the Democratic primaries, but her path to the presidency looks clear now.  She is just hoping that Biden doesn’t do anything really stupid and that the anti-Trump vote is strong enough to provide victory in November.

A Winning Message?

Biden and Harris appeared together after the announcement had already been made and people were talking about the impacts.  In a joint press conference in which they didn’t take questions, Biden went on about how everyone should wear masks and that wearing masks for the next three months will save 40,000 American lives, according to the “models”.

Why three months, Joe? Why not until the end of the year? You could have at least said for the rest of the year to not make it so obvious.  He said this with the election being just over three months out.  In other words, let’s make life as miserable as possible for the next three months so that people will feel like any change (i.e., getting Trump out of office) will be good.

After Biden’s spiel about mask wearing, Harris steps up to the microphone and said that that is what real leadership looks like.  I guess she got over all of the allegations of sexual abuse and the racial bussing that she hammered Biden on in the primary debates.

Kamala Harris then goes on to talk more about mask wearing, and then about contact tracing and vaccines.  She is criticizing Trump for not giving us a timeline on when “we” will get vaccinated.  In other words, she wants Trump to lie. But if Trump did offer such words, I’m sure she would have criticized him for lying about it.

So is this the winning message that we will hear from Biden/ Harris over the next three months? Wear a mask, social distance, line up for a vaccine, and allow the government to trace your every move in case you come into contact with someone who may have had the virus.

I understand the anti-Trump message.  Most people aren’t voting for Biden/ Harris.  They are voting against Trump.  There are many people holding their noses in voting for Biden. The anti-Trump message unites a large segment of the country.  That in itself could be a winning message if enough people hate Trump at the beginning of November.

But what’s with the obsession over masks?  I know the political left tends to be more onboard with the mask wearing and obeying government orders to shut down and everything else.  But you have to imagine that there is a decent percentage of people who would not necessarily identify as conservative or libertarian who think the mask thing and the over-response to the virus is way overblown.  As I have said before, when they showed crowds of people packing the beaches for spring break, do you really think most of these people were Trump voters?

What will be the final slam-dunk message from Biden/ Harris?  Everyone should wear face shields?  Everyone should walk around in an astronaut suit?  All candidates have a marketing problem right now, but the Biden/ Harris message of major fear really seems to be the worst.  I mean, there are probably at least 30 million people who don’t have a job or have a job that is paying them less now.  There are tens of millions of people who are on pins and needles about their own job or their own business and worried that life will never be the same again.  There are major cities in flames.  But the Biden/ Harris message is to double-down and mask up.

I also have to think about Bernie Sanders, whom I haven’t heard much from.  Bernie never was the revolutionary that he was made out to be.  He did the same thing in 2020 as he did in 2016.  The establishment worked hard to deny him the nomination, so Bernie lines up and dutifully supports the Democratic nominee.

Still, as bad as Bernie is, I have to imagine that he would be selling a little different message right now if he were the nominee.  He would certainly be anti-Trump, and I’m sure he is enthusiastic about everyone wearing a mask.  However, if Bernie appeared with his new running mate, I’m pretty sure he wouldn’t have spent his time talking about masks, vaccines, and contact tracing, or at least his time on those things would have been minimal.

Bernie would have been talking about healthcare as a right.  He would have been talking about the need to raise wages (through legislation, of course) for lower and middle-income Americans.  He would have shown some empathy for the tens of millions of people struggling to pay their bills.  He would have at least tapped in somewhat to the real problems facing Americans, even if we disagree with his solutions.

Instead, we get the Biden/ Harris message of wear a mask and line up for vaccination.  Are they sure that is the message they want to sell for the next three months in order to beat Trump?

President Harris?

If Biden (i.e., the establishment) defeats Trump in November, I give it a much greater than 50% chance that Kamala Harris will be the president by the beginning of 2023.

Harris is an authoritarian to the bone.  If you think I’m criticizing her heavily now just because she is now Biden’s running mate, read some of my blog posts from the Democratic debates. I pointed out, several time, that she was the scariest candidate of them all, and that she is an authoritarian. She is bad on almost every issue.

I said: “Tulsi had some great moments in the debates.  She took down the worst person of them all – the authoritarian Kamala Harris.”

I said: “She [Harris] is still an authoritarian.  She is still unlikeable.  Luckily, I think others are not finding her likeable either.”

I said: “Kamala Harris is still the scariest of all the candidates.  She is an authoritarian leftist.”

I said: “Kamala Harris is still, I think, the scariest candidate.  She is very authoritarian.”  I also said” “Harris would be horrible in almost every aspect.”

I quote myself here only to show that I am not especially attacking Harris now just because she is now the VP candidate.  I would have been critical of any establishment pick, but I was very clear during the primary debates that I thought Harris was the worst of them all.

It’s funny, in a sick sort of way, that Biden delivered Harris as the black female candidate. I have my many criticisms of the Black Lives Matter (BLM) movement, but there are areas where I find common ground with some people.  I do believe that police brutality is an issue, even if it may not be the most important issue in my eyes.  I believe that we need prison reform.  I believe that the war on drugs should be ended and that people should not be locked in a cage for drugs.

Yet, Kamala Harris has been horrible on all of these issues.  Before becoming a senator, she was a prosecutor and attorney general in California.  She has a record of locking people up for non-violent crimes.  She has a record of enforcing a police state.

I have heard a few hardcore leftists criticize Harris since becoming Biden’s running mate. Unfortunately, most leftists ignore her record and just cheer on the fact that she is a black woman.  If she is a friend to the black community, I hate to see what an enemy looks like.

Harris is just bad in every way, especially to a libertarian.  She favors a police state at home.  She favors more government spending, more taxation, more cronyism, and more government control.  She is also a major war hawk.  She is like Hillary Clinton without quite as much personal baggage.

My only hope is that if Harris does become president, there will be sufficient resistance to her authoritarian plans.  I have seen the American people roll over easily in 2020.  If we have an all-out authoritarian who is not shy about her intentions in the presidency, then maybe it will wake some people up. That’s my hope anyway.