The Federal Open Market Committee (FOMC) released its latest statement on monetary policy.  As expected, the federal funds target rate was raised to a range of 1.75% to 2%.  You can see the latest statement with the changes made as compared to the previous statement.

In order to control this overnight lending rate for banks, the Fed has been raising the rate it pays to banks on reserves, as stated in the FOMC’s Implementation Note.  Up until now, the Fed would raise the interest rate paid on bank reserves to the upper limit of its targeted federal funds rate.  For example, when the range was 1.5% to 1.75%, the Fed was paying 1.75% interest to banks.  However, in its latest statement, it raised the interest rate paid on required and excess reserves to 1.95% (instead of 2%).  This is more of a curiosity than anything, but perhaps the Fed didn’t raise its target rate quite as much as stated.  The range of the federal funds rate went up 0.25%, but the interest paid to banks went up 0.20%.

The Fed is also continuing on its path of monetary deflation, at least in terms of its balance sheet.  The Fed will continue to roll off a total of approximately $30 billion each month.  But according to its Implementation Note, this will increase to $40 billion in July.  This will be $24 billion in Treasury securities and $16 billion in mortgage-backed securities.

This is really the biggest story.  The Fed can impact the market interest rates to a certain degree, but the money supply is the bigger factor.  If this tightening leads to a recession at some point, then the target federal funds rate isn’t going to mean that much.  Market interest rates will go down most likely (especially long-term rates), regardless of what the Fed does, as investors seek safety in U.S. Treasuries.

The FOMC statement comes just a day after the latest consumer price inflation (CPI) numbers were released.  The year-over-year CPI for May 2018 stands at 2.8%.  The much more stable median CPI even went up to 2.7%.  This gives a green light to the Fed to continue its policy of tightening, but it may find itself in a bind if there is a conflict with rising prices and slowing economic growth.  I’m not ready to say that it is the 1970s all over again, but there was a slight step in that direction this week.

While I will continue to monitor the CPI numbers, I still think by far the most important thing to watch now is the yield curve.  I like to look at the 3-month versus the 10-year yield in particular.  If these yields start to get close, this will be a recession warning indicator.

I really believe that the yield curve will flatten, if not fully invert, before we will see a full-blown recession.  And it would not surprise me to see the short-term yields go higher in the coming weeks.  If the 10-year yield stays around the 3% mark while short-term rates creep higher, then things will really start to get interesting.

The Fed is indicating that it plans to raise its target rate two more times this year.  Of course, we know this can change quickly if economic conditions change.  The Fed is also planning to go full speed ahead with its balance sheet reduction.  This is eventually going to take its toll.

There is no reason to be in panic mode of any kind, but I don’t recommend being heavy in stocks anyway.  I recommend a permanent portfolio.

If the yield curve flattens or inverts, then I plan on doing a little speculating by shorting the stock market.

While Donald Trump has been largely a disaster in following his predecessors, he has done some good things too.  He has certainly shaken the establishment.  Although much of his policies have been in line with the establishment, the powers-that-be fear Trump because he is viewed as something of a loose cannon.

Just as there were a few good things Obama did in an overall terrible presidency, Trump has had a few decent moments in his first year and a half.  I think his harshest critics are hypocritical, and their criticisms of him are mostly shallow.  They will go nuts over a mean Tweet that he sends out, but then they will be silent (or sometimes even a little praiseful) when he bombs Syria.  If you say something mean and hurt someone’s feelings, then that is just unacceptable behavior.  But if you kill innocent foreigners, then that is presidential.

With all of that said, Trump did a good thing recently in meeting with Kim Kardashian West and ultimately commuting the sentence of Alice Johnson, who had been sentenced to life in prison for drug trafficking.  Sure, as a libertarian, I would like for Trump to pardon all non-violent drug offenders who are in federal prison due to the crazy war on drugs.  But at least Trump took this one first step in acknowledging that the drug war and its sentencing guidelines may not be all that fair.  You could rape and kill someone and get the same sentence, or maybe even less.

We should hope that Trump spends all of his time looking at individual cases and trying to right the injustices to the degree that he can.  There are hundreds of thousands of people who are in prison who should not be there.  While I would rather him just end the federal war on drugs, it would be a great step if he starts looking at each individual case on its own merits.  He can get the rest of his staff to help out.  Any time spent on freeing innocent people from jail is time not spent on bombing another country, or at least that can be our hope.

I would also like to pay a little credit to Kim Kardashian West.  She recently denied accusations that she was just used as Trump’s pawn. Meanwhile, those criticizing her have done nothing to advance the cause of liberty or to help make a more just society.  Most of those criticizing her are likely opponents of liberty when you get down to it.

It is obviously easy to criticize Kardashian.  Her husband can be a bit obnoxious at times, and he has a big ego (similar to Trump).  Kardashian has gained great fame in being a sex symbol and a television reality star.  Sometimes she doesn’t sound that bright, but I can assure you that she has much greater business acumen than most.  She may act stupid at times, but she definitely has some intelligence.

But aside from the question of her intelligence, I really give credit to Kim Kardashian for not being a goat in the herd.  Hollywood is very anti-Trump, and it is not good business these days to stand beside Trump.  If you are a country singer in Nashville, then you might get away with saying nice things about Trump.  But most celebrities will go out of their way to criticize Trump because it is the easy and popular thing to do, at least as seen by the establishment media.

Kardashian may have posed for a photo with Trump, but she wasn’t really building him up, or at least that doesn’t seem to be her motivation.  She saw an injustice in the world, and she did something about it. She has a platform as a celebrity, and she used it.  She met with the one person who could do something about this injustice, and she made it happen.  And she did it likely knowing that she would be on the receiving end of criticism for even daring to talk to Trump in a civilized manner.

The Hollywood celebrities don’t need to praise Trump, but they could take a lesson from Kardashian if they really cared about justice and making a better world.  They could lobby Trump to take on a less interventionist foreign policy.  They could lobby Trump to be a stronger proponent of civil liberties.  Unfortunately, most of them don’t really care about these issues, or they don’t care enough about them to stop criticizing Trump for his mean comments on Twitter.

Some people just can’t get enough libertarian information.  We are surrounded by the establishment (often called mainstream) media that repeats its talking points, mostly in favor of big government.

Fox News is considered to be an alternative to most of the rest of the mainstream media (at least on television), but Fox News promotes militarism and even Keynesian economics at times with Trump as president.

Libertarians should be quite thankful that we live in an age of the Internet and a technological age that is quickly advancing.  Therefore, we have so many outlets now that didn’t exist 2 decades ago.

Still, the word libertarian is thrown around loosely now.  This is evident just in looking at the presidential candidates for the Libertarian Party of the last few presidential cycles.  There are many other organizations that call themselves libertarian, yet they oftentimes fall short on some key issues, especially when it comes to moral issues.

Below is a list of 10 resources for radical libertarians to enjoy (in addition to this site).  I consider them to be both highly informative and entertaining.  Most people reading this are likely to be familiar with at least a few.

• The Mises Institute – A great resource that focuses on Austrian school economics.
• The Tom Woods Show – This is a podcast (hosted by Tom Woods) with a new episode released almost every weekday.
• GaryNorth.com – Gary North’s emphasis on religion may turn some people off, but he is a great resource for politics, economics, homeschooling, and just overall good life advice. The forums and some of his articles require a subscription to gain access.
• Contra Krugman Podcast – This is a podcast hosted by Tom Woods and Bob Murphy that is released once a week. The show debunks the many errors of Paul Krugman by teaching economics. The hosts are humorous with their back and forth banter.
• LewRockwell.com – This is a must-visit website that has 12 new articles, 6 days per week.  Not all of the writers are libertarian, but most of the articles have a libertarian theme, or else some kind of entertaining or useful information for your life.
• DownsizeDC.org – This organization was co-founded by Harry Browne and seeks to downsize Washington DC, just as its name suggests. You can sign up and use the website in its campaigns to lobby Congress by just typing a short message for a particular issue. But this organization is not just looking for tax cuts and small spending cuts that tinker around the edges.  The Downsize DC Foundation has a project called ZAP (Zero Aggression Project) that seeks to move towards voluntaryism.
• Ron Paul Institute – This website promotes the ideas of Dr. Ron Paul, which is enough said.
• ConsultingByRPM.org/blog – This is Bob Murphy’s personal blog where he writes about economics, politics, religion, and anything else that comes to his mind.
• HarryBrowne.org – Even though Harry Browne passed away in 2006, this is still a great resource with articles indexed by topic.
• LRC Blog and Political Theatre – This is part of Lew Rockwell’s site (see number 5 above), but these gems deserve their own mention. The blog has many contributors with commentary that tends to focus on current happenings in the world.  The Political Theatre portion is updated by Lew Rockwell himself with links to interesting stories.

There are, of course, many other resources out there including books and other websites.  The 10 mentioned above are some of my favorites, and I think any hardcore libertarian is sure to get something out of each one of them.

There are a lot of libertarians who are pessimistic.  They see big government all around them (correctly for the most part), but they fail to see our gains in liberty in certain areas.

To be sure, there are many reasons for a libertarian to be optimistic.  Despite all of the calls for more gun control, gun ownership continues to increase, and there has been little success for the left in trying to ban guns or even control them more.

Homeschooling is another area to be optimistic, as it has increased dramatically in the last couple of decades with the utter incompetence of the government school system.

A third area where we have seen substantial gains in liberty is with the partial legalization of marijuana in many states.  While it is still regulated and considered illegal by the federal government, it has nonetheless been essentially decriminalized in many places.  While the overall war on drugs remains, we have at least made great progress with marijuana.

In addition to all of these specific areas, also consider that libertarianism is far more widespread now than it has been in any of our lifetimes.  If you think the percentage of libertarians is low now, you should have seen it a couple of decades ago.  With the last two Ron Paul presidential campaigns, coupled with the internet, libertarianism has spread considerably, even if the number of hardcore libertarians is still a tiny percentage.  If you hold a liberty event in a medium-sized city, you can at least fill a classroom, if not an auditorium, with people.  In the past, you may have been lucky to get five people.

With all of that said, there is one area where I am rather pessimistic, and that is with the incredible worship of militarism in the United States.  We are supposed to stand and applaud all of the heroes for “serving” our country.  Just by signing on the dotted line, you are forever regarded as a hero unless you do something really egregious.  Of course, even there it is open to debate.  If you kill innocent people in a foreign country, you may still be regarded as a hero in America.

I recently saw an article on Chelsea Manning (formerly Bradley Manning).  The article described how Manning was threatening suicide and showed a picture of Manning’s toes on a ledge (as if threatening to jump).

Right before leaving office, Obama granted clemency to Chelsea Manning, which cut short the prison sentence for turning over government secrets to Wikileaks.  While I think Obama did too little too late and that he probably did it because of pressure from the left, it is one of the few good things Obama did while in office.

In the recent article on Manning’s threatened suicide, I read the comments section.  It was really depressing because it showed me just how many nasty people there are out there.  Even worse, I’m guessing many of the commenters would call themselves Christian.

There were some comments and discussions over transgenderism, which is to be expected.  Some thought that Manning is mentally ill, which resulted in a gender change.  Obviously Manning has mental problems, or there wouldn’t be threats of suicide.  But most of the comments were just linking mental illness and transgenderism.  There was only one commenter I saw who pointed out that Manning endured severe torture while being held captive and that this could have led to major mental problems.  In fact, it is hard to imagine not being mentally damaged after having to endure prolonged torture.

But then many of the comments, one after another, were just nasty.  They continuously called Manning a traitor, and many people were making comments such as, “I’ll help push you along” or “I’ll give you a little push.”  They were teasing the situation saying that, not only do they not care if Manning commits suicide, but that they are actually hoping that Manning does commit suicide.

To me, this is just despicable.  I made a comment to the article to the effect that it is disappointing that so many people consider Manning a traitor and do not care about the murderers that Manning exposed (who shot innocent people from a helicopter in Iraq).  I said that Manning was exposing the government’s hiding of criminality.  I received two replies to my comment, both of which were negative and nasty.  One of the responses said that there is room on the ledge for me as well (to commit suicide).

The article was linked on Drudge Report.  Even though Drudge’s site mostly just links news articles, it is a site frequented mostly by conservatives.

I tend to get more fed up with the left and the political correctness and the class warfare and the hypocrisy.  In the age of Trump, it is especially infuriating to see the left in such an outrage when Trump says something mean, yet they have nothing bad to say when he bombs Syria or threatens Russia.

On the subject of militarism though, the political right is the worst, and it is probably the most important issue.  The political left is certainly hypocritical and not anti-war by any means, but the nasty comments really come from the right when militarism and patriotism are the subjects.

I find in most areas that the political left tends to be much nastier with words and far more intolerant of diverging view points.  But when it comes to the military, everything changes.

The crazy thing is that the most militaristic people are probably many of the same people who you’d most want to deal with in your day-to-day life.  Most of them wouldn’t hurt a fly if given the chance. Many of them go to church and pray.  Unfortunately, many of them also worship militarism and all of the death and destruction that comes with it.

Ultimately, I think the U.S. military is going to contract (decline) from its overseas “commitments”.  Unfortunately, I don’t think it will be for moral and ethical reasons.  I wish the wars and interventions would end because people came to the realization that it is immoral to kill innocent people, even if they look a little different and act a little different in a foreign country.

The reason that the U.S. empire will decline will be for economic reasons.  At this stage, it is unsustainable to continue to spend hundreds of billions of dollars per year on maintaining a vast empire overseas.  When the choice comes between cutting Granny’s check for Social Security or withdrawing forces from Syria, we can all hope that Granny will see the light and take the Social Security check.

The best indicator for a recession is an inverted yield curve.  This is when yields (interest rates) on longer-term debt go below the yield for shorter-term debt.

I have seen different people use different benchmarks.  For example, one person may use the 30-year yield up against the 1-year yield.  If the 30-year rate falls below the 1-year rate, then this is a recession indicator.

Personally, I like to use the 10-year yield on U.S. Treasuries against the 3-month yield.  The 10-year yield has a high correlation with 30-year fixed mortgage rates in the United States.  If the 3-month yield goes above the 10-year, then this is a clear recession indicator, and you should hold on tight.

I would like to point out just how fast the yield curve can flatten at this point.  For me, a flat yield curve is practically as good as an inverted one.  A flat yield curve would indicate long-term yields and short-term yields being approximately equal.

On May 29, 2018, stocks tumbled (and the U.S. dollar rose) on news of political happenings in Italy.  There is growing fear that Italy could default on its debt and/ or break away from the European Union.  There is also possible major trouble in terms of the banking and financial system.

Take a look at the yields on 05/29/18 as compared to 05/25/18 (05/28/18 was a holiday).  The 1-month yield jumped from 1.70 percent to 1.77 percent.  The 3-month yield went from 1.90 to 1.93.  Meanwhile, the 10-year yield plummeted from 2.93 to 2.77.  This was just over a week after the 10-year had hit 3.11.

On 05/30/18, stocks recovered and had a big day.  The 10-year yield rose to 2.84, so it did not go back to the level seen from 05/25/18.  But the 1-month yield stayed the same from the day before, which meant it was still considerably higher from 05/25/18.  The 3-month yield went up slightly again on 05/30/18 to  1.94.

In other words, the longer-term yields went down over this period (2 business days), while the shorter-term yields went up.

(If you click on the Treasury site after May 31, 2018, you will have to select the 2018 time period to view May.)

As of this writing, the 10-year yield is only about 90 basis points higher than the 3-month yield (2.84 vs. 1.94).  In other words, the yield curve has flattened a bit, and it happened rather quickly.

There aren’t many things in life that are this useful in making predictions, especially when it comes to the world of economics and finance.  But an inverted yield curve is almost a sure thing that a recession is coming.  In some cases, the recession may already be there, but people just don’t know it yet.

It is telling that we really would just need a few weeks of this kind of turmoil before seeing a flat yield curve.  I am not saying this will happen in the near future, but just that it is looking more and more feasible.

When short-term rates were near zero, I wasn’t sure what to make of it.  I said that perhaps a recession was still possible without an inverted yield curve because short-term rates were near zero.  It would be impossible to invert unless long-term rates went to zero or negative.

But now, short-term yields are considerably higher than they were.  The 1-month and 3-month yields are the only ones that haven’t hit the 2% mark, but they are really close.  All of a sudden, an inverted yield curve looks a lot more likely.

This is something I will continue to watch closely, as all other economic analysis combined probably can’t match the power of this one indicator.  When a recession is about to hit, it helps to know the approximate timing.

This may sound a bit odd coming from a libertarian, but I think there is a good case to be made with investing in U.S. government debt.  Yes, I know that the government is in debt to the tune of $21 trillion, and the unfunded liabilities are likely hundreds of trillions of dollars. I know that the Federal Reserve will resume its digital money printing as soon as the next major economic downturn comes.

I am an advocate of a permanent portfolio, which recommends putting approximately 25% into long-term government bonds.  However, there is a case to be made to invest in Treasuries even outside of the permanent portfolio, or to invest in short-term Treasuries with part of your cash portion (which is also 25% in the permanent portfolio).

This recent article says that buying Treasuries can yield up to 30 times more than your average bank savings account.  I can personally vouch for this, as my bank pays a tiny fraction of one percent, even if you have significant savings.

Using the TreasuryDirect website, you can purchase Treasury securities through your bank account.  I haven’t personally used it (yet), but I have heard from others that it is surprisingly easy.  Since short-term yields have gone up (from near zero), at least for U.S. government debt, you can even buy, let’s say, 4-week Treasury bills and just keep rolling them over until you are ready to stop.

In the context of a permanent portfolio, you can buy these short-term Treasuries with part of your cash portion.

Just as an example, let’s say that you have $100,000 in investable assets that you put in a permanent portfolio type setup.  You buy $25,000 in stocks, $25,000 in long-term bonds, and $25,000 in gold or gold-related assets.

For your cash portion, you also have $25,000.  But instead of putting it all in a checking account, or savings account, or money market fund, you can use a portion of it to buy short-term Treasuries.  As long as you know you don’t need the cash imminently, you could take $15,000 or $20,000 and buy 4-week Treasuries, or something similar.  I would still recommend leaving $5,000 to $10,000 in your checking/ savings account for emergencies or unforeseen opportunities.

You have to consider your own personal circumstances, but I just want people to be aware of this option.  Banks are paying close to nothing on savings, so you may as well take advantage of the government’s willingness to pay you something, even if it is relatively low by historical standards.

While dollar depreciation is always a threat, that is why you should own some gold.  It is also good to have some cash, and it is better to have it earning a little something as compared to virtually nothing.

At least for right now, there is nothing safer in terms of investments than U.S. Treasury securities.  You can be confident that you will get back your money, at least in nominal terms.

Last month, I splurged and took my family on a 4-night Disney cruise.  It was indeed a magical experience.

Before gushing over Disney, I will acknowledge that I have my disagreements with The Walt Disney Company.  I don’t always appreciate the Disney channel and how the kids often talk back to their parents in the shows.

Disney owns ABC and ESPN, among other things.  These channels tend to be mouthpieces for big government.  It is particularly disappointing with ESPN.  I still like ESPN because I like sports, but some of their shows are filled with politically correct nonsense.

My guess is that a majority of men who watch ESPN do not want to hear this politically correct garbage.  They don’t want to hear touchy feely stories very often.  They certainly don’t want to hear about political issues.  One of the whole points of watching and following sports is that it is an escape from the real world, particularly politics.

With all of that said, our Disney cruise was incredible.  The staff there went the extra mile for the customers in almost everything.

When you had to board the ship, the process was rather easy.  And going through security was nothing like going through the TSA at an airport.  They get you through quickly and without trying to humiliate the customers.  That is because the cruise passengers are customers.  The people flying at an airport are customers to the airlines and not the TSA.

I don’t know what kind of training the Disney cruise staff receives, but they are obviously taught to treat the customers well.  They want people to come back.  They want people to tell others how well they were treated, just as I am doing here.  This is the way the free market works.

We paid a premium to go on a Disney cruise as compared to another cruise line.  Therefore, we expected to be treated really well, and we were treated really well.  When we got off the ship at one of the ports and later returned, they had cold refreshments and cold wet cloths for the returning passengers.  It was all of these little things that made it extra special.

The food was great, and there was plenty of it.  They would usually accommodate any special requests, particularly at dinner.  Our state-room attendant was especially friendly and would usually check with us each morning to find out our plans for the day.

Even the lifeguards at the pool and water slide were really friendly.  I saw one boy ask for a towel.  Not only did the Disney worker hand him a towel, but he actually wrapped the towel around the boy because he knew he was cold.

I could go on and on.  The point is that the staff on the cruise line made it a point to treat the customers really well.

As I’ve gotten older, I tend to appreciate experiences over things.  Sure, I want a nice place to live, and I certainly want certain things such as televisions and a smartphone.  But beyond the few things that I use on a regular basis, I don’t want to accumulate more clutter. If I am going to spend money, I would rather it be on experiences that create memories.

I certainly try to be future-oriented, and I encourage others to be the same.  It is good to save money for a rainy day, and it is good to save money in order to have more freedom and choices in your life.  At the same time, you want to enjoy life in the present, so it shouldn’t be all about deprivation for the sake of saving.  It really is important to find that right balance.

Even though the Disney cruise was rather expensive, it was worth it. In today’s world, it seems that there is often a shortage of good customer service.  It was nice to get an experience where we were treated like royalty for four days.

I am not one to closely follow celebrity gossip, but I do know that the royal wedding is high up on the news feed.  While a recent poll indicated a somewhat lackluster interest in the wedding by the British people, it will still be watched by many millions of people.

I have wondered for a long time about why the British people put up with subsidizing the royal family.  The royal family is largely symbolic, as the Queen isn’t enacting or enforcing legislation.  The British taxpayers fork over multiple millions of dollars every year to fund the lavish lifestyle of the royal family.  Some estimates put the cost of running the monarchy at well over $300 million per year.

It doesn’t make much sense why someone struggling to pay rent and put food on the table continues to consent (even if tacitly) to funding the royal family.  I know that some will argue that the royal family actually brings in significant tax revenue to the government to help offset their cost.  This tax revenue comes from visitors and tourists.  But if that is the case, why can’t the royal family be funded through charity and business?  The family could set up their own for-profit museums, tours, meet and greets, etc.

While a majority of those surveyed say that the royal family should be responsible for the full cost of the wedding, public opinion obviously isn’t strong enough to actually stop it from happening.

When Chevy Chase’s character in European Vacation is asked what the Queen does, he responded that “She queens, and vacuums.”

But what really does the Queen do?  She makes public appearances and acts as something of a diplomat.  The problem is that the number one thing she does is suck up taxpayer money.  I guess that is part of the vacuuming.

Now we have this royal wedding with Prince Harry and Meghan Markle.  It is estimated to cost $2.7 million for the actual wedding, but the security costs could run around $40 million.  That will largely be borne by the British taxpayer.

It is bad enough that the British people are forced to pay for this lavish lifestyle of the royal family.  Now they have to fork over millions more to an American.

The American colonists seceded from the British Crown when taxes in the colonies were around 1%.  Now Americans fork over about 25% (based on spending) to their own national government, and at least another 15% to state and local governments.  The British people are even worse off for the most part, but now they are forced to subsidize an American woman, probably for the rest of her life.

From the little I’ve seen of her, Meghan Markle seems to enjoy the spotlight.  I hope the British people enjoy funding her new celebrity role.  If this isn’t the straw that breaks the camel’s back, then I don’t think there are any straws big enough to do it.  Maybe the middle class there just doesn’t feel enough pain yet.  Then again, there are many third-world countries where the large majority of the population lives in dire poverty while the rulers live it up.  But even in those cases, the rulers have to be careful not to show off their wealth too much.

This wedding is a royal ripoff for British taxpayers.  Sure, there are many other government programs that are far more costly and far more damaging.  But those costs are often well hidden.  In this case, the wedding is being broadcast wide and far for all to celebrate.  The British people can celebrate at home eating ramen noodles.

On Tuesday, May 15, 2018, the 10-year yield on U.S. Treasuries jumped above the 3% mark.  It settled the day just above 3.07%, which is the highest it has been since 2011.

The rest of the financial markets were spooked a bit, as stocks plunged, although not horribly.  After the last few months of extreme volatility, any day where the losses are less than 1% doesn’t seem like much.

Stocks and bonds weren’t the only assets to sell off.  Gold took a major hit, as the U.S. dollar rallied.  Gold had been trading in a fairly narrow range for a while between $1,300 and about $1,350.  Well, with the spike in the 10-year yield, gold plunged hard below the $1,300 barrier.

This was one of those days where all of the major asset classes were down.  A permanent portfolio did not save you on this one particular day.  The mutual fund PRPFX, which somewhat mimics the permanent portfolio setup, was down nearly 1% on the day.  There aren’t many days where the losses are bigger than that.

I find that when the permanent portfolio or PRPFX has a really bad day, there is usually a rally shortly thereafter.  All three asset classes are not likely to continue downward together.  At least one of the asset classes will bounce.

And that is really the main benefit of the permanent portfolio.  All of the asset classes are not highly correlated.  There are certain periods where there may be correlations, but typically at least one of them will do well.

The only time that the permanent portfolio struggles all the way around is in an environment of relatively low price inflation and slow economic growth (or outright recession).  But if we get a recession, then the long-term rates will likely reverse course and head downward again, thus driving bond prices higher.  This didn’t happen in the 1970s, but there was high price inflation at that time and gold did really well.

With the volatile stock market of the last few months, I thought the chances for an upcoming recession were increasing.  But if you look at the rates on May 15, 2018, it was just the longer-term rates that spiked higher.  The one-month and three-month yields actually dropped by .01 percent.  In other words, the yield curve steepened a little.  This does not indicate a recession.  We are looking for a flattening yield curve for a recession.

One day certainly does not make a trend, but you can still learn some lessons.  The financial markets are getting spooked easily with the prospect of higher rates.  The 10-year yield is closely correlated with mortgage rates in the U.S.  This means that there won’t be much refinancing in the near future.  It may or may not slow down the housing market.

The next FOMC meeting will be held June 12 and June 13.  It will be interesting to see if they try to calm things down by suggesting that they could slow down with hiking their target federal funds rate.

Meanwhile, the Fed keeps draining its balance sheet, even if slowly.  We have to believe that this is going to have an impact at some point and unwind any malinvestment that took place from the ultra-easy money that flowed from 2008 to 2014.

I am sticking with my permanent portfolio for a good portion of my financial assets.  There are so many variables pulling in different directions, it is really hard to know what we are going to get in the next year or two.  The returns haven’t been that great with the permanent portfolio in this environment of low interest rates and relatively low price inflation.  But you have to ask yourself whether the prospect for higher returns is worth the risk, especially when it comes to stocks.  Are you going to try to get another 10% out of the bull market with the risk of stocks dropping by 50%?

In regards to bonds, I still don’t think interest rates are going to spike significantly higher unless we start to see signs of significantly higher price inflation, which we haven’t so far.  Sure, the 10-year yield could easily go to 3.5% or even 4%, but I don’t see it getting to 6% or higher any time soon without much higher price inflation.

They say that high prices are the remedy for high prices.  Well, in this case, we could say that higher yields will ultimately be the remedy to higher yields.  If it spooks markets too much and a recession starts to loom, then rates will likely go back down as investors seek safety.

Regardless of what you think of the U.S. dollar and the solvency of the U.S. government, U.S. Treasuries are still considered one of the safest investments on the planet.

Barack Obama was a disastrous president.  On this vague statement alone, we can agree with Donald Trump.  But even a blind squirrel finds a nut once in a while, and Obama did find a few during his 8 year presidency.

For libertarians, there is not much to praise about Obama or any of his policies.  In terms of anything significant, I can only name a few good things that came out of Obama, and there are criticisms I have within these few things.  Unfortunately, with those few things, Trump has largely opposed the policies of those few good things.

One thing Obama did that was a step in the right direction was to loosen sanctions on Cuba and somewhat open up travel.  Of course, it would have been nice if he had completely repealed all sanctions and travel restrictions, but he adopted a policy that was better than any other president of the last 5 decades.  Trump scaled back this Obama policy.

For some reason, even though Trump thinks it can be economically beneficial to impose tariffs and reduce trade with foreign nations, he somehow thinks it is a punishment to impose sanctions, which means a reduction in trade.  This alone shows Trump’s inconsistency on the issue of free trade.

A second thing Obama did (or maybe didn’t do) was to mostly allow states to adopt their own laws and policies with regards to marijuana.  Maybe Obama just threw in the towel, knowing that he couldn’t (politically speaking) send in the troops to knock down doors over marijuana.  His administration’s policies were not as hands-off as we have been led to believe, especially when it comes to making it difficult for marijuana dispensaries to open a bank account.  But Obama certainly could have been a lot worse on the issue of marijuana and states’ rights.

Meanwhile, Trump’s disgusting attorney general, Jeff Sessions, wants to go out of his way to bust down doors and ramp up the drug war, even in places where marijuana has been deemed mostly legal.  Sessions is a drug warrior who has no sympathies for the U.S. Constitution when it stands in his way.  For any good attributes Sessions may have had (which are few to a libertarian), he has mostly focused on all of his worst attributes.

The third, and final, good thing that Obama did was to negotiate with Iran and to be become a signatory to the Joint Comprehensive Plan of Action (JCPOA).  The main points of this agreement is that Iran would not pursue nuclear weapons in exchange for sanctions being lifted.  Trump recently said that the U.S. would withdraw from the agreement.

Trump has said since his campaign that it was a bad deal.  Some others have said that it wasn’t a perfect deal, but that the U.S. should not withdraw.  I don’t really understand what these statements mean.  They are short on specifics.  What exactly was bad about the agreement?

My only criticism of Obama here is that I don’t really think such an agreement was even necessary.  The only reason Iran would want to pursue nuclear weapons would be as a deterrent from being blown up and occupied (Iraqi style).  The U.S. and Israeli governments continually threaten Iran, while misleading people to believe that it is Iran doing the threatening.

The whole world should be able to see what is taking place.  Iraq was overthrown.  The war in Afghanistan is still going on almost 17 years later.  Libya was overthrown.  The U.S. helped with the coup in Ukraine.  And for years, the U.S. government has been trying to overthrow Assad in Syria.  Then consider all of the small wars and covert actions in other countries, particularly in the Middle East and Africa.  Meanwhile, there is continually tough talk about Iran, North Korea, and others.

Iran has not tried to invade or overthrow any other countries.

I don’t believe the North Koreans have nuclear weapons.  If they do, there is no means to deliver them very far outside of its own borders.  Kim Jong-un was purposely flinging bottle rockets into the sky as a deterrent, and it may have worked for now.  If he hadn’t claimed capabilities of long-range missiles, maybe the U.S. wouldn’t be considering any negotiations right now.  The country may have already been taken over if not for those displays.

The whole world can see what happened to Saddam Hussein and Gaddafi.  They did not show off nuclear weapons, and they were deposed.  If you are being threatened by the U.S. government, it only makes sense at this point for any country to acquire nuclear weapons, or to at least claim to have them.

Therefore, the JCPOA was unnecessary.  Obama should have just lifted the sanctions.  There was no need to enter any agreement over nuclear weapons and enriched uranium.  Politically, I’m sure Obama felt the need for such an agreement or else he would have taken a worse beating from the right on his so-called weakness.

I don’t know what will ultimately happen with Iran.  Maybe Trump just wants to make a better “deal”, but it is hard to call it a deal when it is being done at the point of a gun.  Or in this case, it is at the point of a lot of guns and missiles.

Ron Paul recently said that Trump is sometimes the opposite of Teddy Roosevelt.  Roosevelt said that we should speak softly and carry a big stick.  Sometimes Trump is the other way around.  This is certainly true in regards to the first part.  He does anything but speak softly.  Of course, this is preferable to speaking boldly and always acting that way.  When he ordered missile strikes on Syria, things certainly could have been a lot worse.

Regarding Obama, aside from the things mentioned above, his presidency was mostly a disaster.  The only good thing that can be said about him is that he could have been worse.  I’m not sure if that is any kind of praise.  He was mostly horrible on foreign policy.  He had his hands in Yemen, Syria, Ukraine, and Libya.  He continued the wars that were already happening in other places.  He can only be praised on the grounds that he could have invaded even more countries than what he did.

For the few decent things Obama did, he basically did them on his own authority.  They are not like Obamacare, which had to be pushed through Congress.  Therefore, even his somewhat good accomplishments were easily repealed.

Trump, for his part, has done a few good things.  He has helped reduce federal regulations a bit, but he has a long way to go.  Trump has helped expose the deep state, whether he has intended to or not.

Like Obama, most of the good things one can say about Trump is that he could have been more disastrous that he has been so far.  He hasn’t started any major new wars yet, but he continues the interventionist foreign policy.  Meanwhile, the few decent things that were done by Obama have largely been undone under Trump.