Category Archives: The Economy

The Left’s Uncontrollable March to Defeat The Great American Experiment In Freedom and Equality

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In our last article, “The Left’s Last Stand to Defeat The Great American Experiment In Freedom and Equality”  https://wp.me/pY51c-1qV, we postulated that:

The only way the left can overcome the American Constitutional Republic is by destroying the fabric of its foundation.  In other words, destroy its base of law and order through division, class hatred, race hatred and ultimately anarchy.  Once the foundational pillars are gone, the globalist left can come in and the people will acquiesce to the rule of this oligarchy in order to restore some semblance of law and order. “

While we stand by this statement, we also believe that the Political and Media arm of the leftist movement has passed the center of gravity in inciting insurrection and are now unable to control the deep dive of the followers of the left into the abyss of anarchy!  In other words, the Political and Media arms of the left have been so successful in demonizing President Trump that the sheer inertia of the leftist anarchy movement may drive it to a coup d’état or a cultural/political revolution.  Sound far fetched, this word has been used lately in almost a dozen articles printed in leftist publications and parroted on cable channels.  

Coup d’état versus a Revolution:  You may have noticed that I used both the word coup d’état and revolution.  They are different phenomena with quite different outcomes.  A coup d’état is like a revolution in that they can be driven by a popular uprising, but a coup is usually enacted by a few individuals  A coup d’état is usually followed by military rule, at least in the interim.  It is  a change in leadership and not necessarily a cultural and political change.  Existing structures and governing apparatus remain under different leadership.  A revolution is usually accomplished by an overwhelming number of people with the goal to fundamentally change the structure of the nation as well as its leadership.   Think of a revolution as throwing the baby out with the bath water!

The Two Donald Trump’s:  Many Americans only knew the Donald Trump who was the larger than life New York sky scraper builder and part of the New York social elite.  His television show, “The Apprentice”, made him a household name and arguably one of the most recognizable characters in the World.  What many Americans did not know, was that this larger than life character had very specific, principled views on foreign policy, economics, taxation, government, the use of the military, and every other aspect of the role of the US in the world in the current century.  Donald Trump wrote several books that chronicled his beliefs in black and white and the Left certainly knew and understood who Donald Trump was, his views, and his absolute threat to their ideology and more importantly, their 100 year to war to defeat the Great American Experiment.  To use a very overused word, Donald Trump was an existential threat to the Leftist movement in the modern world.

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So, when Donald and Melania Trump came down the golden escalator in June 16, 2015, the Left began their campaign to take out Donald Trump, the candidate, then the President.  At first they chuckled about him not being a serious candidate but behind the scenes, the Obama Administration, including the Justice Department, FBI and the Intelligence services, began to surveil his candidacy and “create” fictitious operation research that they could use against him.  During the ensuing months leading up to the election, the Left and their lap dogs in the media threw the Democrat playbook at Trump with no avail.  The more they denigrated him, the more popular he became.  “America First” and “Make America Great Again” resonated with conservatives, some Democrats, blue-collar workers, and most importantly with many in the minority communities.   

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Trump had struck a cord with the American People that could not be extinguished by Leftist mudslinging using sex, money, and finally race.  The Left’s creation of the Russia Hoax is now pretty widely understood and I will not go into that here,  Suffice it to say, this Leftist smear campaign against Donald Trump the Candidate, then Donald Trump the President, resonated with Leftist hate groups, race baiters, and philosophically opposed factions to the point where the majority of the Democrat party actually believed every untruthful allegation against Trump to be true.  The hard Left groups knew that Trump would undo what had taken them 100 years to accomplish in the US and around the world and they knew they could not allow him to succeed.  The hard Left also had allies in the Neo-Con “conservative” community who would do anything to maintain their hegemony over our foreign policy and foreign trade levers of power.  Globalism to the Left and the Right was a religion that had to be maintained and protected and this “Orange” person threatened their kingdoms.

Fast forward to today when Trump has completely ripped up almost every bad Globalist trade deal for his new reciprocal trade deal format; ejected he US out of the Left wing Paris Climate Accord; Defunded US funding of abortion overseas; Pulled our troops out of Syria and Iran for the most part and working on pulling them out of Afghanistan;  Moved our Israeli Embassy from Tel Aviv to Jerusalem; Torn up the US/Iran agreement and placed harsh sanctions on the Iranian regime; Defeated ISIS in Syria; Forced Europe to pay their share of NATO; and so on.  All of these reversals struck at the heart of the Leftist global agenda. 

But he did not stop overseas, Trump is providing School Choice to minority students who have been confined to failing public schools; Created Opportunity Zones to uplift the inner-cities and create jobs for historically unemployed minorities; provided long-term funding for Historically Black Colleges and Universities; Provided increased child care support for families; Drastically revamping the healthcare systems that service the impoverished areas;  Enacted long overdue Criminal Justice and Prison reform that benefitted the Black community the most; Brought millions of jobs to the US via tax cuts, regulation cuts, incentives to manufacturers and more.  In short, in 3 years Trump’s domestic policies generated the lowest unemployment and raised income levels for all minorities; Raised the incomes for most minorities to historic levels; and created a business environment where Blacks and Hispanics opened more new business than at anytime in our history; and much more.  

Chinese Virus:  The onset of the Chinese Virus gave the Left another tool to use against Trump.  But their hand is pretty weak trying to blame Trump for the impacts on our economy as a result of this Pandemic.  While Trump was stopping travel into the US from China in January, the Radical Political Left was impeaching President Trump!  But, the Left saw how easy it was to use the Pandemic to tear up the Constitution and Bill of Rights!  Even today, the curtailment of free peaceful assembly, free speech, and freedom of religion is still being curtailed by leftist governors and mayors around the country.  The Left also sees the use of continued, unsubstantiated “lock-downs” as a way to stop the economic recovery that is underway in the hopes that they can blame Trump for a slow recovery!  Sick People! 

Make no mistake, the Left is taking notes how to strip you of your rights in the event they are able to seize power, peacefully or not!

Trump’s popularity in minority communities scares the living hell out of the progressive Left to the point that supporting anarchy via Antifa and specifically Black Lives Matters is the last trump card the Left has to play, and play they are!

So, today, June 15, 2020, we have part of Seattle, including a police precinct, was taken over by Black Lives Matter and Antifa; Many major Left controlled cities in the US are calling for the defunding of the police or at a minimum cutting police budgets down to levels that will invite lawlessness; Riots spring up every time a police officer is involved with a shooting of a Black person; Calls for emasculating police power and force to the point of ridiculousness; and the Left’s media is flaming the fires 24-7.

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It is so bad at this point there was a Fox reporter, Jonathon Hunt, on scene in Seattle stating that President Trump was wrong about the insurrection in Seattle and that the “protest” was 99.9% peaceful.  What a complete idiot and dupe of the Left, thank you Fox News!  By its very nature, an armed takeover of parts of an incorporated city, and the private property contained therein, and the citizens who work and reside within its confines, is insurrection and can in no way be construed as “PEACEFUL”.  Is this really where we are today in “journalism?  Are members of this self-proclaimed elite class that ignorant?  Or are they part and parcel of the Left Push to Defeat the Great American Experiment!  I think the latter.

A Bridge Too Far

A bridge too far has to come to mean an act or plan whose ambition overreaches its capability, resulting in or potentially leading to difficulty or failure.  While “A Bridge Too Far” was a quote that came our of a discussion of a WWII plan by the allies to isolate the Nazis by taking out all of the bridges in the Netherlands, the plan failed as they did not take out one at Amhem.  The Left is finding themselves in much the same predicament as the Allies.  The Left’s plan was to take out Trump and take back power by any means necessary short of a revolution or a coup d’état, 

But, Where is the “OFF” Button for Anarchy!

Do you really think that if Nancy Pelosi and Chuck Schumer stood up and told Antifa, Black Lives Matters and all of the protestors and rioters to go home and chill out that they would obey them!  Get Real!  The political leaders in Democrat Party are now powerless to control their self-created mob.  The Left Media is now in full control shouting orders to these groups and directing their next moves by innuendo.  The mob has tasted blood and they believe that the majority of Americans either stand with them or are afraid of them.  

The anarchist are calling the shots and their enablers in the Left wing media and the leftist controlled states and cities are aiding and abetting their every move.  Congress is even complicit in their hand-wringing and endless apologies for all of the country’s past wrongs even though no one can articulate them in a coherent manner.  Congress, both sides of the aisle, are frantically trying to out legislate the other to appease the mob.  MOBS CANNOT BE APPEASED WITH LOGIC OR RHETORIC.  It has been tried and it does not work.

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Well, you could argue that the Off Button is the Federal Military and the National Guard if the President Federalizes the guard under Title 10 or Title 32 of the US code.  He could further activate all of the provisions of the INSURRECTION ACT of 1807!  This law provides:

“Empowers the President of the United States to deploy U.S. military and federalized National Guard troops within the United States in particular circumstances, such as to suppress civil disorder, insurrection and rebellion.  The act provides the “major exception” to the Posse Comitatus Act of 1878, which limits the use of military personnel under federal command for law enforcement purposes within the United States. Before invoking the powers under the Act, 10 USC § 254 requires the President to first publish a proclamation ordering the insurgents to disperse.”

The Left knows that the President has this power and that this power has been used over 20 times by both Republican and Democrat Presidents, that last being George H.W. Bush in 1992 to quell the riots in Los Angeles.  1992 only impacted one city, Los Angeles,  The current insurrection is impacting dozens of major cities across the US.  So, the Left and its Media is portraying Trump as a dictator if he tries to quell this current wide-spread insurrection.  Also, the Leftist Mayors and Governors are dragging their feet in taking charge so they can force Trump to act!  God forbid one of the mob is killed by the military as this will be blown out of proportion and make the Kent State shootings seem small.

Where Will the Military Be?

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Lately, you have seen several retired military Generals and even our Secretary of Defense and the Chairman of the Joint Chiefs of Staff state that Trump is violating the US Constitution by some of his acts or planned acts.  Of course, none of these brave soldiers name any of the specific of these alleged violations.  But it begs the question, if the President of the United States, Donald J. Trump, enacts the Insurrection Act, and Federalizes the National Guard and the Active Service Military, would the Pentagon resist?  If they refused to deploy troops, this is the first step towards a coup d’état!  How far would they go?  If both houses Congress did not support the President and publicly ask the military to remove the President, would they do so?  Would the Military tell Congress they had to impeach the President rather than unconstitutionally remove the President from Office?  IF the President is impeached, would VP Pence be “ALLOWED” to succeed him or would the Military and Congress name their own President?  Seem far fetched?  Today seems far fetched!

Revolution Instead?

Antifa and Black Lives Matter today are not strong enough nor organized enough to fend off the weight and military strength of the US Military.  But, they could certainly loot, burn, maim, and kill indiscriminately before they are subdued.  The impact on our cities, our citizens, and our immediate future would be grim to say the least.  If the President deploys the Military around this nation, there will no doubt be violent actions and reactions.  No doubt some will be killed, maybe on both sides.  One thing for sure, the Left and its Media and the Democrats will blame President Trump in order to try to use it to defeat him in November.  

The Law of Lawlessness

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President Trump is in a Catch-22.  If he does nothing, the lame left wing Mayors and Governors will sit back and let the violence continue.  Eventually, President Trump will have to act and act decisively.  The less decisive, the more casualties.  It will have to be a swift, well coordinated effort followed by strict marshal law with strictly enforced curfews until emotions abate.  It will be a sad day in America but better than allowing this to continue until we see Red States and Blue States enjoining in battle!  We went through this once and a repeat of the American Civil War is not something any of us wish to consider.

We pray for this current upheaval to abate organically.  But, if it does not, then there is only one option and it cannot be postponed too long…

RD Pierini

@RDPierini

Pelosi’s Next Dumb Move, Hold Articles of Impeachment Until State of the Union Address

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What is Pelosi waiting for in filing the Articles of Impeachment with the Senate?  Probably two things.  She and the rabble on the left are hoping to find anything they can use to add to their “charges”.  Two, I believe that she will try to use the filing with the Senate as a way to “embarrass” Trump the day before or day of the SOTU. 

Earth to Nancy: 

TRUMP DOESN’T CARE WHAT YOU DO WITH YOUR BASTARDIZATION OF THE US CONSTITUTION AND YOUR ABUSE OF THE IMPEACHMENT POWERS.

If the Left does hold the Articles of Impeachment until just before the SOTU, it will be one of the ugliest examples of partisan politics since this Republic was founded.  

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If this happens, it will be interesting to see what Trump’s response to Pelosi and the radical left will be that night. 

  • Will Trump even show up?  Without a Doubt! 
  • Will Trump slam Pelosi and the Democrats to their face?  Without a Doubt! 
  • Will the Democrats be seen as the political hacks they are?  Without a Doubt! 
  • Will the Democrats suffer for this stunt?  Without a Doubt!

If Pelosi pulls this stunt, she will go down as the most ineffective Speakers of the House in our History.  She presided over the Failed Obamacare fiasco that saw her party thrown out onto the Streets with the Speaker’s gavel hitting her on the rear end on the way out as Speaker!  

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The impeachment is already being seen as a political, illegal, and anti-Constitutional act by the Democrats.  The Democrats have lost almost all of the independent support for their actions.  With the backdrop of Trump fending off the Iranians; getting USMCA passed; meeting with Xi of China to sign the Phase I of the USA/China trade agreement; and surrounded by a Roaring 20’s type of economy, the Democrats will g down and flames…

And they deserve it!

RD Pierini

@RDPierini

 

 

Biggest Threat to Global Stability-US or Chinese Deficits?

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(Note:  It is difficult to obtain actual data on the Chinese economy as it is a closed system and the “official” data is released by the China’s Communist Party.  You have to factor in State Debt, Domestic Debt, currency devaluation and other factors to arrive at a meaningful measurement of the Chinese economy, GDP and debt.)

The International Monetary Fund has estimated that China’s domestic credit to GDP ratio will be 300% by 2020.  Since the imposition of US tariffs on Chinese imports, China’s exports to the US are estimated to have declined by 27% forcing China to double down on borrowing and currency manipulation to sustain its state owned industries.  According to “The Guardian”,  “But Xi has more than just his battle with the US to contend with. Since the 2008 financial crisis, China’s large state-owned enterprises, most of which are involved in heavy manufacturing or energy production, have only kept going with heavy borrowing.”  Chinese unemployment has spiraled upward since 2008 and is much higher than the “official” 3.5%.  This is causing unrest on the mainland just adding to President Xi’s problems with Hong Kong and Taiwan. 

The US Debt to GDP has leveled off somewhat since 2014 when it reached just below 103%.  In 2018 it hit 106.1$, up roughly 3%.  

United States Gross Federal Debt to GDP

The primary difference between the US and Chinese Debt to GDP difference is that the US is steadily growing while China’s economy is struggling and is in decline, not only due to US tariffs, but through a decrease in global Chinese exports.  By the end of the 4th quarter of 2019, the US GDP is expect to rise to $21.2 Trillion then increase to $22.8 by the end of 2020.  This latter increase did NOT factor in the passage of the USMCA nor the potential for a Phase I trade agreement with China.  Those two trade agreements could increase our 2020 GDP to as much as $23.3 Trillion.

Trump Squeezing China

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In addition to Trump’s tariffs on China, he has also withdrawn from and killed the World Trade Organization (WTO) that treated China as a “developing” nation giving it special status and exemptions from currency manipulation and unfair trade practices.  President Trump is also tapping the breaks on China’s ability to borrow from the World Bank at sub-par rates which basically was the US subsidizing Chinese borrowing!  (Why did we allow this to go on!)  Add this to China’s ability to buy us Treasury Bonds and receive a decent interest rate compared to negative European rates, the US was buying the knife for China to use to cut our own Economic Throat!  By curtailing just these three items, China will feel a credit crunch that will be felt all the way down to their line workers.  South-Eastern Chinese manufacturing area is already suffering badly from their economic slowdown. 

Double-Edged Sword

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Make no mistake, China is an existential (over used word) military and economic threat to the US.  While the President is right to force China to deal with US trade fairly while building up our own military defenses, he has to be careful that China does not succumb to wide-spread internal unrest.  An unstable China is a threat to not only its own citizens but to the world.  China must work with the US to stabilize its economy and reduce the risk of hyper-inflation internally.  Continued currency devaluation on top of increasing unemployment is a recipe for a revolution that would dwarf Venezuela.  In addition to China’s economic woes, add in a decimation of its livestock and agricultural industries.  A hungry country is not a happy country.

The bottom line is that the growth Chinese national and domestic debt poses the biggest threat to world peace.  Our own deficit to GDP ratios are stabilizing somewhat through growth and do not pose any serious threat to us in the near term.  Our 2020 elections could be pivotal in our relationship to China as well as to our own economic well being.

US National Debt

If Trump holds the WH and Republicans take back the House, Trump could start to whittle down the spending spiral for the long term with his spending reforms.  Trump has supported a version of the “penny-plan” for quite some time which advocates a 1% reduction in federal spending every year.  He has also promoted a phased in spending cap of 18% of GDP.  He could go oven lower as that cap represents a budget of $4.1 Trillion dollars using a possible 2020 GDP of $23.3 Trillion. 

It will take serious reforms in Congress to deal with the auto-pilot spending mechanisms, the idiocy of the Congressional Budget Office, and put in place long term revenue generating reforms in our Social Security, Medicare, and entitlement programs.  Trump fought Paul Ryan during his first two years in office.  If Trump can secure a serious Republican led Congress in 2020, we may actually get to experience a decline in our national debt while still growing our economy.

RD Pierini

@RDPierini

 

Hat Tips

https://nationalinterest.org/blog/the-buzz/scary-statistic-chinas-debt-gdp-ratio-reached-257-percent-22824

https://www.theguardian.com/business/2019/jan/05/china-economy-slowdown-us-tariffs-trade-war

https://tradingeconomics.com/united-states/government-debt-to-gdp

Trump’s ‘Penny Plan’ Could Slash Federal Spending Over Decade

Updates: Fannie and Freddie and China/US Trade and Military Cold War

Occasionally some world and local events require us to circle back and look at perceptions, facts and events that we have contemplated before.  Today. two such items require revisiting.

Trump’s Addressing Root Cause of 2008 Crash-Freddie and Fannie

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Link to Original Post (2/24/2019): https://wp.me/pY51c-1g4

In February, contrary to “conventional wisdom”, (meaning Fake News aided and abetted by RINOs), was that President Trump would NOT seek to privatize Fannie Mae and Freddie Mac and eliminate government control over these two quasi governmental agencies and by and large eliminate the potential liability for these agencies by we, the taxpayers.  Both entities were originally chartered as private entities in 1938 when they were created.

The “wisdom pundits” postulated that Secretary Mnuchin and others in the administration would convince the President that privatizing these agencies would be a bad idea.  The big government control freaks love the idea of being able to control each of us and generally, our largest personal asset, our homes, by controlling the liquidity of mortgages.  In 2008, the fallacy of keeping these two Government Sponsored Enterprises (GSEs) was highlighted as we, taxpayers, had to bail out both of these entities after they knowingly, and with the aid of Republicans and Democrats, bought up junk mortgages and loans from banks who made sub-prime loans.  

Today, President Trump is pushing the privatizing of both of these entities in order to restore accountability and responsibility for their operations.  Their sole purpose is to provide a secondary market for mortgages and loans so banks “sell” these loans and restore the cash they need to give more new loans.  If you have refinanced or bought a home, you probably received a note that your loan was bought out by Freddie or Fannie and you probably were given the name of a new processing company to send you payments to.  Your original bank was then off of the hook for your loan and the responsibility was shifted to Fannie and Freddie, and you the taxpayer.

The fallacy of this quasi-government arrangement was that there were already private companies doing the same thing as Freddie and Fannie.  But, they could not compete with the purchase rates nor the lack of liability that Fannie and Freddie enjoyed.  So, the private market pretty much is insignificant.

President Trump want to recreate the private secondary market by removing the GSE status of these agencies and force them to compete on the open market.  Private investors would have never made the decision to buy worthless paper as these two agencies did in early 2000’s until the crash in 2008.  Congress will find it much harder to create a bubble like they did in the 2000’s that led to the housing crisis.  There will be no willing partners in the secondary market.  Also, it reduces Congress’s ability to fiddle with the mortgage market and create politically popular short-term bubbles.

Congratulations President Trump…

Chinese Communist Party and President Xi Jinping Stuck on World Domination Goals

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Link to Original Post  (9/1/2019): https://wp.me/pY51c-1iG

This week we saw that the Hong Kong leaders pulled back the Chinese Government Law that would have allowed Hong Kong Citizens to be sent to mainland China for interrogation and prosecution.  (Ask Muslims how this has worked out for them!)  But, the Hong Kong protestors are also demanding:

  1. Unconditional release of all protestors that have been arrested.
  2. Elimination of the characterization of the protests as Riots
  3. Independent inquiry into the actions of the police.
  4. Universal suffrage and control over Hong Kong by their citizens.

While President Xi was not publicly involved in this action, I believe that he convinced the hardliners in the Communist Party that a Tiananmen Square type of crackdown would only exacerbate the Hong Kong problem but also endanger any hope of a US trade deal and invite international condemnation.  I do not believe that, as of this writing, the Chinese are willing to go much further in terms of turning over more autonomy to the people in Hong Kong.  This would have ramifications within the Chinese mainland as well as Taiwan.

While this may signal some softening inside of China, it may not.  But, if Xi did overcome objections by the hardliners, there is some hope that Xi may also be able to push forward trade talks with the US.  I still am less than hopeful that President Trump and Xi will arrive at a point acceptable to the Chinese hardliners or President Trump.  But, I still do not believe that President Trump cares if he gets a deal or not.  He can achieve his goals by the end of his second term by revamping the Chinese goods supply chain and move US companies out of China.  This will severely hurt the Chinese economy, prop up the US economy, and cripple the Chinese ability to fund its military expansion.  

Don’t forget that President Trump has also ramped up our military sales to Taiwan to the dismay and consternation of the Chinese.  He is also protrolling the south Chinese Sea in the face of Chinese protestation.  Trump is poking a lot of different sticks in the Communist Chinese Eyes and they are quite dumbfounded as how to respond…

RD Pierini

@RDPierini

Stupidity Behind Hand Wringing Over “Treasury Yield Inversion”

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Don’t kid yourself that any of the Business Talking Heads on TV who are wringing their hands over US Treasury Bond Yield Inversion are smart, they are NOT!  You would think, or hope, that these same “brilliant” geniuses at least understood supply and demand but obviously they do not!

The morons on Wall Street say constantly that if the yield or interest you get from a 2 year Treasury bond is More than you would receive from a 10 year Treasury bond then we have a Bond Inversion that signals A RECESSION WITHIN 24-26 MONTHS!  Great but that little piece of wisdom has not historically not been true with any consistency and WORLD CONDITIONS THAT WE HAVE TODAY ARE EXTREMELY UNIQUE

IF you buy German Bonds today, YOU HAVE TO PAY THE GERMAN GOVERNMENT INTEREST JUST TO HAVE THE HONOR OF BUYING THEIR BONDS (30 year)!  No, that was not a typo!  You read right, the German Government Bond carries negative interest and you have to pay them to buy their bonds.  Many of the other European countries are at zero interest or closing in on it.

So, where would you buy bonds if you were wanting to actually receive a yield (interest) on your investment?  YUP!  The good old US of A.  What happens when our bonds are the best buy in the world, yep, more people want to buy them.  What happens to the yield (interest) on our bonds in the short term.  Yep, it goes down as we don’t have to give as much in order to sell our bonds! 

So, bond investors are buying our short term bonds, 2 year, expecting that the rest of the world will come to their senses and do something to jump start their economies.  So, with people flooding to buy our 2 year bonds, those bond yields go down and may actually yield less than our 10 year bonds.  This is not rocket science and is not a predictor of anything other than how dumb you would have to be to buy a negative interest German Bond!

We have discussed this before but let me give you an easy example so you can maybe get your liberal friends to understand what the “geniuses” on Wall Street don’t.

Let’s say your bank offers you a CD that yields or pays you 3% interest.  The bank across the street offers CDs that yield or pays -1%.  Are you going to buy from your bank and get 3% interest or buy from the bank across the street and have TO PAY THEM 1% to buy their CD?  (Please say that you would buy from your bank!)  The more people who buy the 3% CD from your bank, the higher the chance that your bank will start reducing the interest rate since they have more buyers demanding their CD.  At some point, your bank will find that they can only lower their CD’s interest so far before they start to lose customers.  

The world economy was totally messed up by the end of 2010 following the deep world-wide recession of 2008.  Central Banks, like our Federal Reserve, began monetizing their debt by merely creating more paper money.  Our Federal Reserve during the Bush and Obama years ran up over $4 Trillion in debt, not counting Bush and Obama driving our national debt to $19 Trillion.  Europe, Asia and virtually all developed countries followed suit until today we have developed countries with negative growth, massive debt, and no market for their bonds that are sold to service these massive debts.  All but the US under Trump.  We are the only country exhibiting healthy growth.

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It is this imbalance that is causing our short term bonds to be scooped up by investors and driving their yield below our longer term bonds.  This is a sign of non US economies being week, not the US economy being week!

But let’s be clear.  The talking heads on TV are not basing their comments on economics but on politics.  They will do and say anything, including inciting a recession in the us, in order to defeat President Trump.  Don’t buy into their crap as it is based on the same “solid” foundation as their Russian Hoax or calling you a racist!

RD Pierini

@RDPierini

The New Leftist Political 3 R’s! Russia, Racist and Recession!

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First the Leftist turned our own Intelligence agencies, and those of our international allies against Candidate Trump, and then President Trump; After the RUSSIAN Hoax failed, these same Leftist tried to brand President Trump AND ALL OF HIS SUPPORTERS AS RACIST;  When that failed, they are now crying out that the great Trump Economy is heading into a RECESSION!  

All three political hit jobs have one thing in common.  None are True! 

  • The Russia Hoax was fabricated by the Clinton Campaign, aided by the Obama Administration, and abetted by many of our so-called European and Australian allies.  This will end up being the most blatant disregard for the rule of law in US history.  Even Robert Mueller and his 17 pit bull leftist prosecutors could not find one shred of evidence against the President, his campaign or his Presidency with which to indict anyone for conspiracy or obstruction of justice.  This hoax went deep inside our DOJ, FBI, CIA and other intelligence agencies and even corrupted the FISA process which is supposed to protect US citizens from unlawful surveillance.
  • Racist labeling of the President and his supporters have backfired and US citizens, Trump supporters and detractors, are tired of everything being labeled as racist.  It is so bad, that the Leftist morphed this word into WHITE NATIONALIST or WHITE SUPREMECIST!  The Trump economy has yielded the lowest unemployment numbers in the history of the US for Blacks and Hispanics.  Trump’s OPPORTUNITY ZONES target the rebuilding of mostly poor minority inner cities and poor rural areas.  The goal is to overcome decades of Leftist control over these areas that have left minorities and their communities in abject poverty in the midst of the worst school systems and drug infestations.  If Trump and his supporters were racists, why would be care about the plight of these areas?  Maybe the Leftist should be asked and forced to answer why they allowed these areas to decay, become rat infested, with substandard school system yielding over 50%+ illiteracy, and the residents with no hope for the future other than to hope that someone gives them money because they have long despaired and given up on America’s promise of Equal Opportunity!
  • Russia and Racist both failed so now the Democrat Leftists are ginning up a new hope that the Trump Economy is heading for a RECESSION.  They even embarrassed themselves by pointing out that the 2 year treasury bond yield was higher (for a few hours) than the 10 year treasury bond yield.  These morons stated that this “inversion” indicated that our economy would go into a recession, within 22-24 MONTHS, as it had in SOME PRIOR recessions.  Not all, SOME.  Well, I ate pasta just before the 1979. 1991 and 2008 recessions.  I guess I caused these recessions!  Don’t take my word for it, Dr. Sonal Desai, the Chief Investment Officer for the Templeton Investment Fund stated;  “In short: the economic data show no evidence that either the United States or the global economy is approaching a recession.”  

Why would the Democrat Left gin up a Recession and the fears of a Recession?  Simple!  2020

The President has turned this economy around and the US, its businesses and its citizens, especially blue collar and lower income people have benefitted the most.  There are no signs of a US recession.  You hear these Leftist pundits decry the Trump Tariffs against China as being a driving force for the upcoming recession.  Don’t confuse them with facts, especially the fact that the Chinese have devalued, manipulated, their currency below the tariff levels thus negating the impact on the US consumers.   Once again, if we tax a Chinese product that costs $1.00 10%, that product will now cost $1.10.  If the Chinese devalue their currency by 10%, then that product will still cost the US consumer $1.00.

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Jamie Diamond, Chairman of the Globalist Business Roundtable and Chairman and CEO of JPMorgan Chase, Helped Structure the 2008 Recession Bubble!

Why do the Democrat leftist want to get rid of the Chinese tariffs?  Simple, the globalist, multi-national corporations like the status quo where they can maximize their profits by manufacturing in China where labor has been very low.  The more sinister view is that they really want to take down the US as the dominant economy in the world so these forces can dominate the world economy!  But I won’t go there now.  These business interest could care less if you lose your factory job because they cut a buck out of their costs!  Did you ever stop to think about what Obama and the leftist have said about jobs leaving America, never to return.  They said that it was a matter of companies HAVING to produce products wherever it was the cheapest so all  world consumers, even the US consumers, could get the best price.   Did you stop to ask just how a US factory worker who lost his or her job could afford to by anything now they do not have a job and a paycheck!  The leftist did not care if our middle class was decimated which it was.  The globalist goals were loftier and better for everyone, ESPECIALLY THEM.

See the source image

Then along came Donald J. Trump and his America First band of merry supporters.  First the Leftist laughed.  After all, they stomped out the Tea Party revolt!  How hard could it be to stomp out Donald Trump and his DEPLORABLES?  Very hard indeed.

Don’t let this latest Left-Wind hysteria regarding Recession worry youWe ARE the strongest economy in the world.  Our economy is the only hope the rest of the world has to avoid problems in their own countries.  We consume 25% of the world’s output and are now the dominant oil and gas producer in the entire world.  We have re-established our steel industries as well so no nation can now threaten us with energy or manufacturing  boycotts or price fixing.  

We will probably at some point have a slowdown or even a recession.  But for one political party and their leftist cronies and media to hope and promote the idea that a recession is inevitable and rapidly approaching, just when many Americans are starting to live the dream they thought was dead, is sick and demented.  

Enjoy the economic revival.  Why Would You Want to be Miserable Like the Leftist Democrats and their Media!  

RD Pierini

@RDPierini

 

Hat Tips

https://www.franklintempleton.com/investor/article?contentPath=html/ftthinks/en-us-retail/cio-views/on-my-mind-yield-curve-hysteria.html&msclkid=54f7763ccfd41391d8952b6065a3d947&utm_source=bing&utm_medium=cpc&utm_campaign=T-TL-FTThinks-CIO%20Views-Yield%20Curve%20Hysteria-UNB&utm_term=recession&utm_content=CIO%20Views-Recession%20PHR&gclid=CL3v3MPzkuQCFQ2mZQodvtsBdw&gclsrc=ds

 

Trump Vs The Federal Reserve (Fed)

Federal Reserve “Palace”, Eccles Building Washington DC

Are you one of those who listen to the political pundits bad-mouthing Trump for criticizing the Federal Reserve policies and its Chairman Powell?  If you think the President is wrong to criticize the FED, consider the following.

The Federal Reserve (FED) is an extra-constitutional institution that was created in 1913 to stop financial crisis and provide stability to our nation’s credit, its banks, and to protect consumers.  Ironically the FED did nothing to prevent or end the Great Depression, and the recessions that have plagued this nation including the recessions of 1980 and 2008.  Following the recession of 1980 that was accompanied by runaway inflation, the FED was given additional powers to “control” inflation.  In short, our nation’s entire fiscal health, and the health of our banking systems, rely on an institution that is not mentioned in the US Constitution; is totally governed by 7 unelected citizens; and is advised only by 12 individuals from the banking industry that the FED is supposed to manage.  

The Fed is led by the Federal Reserve Board (FRB) comprised of seven Presidential appointed “governors”.  Below the are two additional levels of UNELECTED BUREAUCRATS.  Below the FRB, is the Federal Open Market Committee (FOMC).  Its membership is comprised of the seven members of the FRB plus five of the twelve  Federal Reserve Bank Presidents.  The Federal Advisory Council comprised of twelve REPRESENTATIVES OF THE BANKING INDUSTRY.  The FAC “advises” the FRB on all matters under its jurisdiction.  

Finally, the Federal Reserve Act created Twelve (not sure why they were hung up on the number twelve) Federal Reserve Banks, each of which is responsible for member banks located in its district.  (This was before national and international banks!)  

Each of these FED banks has a President appointed by its board of director.  While District Federal Reserve Banks are purported to be independent from its member banks, the MEMBER BANKS DO ELECT SIX OF THE NINE OF THE REGIONAL FEDERAL BANK’S BOARD!  

Sorry for the dissertation on the structure of the FED but the key points are:

  • The Fed is Extra-Constitutional
  • The Fed management is devoid of any elected individuals
  • The FED is controlled by 7 non-elected officials that are appointed by Presidents.
  • The banking industry itself controls the boards or members of Federal Reserve Advisory Council and the District Federal Reserve Banks.
  • The FED creates banking regulation and regulates private banks, PERIOD.  No elected official or agency of the Executive Branch has any sway over these banking regulations.  
  • Yes, the President can nominate the members of the FED Board and the nominees have to be confirmed by the Senate but any actions undertaken by the FED is not subject to Congressional or Executive Oversight!

So, the Federal Reserve can “create” money; manage how much of our cash is available to world; set funds rate which sets interest rates; print  money then buy back US debt also known as Quantitative Easing and monetizing the debt!  All this without any check or balance, nor anyone on the FED being elected by US voters!

YOU THINK THE FEDERAL DEBT IS $22.3 TRILLION!  NOPE, THE FED HAS “BORROWED (PRINTED) ANOTHER $4 TRILLION FOR A TOTAL NATIONAL DEBT OF $26.3 BY USING QUANTITATIVE EASING.  

Should the President Publicly Challenge the FED?  Someone Better!

During the Obama Presidency, the FED not only pumped $4 Trillion into the economy by borrowing (printing) money, they also drove interest rates down to zero Then when President Trump came in, the FED began to pay down, (remove cash from the economy), and then went through 6 additional Fed Rate increases (this increases your credit card and mortgage Interest rates) beginning in March 2016 raising the interest rate to 1%, until December of 2018 raising the funds rate to 2.5%. 

All of these actions depress the economy! 

These actions by the FED were justified as making sure inflation did not get out of control as the Trump economy was booming!  What, there wasn’t and still isn’t any inflation!

What you need to know is that raising interest rates slows economic growth, and what supposed “conventional wisdom” defines as inflation!    It is a mechanism that has been used to curb INFLATION.  Paying down the monies borrowed by the FED also slows down economic growth by taking cash out of the market. The FED set a target of 2% inflation following the Jimmy Carter presidency that featured an exploded inflation rate accompanied by the FED exploding interest rates to over 16%.    During the Trump administration and the economic growth under Trump in 2019, teh economy has yielded an inflation rate AT A LOWER RATE THAN THE 2% FED TARGET!  Thiws is why The President keeps saying that especially the last Fed interest rate hike in 2018 was deflationary and seriously damaged the growth of our economy.

The FED, the National Debt, and Globalism:

Why is the FED fighting against the Trump economy?  Why is the National Debt still rising?  and Where is the FED in all of this?

Remember, the FED is totally comprised of and controlled by International bankers.  The vast majority are globalist in that they believe that a “balance” among nations economically is good for all.  The only problem is that the FED charter has nothing to do with making sure nations, other than America, are financially sound.  Some argue that international economic stability is our responsibility.  Then why don’t we have a say in the really dumb decisions made by EU nations, China, Russia and other nations that are driving their own economies into the toilet?  Why is our economy held hostage by poor decisions being made by other countries!

Why is our National Debt still rising?  Two reasons, One is an corrupt Congress that does not have the guts to change its own rules allowing spending to keep climbing due to automatic increases each year.   Two, a FED, aided and abetted by Congress, the US Chamber of Commerce, and the Business Roundtable, that constantly depresses the US economy and makes sure that our growth and ensuing tax revenues do not strengthen our economy vis-à-vis other nation’s economic growth.  If the US economy is flat, then even if Congressional spending is flat, we can never pay down our national debt.  IF the Trump economy can generate an annual increase in our Gross Domestic Product in the 3-4% range, tax revenues will increase and eventually start chipping away at our national debt.  (Why not raise taxes?  Raising taxes decrease tax revenue.  Tax decreases increases tax revenues.  This is a historical fact!) 

The FED makes sure that our international globalist can move their investments and businesses out of the US into countries that increase their profits.  THE FED AND THESE SELF-INTERESTS AND FOREIGN NATIONS promote foreign countries to maintain tariffs on US imports further depressing US growth and US job promotion.  

President Trump’s

BUY AMERICAN, HIRE AMERICAN

is the Antithesis to the goals of the FED, the Globalists, the US Chamber of Commerce, the Business Roundtable and the Progressive Left.

This is why the President is taking on the FED chairman Powell directly and in the public square.  Continued rate hikes without inflation in excess of 3% is recessionary and contrary to the US National Interest.  The President understands that no matter what he does in terms of regulation and tax cuts, the FED can counterbalance his moves by merely printing more money or raising interest rates.  The President’s economy is generating inflation because for every job gained, PRODUCTIVITY per hour is increased.  For every good produced in this country versus China or elsewhere, GDP and tax revenues into the US treasure are increased!  

TARIFFS, NOT REALY A TAX ON US CITIZENS.

You hear every day that US Tariffs on other nations good being brought into the us are TAXES ON US CONSUMERS.  Not True in the Long Run and Not really true in the short to medium term.  Why?  Ask yourself, “How can the US inflation be less than 2% if ur Tariffs are increasing the cost of the good we import to any significant degree?  Answer, they are not! 

The exporting country, say China, cannot afford to loose production nor revenue due to US tariffs.  Also remember, that China is a communist country whose economy is totally controlled by its communist party.  So, China will devalue their own currency to offset some or all of the tariffs.  How does this work?  Say they export an item to the US that costs them $1.00.  We put a 25% tax on that item so the cost of that item would be $1.25.  By devaluing their currency by say 10%, the real tariff cost for the item is $1.125.  Then, in order for the Chinese factory to not loose the $0.125 per item, the Chinese government creates a subsidy for the factory in the amount of $0.125 per item.  In the end, the item cost is still $1.00 to US Consumers.  This is exactly what is happening to China today!  

In the short term, most of the exporters of Chinese goods have forward contracted with Chinese manufacturers to by their goods at a set price over a period of time.  Most are hedged against the Chinese currency to avoid loses due to Chinese currency manipulation.  So, in the short-term, the goods sold to US consumers do not carry a price increase. 

For items like electronics, South Korea and Japan have forced prices down by $150 or so per television over the past 18 months for example.  Our tariffs on Chinese TVs would have no impact on US consumers for specific items as they can buy the less expensive Korean or Japanese TVs.  In the medium to long term, these exporters can seek other country’s suppliers especially Viet Nam, Japan and South Korea.  During this same time frame, the Chinese manufacturers who have non-Chinese partners, will see their non-Chinese partners move their investments to other countries or even the US to avoid the tariff impacts.  Many already have plants in multiple non-Chinese countries.

So, President Trump has to fight for the US consumer on many, many fronts.  The FED is certainly at the top of the list as they can kill the impact of Trump economic moves and even drive the US into a Recession.  The FED can also manipulate our currency and overvalue it and kill our ability to export, especially agricultural goods that are priced on international markets.  

Congress is also a stumbling block as they typically support their big donors, regardless of party, and these include the US Chamber of Commerce, the Business Roundtable, the Koch Bros. and others.  While they give lip service to supporting America First, just listen to these political hacks when Trump threatens tariffs on Mexico and others.  In this case, the day Trump threatened to impose a 5% tariff on Mexico, their Peso was devalued at over 5% thus negating the impact of the tariffs in the short-term.  Congress will always stand behind global interests, until we institute term limits and expel these hacks from Congress.

Keep Up the Good Fight!

So, when you hear the talking heads and political hacks decrying Trump Tariffs, consider the sources.  Trump knows that the Chinese tariffs may in time case some of the Chinese goods to be more expensive for US consumers.  In the meantime, he has ramped up US energy production to drive down gas prices for consumers and manufactures alike in order to buffer potential Chinese price increases. 

What always gets me is to hear pundits say that it is better for US consumers to be able to by cheap goods from China than to have those goods produced in the US.  Good for Who?  If you have been laid off at a factory and receiving unemployment or welfare, your purchasing power has been seriously reduced.  Further, rather than you paying taxes and increasing revenue into our treasury, and keep circulating your wage income within the US, you are taking from our treasury and the dollars we are spending with China leave this country and are never recirculated within the US!  Moving jobs out of the US no matter the cost of a tennis shoe is never a net benefit to this nation.  

———————

Note:  if you have a chance, read “Why America Will Fail-Unless the People Take Back Their Country” by clicking on this link: https://wp.me/pY51c-yo  It will explain in more depth the structure of the FED and other institutions and how many of our economic safeguards have been removed intentionally by the globalist.

RD Pierini

@RDPierini

 

Hat Tips

https://en.wikipedia.org/wiki/Federal_Reserve

https://www.thebalance.com/fed-funds-rate-history-highs-lows-3306135

https://www.investopedia.com/terms/f/federalfundsrate.asp

https://www.investopedia.com/articles/03/122203.asp

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2019

https://www.quora.com/What-should-be-the-ideal-inflation-rate-for-country-like-India-and-why

Top 10 Countries with Largest National Debt-to-GDP in 2018

 

Illegal Immigration & National Debt Killing the American Dream

 

See the source image

Why discuss Illegal Immigration and the National Debt together?  The two topics are an excellent juxtaposition of emotion driven bad policies that lead to a lowering of overall freedom, the lowering of the standard of living for those the government is supposed to serve, and the eventual takeover of government by the government and its elites.  Make no mistake, illegal immigration and the national debt are both primary tools in the socialist toolbox. 

You can’t “Fundamentally Transform” this Nation without Destroying its Social and Economic Foundations First!

***************************

Costs of Illegal Immigration

Trying to determine the actual costs of illegal immigration is as difficult as trying to determine how many illegal aliens (IA) are in the United States at any one time. The  conservative Federation for American Immigration Reform pegs the IA population at 12.5 million while other alternative sources put the number much higher, 20-30 million.  Wikipedia estimates that the IA population could be as high as 20 Million.  12.5M seems to be conservative and is quoted by the left and right.  But, if the population is 20 million, then the overall net costs could be higher.

See the source image

But, in the past two years, we have seen a dramatic shift in the make-up of illegal immigration at our Southern border and this shift is adding even higher costs to the processing and care of the new illegal immigration population.  Historically, most of the illegal immigrants came from Mexico into the US.  Some sought to stay here permanently while others came on a seasonal basis for seasonal work.  Today, the majority of illegal immigrants are seeking asylum and are coming out of Central America and consist of family units or unaccompanied minors.  

See the source image

This shift puts a tremendous new burden on our Customs and Border Patrol, Health and Human Services, and other federal agencies.  Care of minors and family units requires extensive healthcare services as well as investigative services to ensure that the adults with the children are actually the parents or guardians of the children.  Today, there are over 2,000 IA who have been detained at the border are now quarantined as they have infectious diseases such as mumps, chicken pox, and other diseases that have been pretty much eradicated in the US.  IA net costs estimates do not include any costs for treating US citizens who have been infected due to contacts with IA and their children.

Net Immigration Costs-12.5M IA

That said, lets assume that the 2018 costs of illegal immigrants entering and living in the US is still indicative of today’s 2019 costs.  At a high level, there are a number of cost components that are provided by the Federal Government then by State and Local Governments.  (The percentage shown next to the cost is the % of the Federal Government Spending ($4.1TT) less Social Security and Medicare ($1.63T) or $2.47T total spending)

  • Federal Costs of Illegal Aliens: $45.8B (1.85%)
    • Federal Education-$1.6B
    • Federal Medical Costs-$17.1B
    • Federal Justice Expenditures-$13.1B
    • Federal Welfare Programs-$5.8B
      • Meals in Schools-$1.003B
      • Supplemental Nutrition Assistance-$1.96B
      • Women, Infants and Children Care-$1.098B
      • Temporary Assistance for Needy Families-$1.785B
    • Federal Tax Receipts (all taxes) From Illegal Aliens-$22.1B
    • Net Federal Costs from Illegal Aliens: $30.4B (1.23%)
  • State and Local Costs of Illegal Immigrants:  $88B
    • State Educational Expenditures;  $44.4B
    • State Medical Expenditures:  $12.1B
    • State Justice Expenditures: $10.8B
    • State Welfare Expenditures: $2.9B
    • State Taxes Collected (All taxes) from Illegal Aliens: $3.5B
    • Net State and Local Costs from Illegal Aliens:  $85B
  • Net Federal, State and Local Impact of Illegal Aliens:  $115.4B (4.7%) (Note 1)

Hidden Costs of Illegal Immigration

There are many other costs that are not quantified such as those associated with having to provide an extensive Multi-Lingual components to our overall education system due to IA children.  Increased medical costs to citizens as a result of formerly eradicated diseases being reintroduced into our general population.  With over 12M IAs willing to work for low wages, what is the cost to our economy and to our workers for IAs artificially depressing our wages?    Well, assuming IA keeps lower incomes depressed by $3.00/hour, and there are 12M illegal aliens in the workplace, this would decrease overall wages and our GDP by $74,880,000,000.  Yes, that is BILLIONS.  Adding this to the net cost of supporting IA you are almost to $200B Per Year! No wonder the left want to artificially set the minimum wage to $15.00/hr!

The other cost is that of law enforcement.  Open border supporters state falsely that ‘immigrants” commit less crime that do US Citizens.  This is false narrative as they add legal immigrants with the illegal immigrant numbers; do not include crimes such as document fraud, fraudulently applying for government benefits, drug offenses and offenses committed in sanctuary cities that are ignored altogether.  

The bottom line is that illegal immigrants are 3 times more likely to commit a crime than a US Citizens and lawfully present aliens.  

Negative Impact of Illegal Immigration

One key takeaway is that IAs do NOT contribute to the US economy and are actually a negative in terms of cash flow in the amount of $115,400,000,000 per year!  That is equal to about $375 per year for every citizen, men, women and children in the US! 

President Trump submitted a Budget for the Veterans Affairs Department for 2019 in the amount of $198,000,000,000.  The IA net costs if eliminated would pay for over half of the VA costs! 

In spite of what you hear to the contrary, IAs receive the following services from the FEDERAL GOVERNMENT today.  This does NOT include the services that they receive from State and Local governments that are over and above these Federal services:

  • They receive $943,200,000 for Primary and Secondary Education Support;
  • They receive $541,694,040 for LEP-Limited English Proficiency Title III support;
  • They receive $206,140,000 for Migrant Schooling Title IC support.
  • They receive $$8,200,000,000 in Uncompensated Hospital Expenditure costs;
  • They receive $1,242,990,372 for Medicaid Births (children are automatically US citizens)
  • Their healthcare contributes $3,458,475,000 to Medicaid Fraud.
  •  They receive $4,234,129,200 in Medicaid for US Born Kids of Illegal aliens. (children are automatically US citizens)
  • They add $1,240,000,000 to our Federal Incarceration costs.
  • They add $3,218,000,000 to our Enforcement and Removal Costs.
  • They add $5,968,729,360 to our Customs and Border Protection costs (much could be eliminated with a wall.)
  • They add $1,126,840,000 to Other ICE operations.
  • They add $210,000,000 to our State Criminal Alien Assistance Program.
  • They add $168,120,000 to our Executive Office for Immigration Review.
  • They add $1,200,000,000 to our Alien Minor program.
  • They add $16,920,000 to our Byrne Grant Program (note 1)
  • They add $1,003,000,000 to our Meals in Schools.
  • They add $1,963,416,000 to our Supplemental Nutrition Assistance Program. (SNAP)
  • They add $1,097,829,360 to the Women Infants and Children program.
  • They add $1,785,000,000 to the Temporary Assistance for Needy Families program.

Illegal immigration is expensive and a drag on our economy in terms of costs and just as important, it is a drag on the wages of our low-end wage earners who struggle to make ends meet ($75B/yr).  Illegal immigrants do not pay their way and are a drag on our economy in terms of depressing wages, lowering our GDP, adding to our national debt, and endangering our citizens with higher per capital violent crime rates than that of US citizens.

********************

Our National Debt Crisis

See the source image

Most American taxpayers complain about taxes in all forms while glossing over the US National Debt and its potential impact on their lives.  Today, we, you and me, are on the hook for over $22 Trillion in debt and each man, woman and child in the US owes over $67,000 of this debt!  The annual interest for 2019 on the debt is $363 Billion which is almost 8% of the total Federal Budget for 2019!  With $363 Billion, you could fund about 50% of the military; or, you could fund 62% of Medicare; or, you could fund 39% of Social Security; or, you could fund the Entire Discretionary Spending for the 2020 Presidential budget for the Departments of Agriculture, Commerce, Education, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Justice, and Labor!  So, interest expense isn’t cheap!  

Separate Out Social Security and Medicare From the US Government Budget!

The Federal Budget is so convoluted that it is incomprehensible to the average person, even those with an accounting degree.  In order to “simplify” the Federal Budget, we should separate those programs that are supported by taxpayer contributions into their own “accounts” as you would in business.  The two largest, Social Security and Medicare should be separated and any program, such as Social Security Disability, should be moved out of Social Security and into a safety net group of benefits that would include Medicaid, SS Disability, CHIP, ACA and other marketplace subsidies, and all forms of welfare including SNAP (food stamps).  SOCIAL SECURITY, BY LAW CANNOT EVER ADD TO THE NATIONAL DEBT, PERIOD!  MEDICARE CAN.

By separating these two programs out of the Central Federal Budget citizens will be able to see and monitor of these two large programs, including any shortfall in funding they may experience.  IF YOU CAN ACTUALLY SEE A PROBLEM, YOU CAN FIX IT! 

Another benefit would be to see and understand that the Social Security Fund holds 50% of the US Intergovernmental debt totaling over $3 Trillion dollarsThe Medicare Fund holds over 3% or $184,800,000,000 of US Intergovernmental securities.  In other words, your funds are LOANING money, at a ridiculously low rate to the Federal Government in order for it to operate!  The reader should understand that by law the Social Security and Medicare trustees can only invest in low yielding US treasury securities.  They are not allowed to invest in the US economy in lets say the S&P 500 that yields orders of magnitude times that of the US securities.   For example.  In 1928 you invested $100 each in the S&P 500, 3 Month T-Bills, and 10 Year Treasury Bonds.  In 2018, They would be worth:  (Note 3)

      • S&P 500:  $382,850 (minus my $100 investment)
      • 3 Month T-Bill:  $2,063 (minus my $100 investment)
      • 10 Year Treasury Bond: $7,308 (minus my $100 investment)

It is easy to see that by restricting the Social Security and Medicare trust funds to the 10 Year Treasury Bonds we are getting screwed big time in terms of return on investments.  I was born in 1945 and if we look at these same funds today, they would have a present value of:

  • S&P 500:  $382,624 (minus my $100 investment)
  • 3 Month T-Bill:  $1,944 (minus my $100 investment)
  • 10 Year Treasury Bond: $7,129 (minus my $100 investment)

Politicians are Lying to You!

Your politicians, especially on the Progressive-Left but also many conservatives, tell you that it is too risky to invest in our economy!  The amounts shown above include the past 90 years and also include the Great Depression, many recessions including the 2008 Great Recession!  Even including those catastrophic financial meltdowns, the S&P 500 went from our $100 investment to $382,850!  Rather than projecting that Social Security and Medicare funds would be depleted by 2030, those funds would be secure into the next century if even 50% of the money had been invested in the S&P 500!  Heaven forbid if we actually saw an increase in the Social Security benefits! 

The other benefit would be that the Social Security and Medicare funds could FUND OR RETIRE THE ENTIRE US DEBT! 

Back to the Budget and the National Debt

OK, let’s remove Social Security and Medicare out of the President’s FY 2020 Budget and see where we are.  (We are using the President’s budget as it is the latest indicator we have for revenue and spending.  BUT, with a Democrat House, the spending numbers for social programs are going to be lobbied for increases.)

      • 2020 Expenditures-$4.746T
        • 2020 Social Security ($1.102T)
        • 2020 Medicare ($.679T)
      • Net 2020 Budget Expenditures ($2.965T)
      • 2020 Revenue-$3.645T
        • 2020 Social Security Revenue: ($.949T)
        • 2020 Medicare Revenue:  ($.289T)
      • Net 2020 Budget Revenue: ($2.407T)
      • 2020 Deficit Less SS and Medicare ($.558T)
      • 2020 Deficit With SS and Medicare ($1.101T) Note 4

Remember, both Social Security and Medicare are still projected to be solvent per current funding through 2030.  Social Security by law CANNOT add to the National Debt.

So, what is left in the budget?

  • Discretionary Spending
    • Defense Spending:  $726B
    • Non-Defense Spending:  $700B
  • Total Discretionary Spending:  $1.426T
  • Mandatory Programs (Less SS & Medicare)
    • Medicaid, ACA & other Subsidies:  $418B
    • Basic Health Exch. Subsidies:  $50B
    • Other Mandatory Programs:  $587B
    • Infrastructure Allowance:  $5B
    • Interest:  $479B
  • Total Mandatory (Less SS & Medicare): $1.539T
  • Total Spending:  $2.965T
  • Total Receipts (Less SS & Medicare):  ($2.407T)
  • Total Deficit:  ($558T)

Discretionary Spending:

It is easy to understand that the first bucket is Defense Spending.  President Trump’s budget calls for $726 Billion to be spent on the military FY 2020.  But what is the Non-Defense spending that is $700 Billion?   Well, this is the cost to run the government and includes treasury, education, VA, etc..  It is basically the entire non-military executive branch operating costs. 

The President’s budget includes cuts to every executive department while taking money out of the Corps of Engineers and the DHS for additional wall funding.  Congress fought President Trump in the last two fiscal years against his CUTTING the cost of government via cutting non-defense discretionary spending.  There are tons of fat in the executive bureaucracy, and even whole departments that could be eliminated, but until we get a fiscally conservative Congress the President will have to do the best he can.

Mandatory Spending Programs (Not Including Social Security & Medicare):

This grouping adds $1.539 Trillion in spending to the budget.  The description, “Mandatory” is a bit misleading as the definition is spending that Congress legislates outside of the annual appropriations process, usually less than once a year In short, these programs are mainly on auto-pilot with automatic increase triggers of 6-8% Per year!  So when you hear that the President is “cutting” some of this spending, he is actually asking for a REDUCTION IN THE PERCENT INCREASE IN SPENDING.  THE ACTUAL DOLLARS ARE INCREASED! 

Below is a chart of all Mandatory Spending including Social Security and Medicare to help you visualize what is included from 2015.  Most of the non revenue generating healthcare amount shown, $985.7 billion, is for Medicaid.  Food and agriculture is included in this protected group as this department administers Food Stamps (SNAP).  Also included is the cost for the VA, Federal Unemployment, transportation and federal employee benefits.

Deficit Reduction:

2% Plan:  So, how can we eliminate the $558 Billion dollar Discretionary & Mandatory Spending Deficits Spending and start paying down the deficit?  President has included in the 2020 budget is “two-penny” plan where all spending would be cut by 2% except for the military, Social Security and Medicare.  The goal is to eliminate deficit spending within 5-7 years through budget cuts and economic growth.  Once deficit spending turns positive, then the deficit will start to shrink.  

Welfare Reform:  All Welfare programs, Medicaid, CHIP, SNAP etc.,  need to be streamlined and simplified under a single agency to eliminate duplication and abuse.  Many estimates point to $200B in waste and fraud alone in these programs.

Stop Illegal Immigration:  Build the wall, eliminate chain immigration, Visa Lotteries, open amnesty laws, make E-Verify mandatory and with stiff penalties, deport Visa overstays, and make it illegal for illegal aliens to receive any welfare assistance.  By eliminating the costs of illegal immigration discussed at the top of this article, we can save an additional $200B and provide decent wage increases for entry-level positions and add to our GDP.

Eliminate Department Overlap:  Eliminate Wasteful or Duplicate Federal Department Functions:  The department of Energy, Education, Veterans Affairs, Health and Human Services, Interior, Agriculture and others can be streamlined and in some cases folded into another agency.  Most function as grant administrators rather than perform an actual function or add to the overall output of our economy.  Energy, Agriculture and Interior have a lot of synergy and could be combined;  Labor and Education are synergistic by their very nature.  

There are many more cost saving measures that can be undertaken but it will take a fiscally conservative Congress to work with the President to accomplish them.  The current crop of socialist that are overtaking the Democrat Party are not going to sit by and watch this happen quietly!

Add US Economy Investments to Social Security and Medicare Trust Funds:  

Open both funds so the administrators can start investing some of the revenue and surplus into market securities such as the S&P 500.  Gradually allow a percentage of market securities to be included to perhaps a cap of 50%.  This would allow for the 10 year treasury bonds to provide somewhat a buffer in the event of a prolonged market downturn.  But, even during the Depression, the 10 year bonds did not do any better than market securities.  

This move would allow Social Security and Medicare to become self-funding in perpetuity.  Medicare does need some streamlining and cost cutting but the current administration is already addressing much of this and their moves will lower healthcare costs overall to the US consumer.  Just think, instead of your “$100 investment” in 10 Year Treasuries being worth $7,308 over the past 90 years, you could have added $191,275 to your $100 investment! (50% investments in the S&P 500).  Politicians will screw this one up big time!

Conclusions:

The crisis at the border is not only a current immigration, asylum, humanitarian, health and crime issue, it is a long-term economic and social crisis.  The costs and the wage depression impacts are unsustainable to say the least.  The very core social fabric is at risk as well as our historical norms and mores.  Eventually the costs and wage depression associated with illegal immigration will swell to $500,000,000,000 if current levels of illegal entry are not checked substantially.

The national debt is real and it is important.  It is also too much for the current Congress to deal with.  Without a fiscally conservative, gutsy group of men and women in Congress they will keep kicking the ball down the field and ignoring the debt.  You should know that without doing much of anything, the annual federal spending will rise at 6-8% per year as the Congress has basically put the budget process on auto-pilot!  The President’s “2-Cent” plan does not have a chance in this 116th Congress as the House Democrats will block it and the Mitch McConnell wimpy RINOs don’t have the stomach for a fight that is truly for the soul of this country.

2020 is right around the corner.  All this can be solved by your vote for fiscally conservative politicians…

RD Pierini

@RDPierini

 

Note 1:  Federal Spending used much of the State and local spending for these programs originate with the Federal Government.

Note 2: The Edward Byrne Memorial State and Local Law Enforcement Assistance Grant Program or the Byrne Formula Grant Program is a federal grant provided to states from the U.S. Department of Justice (DOJ) Bureau of Justice Assistance (BJA) division. This grant aims to help law enforcement agencies enforce and strengthen local and state laws designed for serious offenders or violent criminals. 

Note 3: Link to Investment Table Comparisons:  http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

Note 4:  Some SS and Medicare revenue and expenditures include non core outlays for disability and other welfare expenditures.

Hat Tips

https://cis.org/

https://www.fairus.org/issue/publications-resources/fiscal-burden-illegal-immigration-united-states-taxpayers

https://www.reuters.com/article/us-usa-immigration-outbreaks/more-than-2000-migrants-quarantined-in-u-s-detention-centers-due-to-disease-outbreaks-idUSKBN1QR0EW

http://fairus.org/issue/illegal-immigration/scaap-data-suggest-illegal-aliens-commit-crime-much-higher-rate-citizens

http://www.usdebtclock.org/#

https://en.wikipedia.org/wiki/Government_spending_in_the_United_States

https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp

 

Democrats-A Party Without A Cause In 2018

Illegal Immigration Is the “Salvation” for Democrats in 2018/2020, Really!

See the source image

There is no doubt that the Democrat Party has locked itself in as an “Identity Party” by polarizing various target groups such as women, LGBT, Blacks, non-Christians, and Hispanics, and anyone else they can turn into victims.  In doing so, the only way to herd their flock into lockstep is to make sure that the economy is mediocre or bad so many of their flock are seemingly disenfranchised, that their flock groups feel threatened by the evil conservatives who are trying to return them to slavery, economic or social bondage.  The toughest task the Democrat herders face is to insure that one or more of their groups are not at odds with other group(s).  

During the Obama years of economic stagnation and the demise of opportunity and economic and social advancement, the Democrat groups pretty much towed the Democrat progressive line and kept their hands out for government subsidies to seemingly make up for their lack of opportunity caused by anyone else but themselves and their wonderful Democrat/Progressive masters. 

But!  Donald Trump stormed onto the scene with a message of economic hope, true socio-economic opportunity, and a clear emphasis on the middle class regardless of sex, sexual orientation, religion, or race.  He even challenged Black voters, “What the Hell do you have to lose?”  Trump cracked the once solid Democrat identity politics herd by introducing the chance for a better life regardless of which herd group you had been corralled into by the Democrats.  Further, Trump’s message of safety, strength, and pride lifted many out of despair that had heretofore not participated in the political process of voting.  Even the once solid Democrat stronghold of Union membership shifted from the Democrat herd to Trump with Trump garnering 42% of the union vote!

But, where does illegal immigration fit into this discussion and specifically to the 2018 mid-terms and the 2020 Presidential race?

The Coastal Democrat/Progressives have tripled down on illegal immigration and illegal immigrants living in the US in the past 18 months.  Sanctuary States and Cities have become the norm for the left and right coasts to the exclusion and detriment of the legal residents of those states.  Those same states have tripled down on socialist, high taxation, and welfare state, policies that have created a degree of homelessness never seen before and the death of their middle class that cannot survive the high taxation, low employment opportunity, and unrealistic housing costs.  They are substituting their once strong citizen middle class with illegal aliens.

California is leading the legal battles against the Trump Administration and are outright defying Federal Laws on immigration and immigration enforcement.  The California Governor and his administration have passed laws in direct conflict with US Immigration law and the US Constitution.  Recently, the Mayor of Oakland, a prior member of the Governor’s staff, warned illegal immigrants that Immigration and Customs Enforcement (ICE) would be arresting illegal immigrants who had committed crimes and were subject to deportation.  This warning allowed over 800 ICE targeted illegal criminal aliens to avoid capture and deportation and to remain in the Bay Area to prey on local, legal and illegal members of the community.

So, by promoting Sanctuary States, Cities, and Counties, the Democrat Party has decided to place the fate of illegal aliens, including criminal illegal aliens, at the forefront of their party to the exclusion of their prior target groups such as women, LGBT, Blacks, non-Christians, legal Hispanics and victims in general.  47% of likely voters in these states oppose their State’s sanctuary designation!  The safety of all women, LGBT, Blacks, non-Christians, and legal Hispanics are put at risk by these policies.  The coastal State’s spending on supporting illegals is robbing their citizens of funds, while being the highest taxes States in the US, to improve their communities while creating a homelessness problem in once beautiful cities is a blight unlike the ghettos in third world countries.

See the source image  

Impact On Other Democrat Party Identity Groups

Prioritizing and promoting an influx of illegal immigration into a job market drives down wages for legal residents, especially for Blacks and Hispanics.  This policy also increases the burden on local schools and drives down the quality of education and the safety for legal students.  Welfare services are likewise stretched and draw down on the State and local governments resources.  Coddling illegal criminal aliens and preventing them from being deported puts all of the State’s residents at risk and the Democrat target identity groups are not immune from these risks, in fact, the poorer Black and Hispanic families are often the target of these criminals.

Just to be clear on how great a risk criminal illegal aliens are, consider the following.  Illegal aliens, criminal and non-criminal, make up only 3.7% of the total US population But, they have been charged with and/or convicted of 13.6% of the total crimes committed in the entire US;  responsible for 12% of the murders, 20% of kidnappings, 16% of all drug dealing, and thousands who have been convicted of sex crimes and not yet deported.  

So, how are the Democrats going to use Illegal immigration as their flagship issue in 2018/2020 when this element of our population:

  • Drives down wages for Democrat leaning Blacks.
  • Drives down wages for Democrat leaning legal Hispanics.
  • Robs this nation and their constituents of a net $115 Billion dollars per year in government services provided to support the illegal alien community.
  • Detracts from equality issues for women,  Blacks, Hispanics, the LGBT community, Muslims and other Democrat victims.
  • Robs inner cities of valuable funding that is siphoned off to support illegal aliens rather than being allocated to community development and safety.
  •  Diverts law enforcement resources an decreases the safety of its female,  Blacks, Hispanics, the LGBT community, and Muslims. 

I posit that the Democrat strategy to promote the causes for illegal aliens is a big loser for the Democrat/Progressive chances in 2018/2020!

Republicans in 2018 can only defeat themselves which is not out of the realm of possibility.  If they would adhere to Trump and his agenda, they could pick up 8 more Senate seats and hold the House.  The Republican majority in the Senate needs to start acting like a party in power by confirming all of Trump’s appointees and paring down to a 51 vote majority rule to pass the House bills that are stuck in the do-nothing Senate!  They have Trump’s regulation and tax reform economy to fill their sails into a victorious Mid-Term!  By November, Trump’s tariff/renegotiated trade agreements will add even more jobs to the economy and entice even more investment in the US.  

If the House and the Senate Republicans do stick by Trump’s guns, they will benefit from a higher percentage of the Black, legal Hispanic, and women’s vote.  Why do I say this?  In 2016, Trump already had chipped away at these normally strong Democrat strongholds.  The following voting blocks are where Trump can help the Republicans who are up for re-election.

  • LGBTTrump took 14% of their vote in 2016.  Since then, with the mass shootings, many in the LGBT community have become gun owners and many have joined the NRA.  Safety is a key issue for this group along with jobs and equal opportunity protections.  Trump is proving to more of this community that he does not represent a threat to their way of life but has proven that he can be good for them by providing economic, political and personal security.
  • Blacks: Trump took 8% of the Black vote in 2016.  Since then, his economic policies have driven Black unemployment down to historic lows.  His outreach through HUD and HHS are improving inner city and rural Black community’s quality of life.  He is restoring life to failed cities like Detroit by bringing back entire industries.  Once he gets Congress to act on a comprehensive Education program via Betsy DeVos, Blacks will finally realize their dream for their children through school choice.  Republicans can campaign on these Black community achievements and garner more of this demographics vote than they could imagine.  In 2020. Trump could get close to 20% of the Black vote for his 2nd term re-election!
  • Legal Hispanics:   Trump took almost 30% of the Hispanic vote in 2016.  Trump’s 4 pillar immigration/DACA proposal and his pushing for a DACA solution has won over many of the legal Hispanic voters.   Trump’s economic message and actions have soared employment levels for Hispanics and his SBA programs have swelled the ranks of new Hispanic small businesses.  Trump’s Christian message also resonates with many in the Hispanic community. Republicans need to campaign on Trump’s successes for the Hispanic community and stay behind Trump until the mid-term elections.  If the Republicans in Congress appear to be fighting Trump on immigration reform and border security or his economic programs, they could risk not getting a high percentage of the Hispanic vote.  I predict that in 2020 Trump will 40-45% of the Hispanic vote.
  • Women:   Trump took 41% of the total female vote, 47% of the married women, and 33% of the non-married women in 2016.  Democrats bet their 2018 chances on the #MeToo movement that is turning out to be a nightmare for themselves and their Hollywood and main stream media lackeys!  They will keep dredging up stories about Trump but the economy will trump #MeToo as it applies to Trump in 2020.  Economic and physical security mean a great deal to women voters.  If Trump can fend off North Korea, Iran, Syria and Russia and stalemate any threat from them, this will add to his side of the ledger.  The Democrats have no real economic, physical security or foreign policy message at all.  Obama/Clinton foreign policy is proving to be even more feckless every day.  Republican campaigners need to stay on the Trump message of strength, economic security, physical safety, and foreign policy security and they will garner a majority of the female vote.  Wouldn’t wait for Jennifer Lawrence nor Ashley Judd but I would question myself if they voted for me!

The Democrats have not learned that you cannot create pockets of identity voters and expect them to vote against their own interests, economic, safety, and quality of life.  You can’t prop non-citizens against citizens and expect your pockets of identity voters to stick with you!  Carvell reminded us that it is the Economy Stupid.  He could have said It Is My Self Interest Stupid!

RD Pierini

@RDPierini

Hat Tips

http://dailycaller.com/2018/03/09/democrats-abolish-ice/

http://www.foxnews.com/us/2015/09/16/crime-wave-elusive-data-shows-frightening-toll-illegal-immigrant-criminals.html

http://www.pewresearch.org/fact-tank/2016/11/09/behind-trumps-victory-divisions-by-race-gender-education/

https://en.wikipedia.org/wiki/United_States_presidential_election,_2016

Paul Ryan Wrong to Prioritize “Entitlements” in 2018!

Ryan Is Ignorant of Sound Fiscal Concepts & A Phased Limited Approach Methodology!

Apparently Ryan and McConnell are bickering over Ryan’s desire to push for “Entitlement” reform in 2018, a mid-term election year!  There are a couple of issues with this picture.  One, Donald J. Trump is the President of the United States, and he, not Ryan, will set the priorities!  Two, Ryan thinks that Social Security and Medicare are part of his definition of “entitlements” that also include Medicaid, Welfare, Food Stamps etc..  Third, to take on “entitlements” during a mid-term election year shows Ryan’s tone deafness when it comes to hanging onto the third rail of politics (entitlements) while trying to hold onto majorities in the House and Senate!  But, none of these three issues are not really the major issue!

The Major Issue is that President Trump has just passed, with some help from Ryan and McConnell, the largest tax cuts and tax reforms in decades.  The economy needs time to react to these fiscal policy changes so we can determine its impact on the economy and on the so-called ‘ENTITLEMENTS’.  

Change Management Principle:  Engineers know the basic principle of Change Management is that you implement one change at a time and assess its impact before moving onto the next change.  If not, it may be impossible to know which change is really responsible for the desired or undesired results and what the impact of multiple changes are on each other!  The tax policy changes and cuts will begin to be melded into the US economy during 2018 and beyond.  Trying to change a major cost driver in our economy while a major revenue driver is being rolled out is idiotic and fiscally unsound!

Tax Cuts and Tax Reform Will Change the Dynamics and Fiscal Make-up of “Entitlements”:  Tax cuts will allow the GDP to swell to 4%+ adding at least $5 Trillion to our annual GDP over the Obama years.  Tax cuts will increase the demand for goods and services from private sectors corporations and businesses by putting more money in the pockets of 80% of our taxpayers.  Tax cuts for corporations and small business will incentivize them to add facilities, increase production to meet the new demand, and ADD MORE EMPLOYEES.  The more people that are employed, the lower the demand for Entitlements such as welfare, Medicaid, Food Stamps, etc…  

Since the Tax Cuts and Tax Reform will dramatically change “entitlements”, Ryan will be trying to hit a moving target in terms of the demand for services by the unemployed and under-employed!  As more people leave welfare, more people will no longer need Medicaid.  As more people are gainfully employed, the less demand there will be for Food Stamps.  The Obama era swelled the Food Stamp participation to 47.6 million people and the Trump economic recovery has dropped the usage to 42.6 million people.  President Trump will tweak these entitlements over the next two years as the economy and employment continue to improve.

Social Security and Medicare:  Until the Trump Tax Cuts and Tax Reform impact matures in 2019, it is idiotic to propose any changes to these programs.  The higher the level of employment, the more people will be paying into both Social Security and Medicare.  The Obama normal of a low labor force participation rate, reduced the number of people paying into Social Security and Medicare.  

Also, since disability is a part of the Social Security funds, more able bodies people will be dropping disability!  During the Obama 8 year depression, people who no longer qualified for unemployment benefits applied for and were granted disability payments.  The Trump economy will reverse this trend.

Tweak-Eliminate Public Sector Retirement Systems:  The one tweak President Trump and Ryan can propose is to eliminate the carve out for public sector employees to be exempted from Social Security and Medicare.  It is typical that government treats itself better than it does its citizen tax payers!  Allowing government employees to contribute to a separate Public Employee Retirement System (PERS) is discriminatory and weakens the Social Security system.

Earth to Ryan:

  1. You are not the President, you are two levels below the President.
  2. President Trump is President, you are not!
  3. President Trump received the mandate in the last National Presidential Election, you did not.
  4. Let the Tax Cuts and Tax Reform kick in and jump start this economy.
  5. Follow Trump’s lead, it is a better view than the one you would see from your home in Wisconsin if you lose the 2018 mid-terms.  The President created an $11 Billion dollar empire, you won an election in a small district in Wisconsin and really have never had a real job.

Go to Camp David with the President and Mitch and listen to the President.  Remember this phrase;

YES MR. PRESIDENT!

 

If YOU are talking, YOU are not learning!

See the source image

RD Pierini

@RDPierini

 

Hat Tips:

https://www.newsmax.com/politics/ryan-mcconnell-entitlement-reform/2017/12/27/id/833921/

http://www.breitbart.com/big-government/2017/07/20/food-stamp-use-falls-lowest-level-seven-years/