Personal Economics 101

Trillion Dollar Deficits as Far as The Eye Can See From Investopedia The Senate and the U.S. House of Representatives passed a funding bill on Saturday evening, avoiding a shutdown.  The bill will fund government operations through November 17, leaving the door open for future negotiations. It includes natural disaster relief, but there is no additional funding for Ukraine to continue fighting Russia. There is also no additional funding for border security, but it does have funds to keep the Federal Aviation Administration operational. The House bill received strong Democratic support after Republican Speaker Kevin McCarthy reversed his stance on seeking bipartisan support. Lawmakers  worked to avoid the federal government's fourth partial shutdown in a decade, which was set to come into force at 12:01 a.m. Sunday (Oct 1). The Democratic-majority Senate passed the bill. The House voted 335-91 to continue funding the government for 45 days and received more support from Democr...

History Channel: How Many Times Has the Federal Government Shut Down? In the United States, a government shutdown happens when there is a gap in federal funding and the government furloughs federal workers without pay. Although there are exceptions for certain “essential” employees (including the president and members of Congress, all of whom continue to receive pay) a shutdown means that a large portion of the federal government stops functioning . Kelly Evans: The $2 trillion deficit: how did we get here? It’s a little unnerving that we’re seeing record budget deficits, soaring government debt, and steadily rising interest rates--all at the same time. How much of this can be undone? And how did we get here? The short answer is, government spending remains notably higher than it was pre-Covid, while revenues are more or less the same. And the fact that both deficits and debt are higher than in the past while our borrowing costs have soared means that paying interest is also taking up ...

By JIM GERAGHTY, National Review Here’s an observation about the Republican presidential primary: Every now and then, I’ll hear someone express a preference for a candidate with the words, “I like what he’s saying.” I don’t want to disparage anyone’s criteria for picking a candidate, but I will note that saying things that you, the voter, like to hear is really just about the easiest part of running for president. You don’t have to actually do anything; you just toss out a bunch of ideas and repeat the ones that get the most applause. Anybody can show up and promise, “I’ll do this,” or “I’ll do that.”  And the candidates who are really unprepared for the job think it will be easy. There’s only so much a president can do with executive orders, given that the next president of the opposite party can rescind such orders with the stroke of a pen. To really enact lasting changes, a president must be able to persuade Congress to turn his agenda into law.  The job of the president is...

Why economic forecasts are unreliable. Or maybe it's the CBO. The Fed and most economist have not done very well, historically. This chart shows projections for inflation compared to actual inflation. 

Joe Biden signed into law the horrific Inflation Acceleration Act – which, as you know, increases government taxes and spending by roughly ANOTHER $750 billion. One of the groups that betrayed taxpayers and fiscal sanity in this fight was the inaptly named Committee for a Responsible Federal Budget. To believe this bill will lead to a “responsible federal budget” is about as divorced from reality as to believe that this is an “inflation reduction act.” Yet here is the statement that Maya McGuineas of CFRB put out to the press: This legislation focuses on lowering health care and energy costs, raising revenue, and reducing deficits and is exactly what the doctor ordered. Senator Manchin deserves tremendous credit for pushing this fiscally responsible reconciliation bill. I'm speechless. The Heritage Foundation reports that the bill will INCREASE the deficit by “at least $110 billion through 2031.” The bill raises $300 billion for corporate give-always for the climate change industri...

S ome people think America's main fiscal problem is the gap between the two lines. In other words, they worry about deficits and debt. But the real problem is government spending. And that's true whether the spending burden is financed by taxes, borrowing, or printing money. Full story here .

Technically, because GDP was negative for two quarters, it's a recession. However, there are caveats to current economic conditions, which mean if it is a recession, it's very mild. And there's still that pesky 2yr/5yr bond rate inversion (2.9/2.72). It's inflation that is the beast, which will undo everything.   T he GDP Price Index came in at an 8.7% increase, well above expectations of an 8.0% gain and compared to the unrevised 8.2% rise seen in Q1. By Kelly Evans The Exchange , CNBC Why was real GDP negative in the first half of this year? Because inflation ate up all the gains. The bombshell report this morning showed that real GDP shrank again in the second quarter, by 0.9% annualized, after a 1.6% drop in Q1. But wait, how can real GDP be shrinking while the labor market at the same time added 2.7 million jobs, and the unemployment rate fell from 4% to 3.6%? Because inflation ate up all the real economic gains. Nominal GDP--actual dollars before any adjustment fo...

From March 2020 through June 2022, the federal government added $7 trillion in debt. To put that in perspective, the federal debt reached a total of $7 trillion in 2004, covering a span from George Washington to the first term of George W. Bush. That means the federal government has racked up 215 years’ worth of debt in just 27 months. While some amount of deficit spending might have been hard to avoid during the worst of the COVID-19 pandemic, Washington kept breaking out the credit card to continue an unnecessary and wasteful spending spree, oversaturating the economy and making inflation problems inevitable.

Massive spending increases for various bureaucracies is the most offensive part of Biden’s new budget. These huge budgetary increases (well above the rate of inflation, unlike what’s happening to incomes for American families) were not the most economically harmful feature of Biden’s plan. That dubious honor belongs to either his massive expansion of the welfare state or his big tax increases. The Wall Street Journal editorialized a couple of days ago about what the president is proposing. A President’s budget is a declaration of priorities, so it’s worth underscoring that President Biden’s new budget for fiscal 2023 proposes $2.5 trillion in tax increases over 10 years. His priority is taking money from the private economy and giving it to politicians to spend. …Raising the top income-tax rate to 39.6% from 37% would raise $187 billion. Raising capital-gains taxes, including taxing gains like ordinary income for taxpayers earning more than $1 million would snatch $174 billion. Raisin...

A bond selloff (lower prices means higher yields) is deepening after Monday's (March 21) comments from Jerome Powell, which said the Fed is prepared to act even more aggressively to tackle inflation. The yield on the 10-year Treasury has soared 20 basis points to 2.32% since the remarks, leading to the worst month for the asset class since 2016. Meanwhile, the 2-year Treasury yield broke above 2%, jumping almost 24 bps over the past 24 hours to reach 2.19%, as the yield curve hurtles towards an inversion (or one of the best indicators of a coming recession). Stocks are hanging in there despite the latest comments - closing in positive territory yesterday - while futures linked to the major averages are up another 0.4% Tuesday morning. Quote: "If we determine that we need to tighten beyond common measures of neutral (i.e. an interest rate that neither hinders nor fuels economic growth) and into a more restrictive stance, we will do that," Jerome Powell announced during a s...

President Biden at his State of the Union address vowed to fight inflation, though that has been a struggle, with consumer prices soaring 7.5% over the past 12 months.  Biden said during his speech before Congress: "My top priority is getting prices under control. We have a choice. One way to fight inflation is to drive down wages and make Americans poorer. I think I have a better idea to fight inflation: Lower your costs, not your wages. Make more cars and semiconductors in America. More infrastructure and innovation in America. More jobs where you can earn a good living in America instead of relying on foreign supply chains, let's make it in America. My plan to fight inflation will lower your costs and lower the deficit." Even if making it (supplies?) in America would work, it would take several years, but that is not the underlying cause of inflation. Inflation is caused by two major factors: Too much money in the financial system and more demand than supply.  U.S. Inf...

Teachers unions are angry about school choice. Of course they are, because they know they can't compete with private schools, and private schools are generally unionized, and don't generate funds for the unions. More money equals more power. It's not about the kids. It's about self-interest and power.  We are continually told that public schools are underfunded. We must pay more in taxes. This is hogwash. School funding is at an all-time high. More money goes to administration and reporting than education. This all began when the Federal government got involved, and the Department of Education was formed.  Don't buy into the left's mantra of more control of education. Parents are starting to fight back by insisting that they are heard and have input into their children's education, though the left believes the state should raise the children (like in Germany in the 1930s).  Just between 2002 and 2019, inflation-adjusted revenues grew by nearly 24%. Yet the r...

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From " The Truths We Dare Not Speak " by Victor David Hanson, Phd.  Everyone knows the government cannot keep running up astronomical annual deficits. It is piling up a near $30 trillion national debt, printing trillions of dollars—and hoping to keep inflation down to 7 percent per year. Everyone knows that, and no one wishes to talk, much less do anything, about it. Instead, we simply will go on redistributing money, inflating the economy, and hoping that the middle classes are naïve enough to believe that their inflated paychecks outpace their greater inflationary costs that, in truth, have more than wiped out all their wage gains. When the interest rate hikes invariably come—the longer we wait, the worse will be the reckoning—we will again know the stagflation of the 1970s and 1980s. The only calculus the Democrats weigh is whether they can print their way to a semblance of normality through 2022, in hopes the helium-over-inflated economy blows up only after the elections....

Following months of rumors and wrangling in the press, the White House has laid out its first concrete plans to reduce consumer prices - financing independent meat processing ventures. The plan goes against everything taught in Ecnomics 101. Government regulation, price controls, and/or subsidies can only make the problem worse, not better. This plan will probably have very little affect on the overall food industry. It seems more political optics, if anything. The funds will come from the American Rescue Plan, a billed signed into law earlier this year.  The Action Plan cites increased market share - four processors control 85%, 54% and 70% of the beef, poultry and pork markets, respectively - leading to fatter margins for middlemen, lower prices for ranchers and higher costs for consumers. The White House has directed $375M to grants for new projects at independently owned processors; $275M will go towards direct loans; $100M towards loan guarantees; $100m towards workforce train...

Treasuries are mixed after seeing some pressure yesterday as the Federal Reserve expectedly announced that it will speed up the tapering of its monthly asset purchases. The yield on the 2-year note is declining 6 basis points to 0.61%, and the yield on the 10-year note is decreasing 3 bps to 1.43%, while the 30-year bond rate is ticking 1 basis point higher to 1.87%. Many stocks are up today as well.  Why? First of all, the market loves certainty. Knowing what to expect on the macroeconomic level next year goes a long way for investors that are closely watching their portfolios, as well as an assurance from the Fed that it is taking inflation seriously. Powell also balanced his rates outlook with a strong dose of optimism about demand and income, and confirmed that "we're making rapid progress toward maximum employment." Weekly initial jobless claims came in at a level of 206,000 for the week ended December 11, versus the Bloomberg consensus estimate of 200,000 and compar...

Woke Got What It Wanted By Victor David Hanson Stanford University The “woke” movement was giddy after Jan. 20, 2021. The left controlled both houses of Congress.President Joe Biden was drafted as the necessary veneer of 1980s Democratic normality to ram through an otherwise hard-left agenda. All the major cultural, financial, economic, entertainment, and media institutions had played various roles in seeing former President Donald Trump not just defeated, but also impeached, twice. He was written off as persona non grata after the Jan. 6 riot at the Capitol. So, academia, corporate boardrooms, Hollywood, the media, the Pentagon, professional sports teams, Silicon Valley, and Wall Street in near hysterical fashion all boarded the woke train. All boasted of ferreting out “white rage” and hiring legions of “diversity, equity, and inclusion” czars. Read more... Reducing a Great Republic to Despotism By Larry P. Arnn Hillsdale College Listen to Fauci on Face the Nation, dismissing his crit...

Buried in the Budget Reconciliation Is the End of Right-to-Work, Independent Contractors; Climate Change Among the various major provisions of the PRO Act is effective nationalization of California's AB5 law that passed in 2019. This law makes hiring independent contractors much more difficult and specifies that contractors must be reclassified by businesses that hire them as employees, unless they meet specific and rigorous standards allowing them to stay independent. Read full article... Biden on Energy Crisis: Begging Others to Save Him From Himself It is on the costs of energy where Biden’s failures are most starkly visible. On his very first day in office, Biden scrapped the Keystone XL pipeline, killing 11,000 jobs in the process and making good on his campaign promise to be hostile to the fossil fuel industry. Continuing his assault on natural resource development, Biden suspended oil and natural gas leases in Alaska. Former President Donald Trump had propelled America to en...

In a study just published by the Club for Growth Foundation, co-authored with Robert O'Quinn (former Chief Economist at the Department of Labor), they estimated the likely economic impact of President Biden's so-called Build Back Better plan to expand the welfare state. Here are the main findings: A loss of $3 trillion of economic output over the next 10 years A loss of $1.6 trillion of worker compensation over the next 10 years A loss of more than $10,000, on average, in compensation for workers over the next 10 years A lifetime drop in living standards of almost four percent for young workers What's especially noteworthy about the study is that they based their analysis on research published earlier this year by the Congressional Budget Office . In other words, a very establishment source. Biden's fiscal agenda would made the United States more like Europe and the economic data unambiguously demonstrate that Europeans suffer from significantly lower living standards...

 Americans still stranded, including high school students. https://youtu.be/G7vnpqoR81o Larry Kudlow shreds Biden's 'anti-work' policies. https://youtu.be/_hFjJtuIpm8