Tag Archive for: BidenInflation

The Inflation ‘Reduction’ Act – Really?? Are You Kidding?? Calling Senator Sinema

Estimated Reading Time: 2 minutes

The $739 billion Inflation ‘Reduction’ Act of 2022 – really?? Are you kidding?? Joe Manchin, Chuck Schumer and Joe Biden are attempting to rapidly hoist this Senate bill on America before the coming recess to reduce inflation!

Does any sane American (sane = common sense, attached to reality) actually believe this totally partisan and desperate legislation arriving months before the November 8th reckoning will reduce the Biden inflation caused by uncontrolled federal spending and the attack on energy in America?

After appearing as a rare, sane and pro-American Democrat, Manchin now claims his elevation to the world’s oldest profession from the political profession, a close second.

This legislation, to be passed by reconciliation (50 votes plus the Vice-President), will be economically devastating to Americans and make the economic crisis in America much worse as recession deepens and severe inflation goes higher.

The bill includes a higher tax burden on all classes of taxpayers and small businesses (where American jobs are created), hundreds of billions for the Green New Deal, over $250 billion taken from Medicare and a host of other hostile provisions hurting the working folks and producers in the nation. The enviro-left-Democrat base is cheering the Democrat Senators on to ‘save the planet’.

Who is left among the Senate Democrats to stop this assault on economic and energy policy, in effect a crushing of the middle and lower classes? There is one person – the one who previously stood with Joe Manchin against eliminating the Senate filibuster, against packing the Supreme Court, against spending 5 trillion dollars on Build Back Better, etc., etc.

It is Kyrsten Sinema of Arizona. Contact her now and be loud and clear – her political future is at stake and she may be the only Senator who can actually stop this craziness and threat to America’s future.

She is on the ballot in 2024 and has billed herself as an independent, maverick styled politician. Remind her that Arizonans reject this damaging, partisan election year legislative stunt and will reject her if her name is on it.

Let Senator Sinema know that her name is now the only important name – she is the one Senator who can kill this bill at a time of recession and galloping inflation. The state she represents is polling decidedly against the Inflation Reduction Act of 2022 and a vote for it by her will not be forgotten or forgiven.

See the TAKE ACTION link below to contact Senator Sinema and inform her of the consequences of caving to Chuck Schumer and Joe Biden.

Although Senator Mark Kelly is a predictable and loyal shill for Chuck Schumer and does what he is told, he is on the ballot this November and is very vulnerable. Delivering the same message to Kelly is appropriate and might be helpful even if his vote is quite predictable.

The Biden Administration Says US Not in a Recession, but Federal Statutes Say Otherwise. Who is Right?

Estimated Reading Time: 4 minutes

Is the US economy in recession? The answer is, paradoxically, both easier and more complicated than you might think.

As expected the United States posted negative growth for the second consecutive quarter, according to government data released on Thursday.

“Real gross domestic product (GDP) decreased at an annual rate of 0.9 percent in the second quarter of 2022, following a decrease of 1.6 percent in the first quarter,” the US Bureau of Economic Analysis announced.

The news prompted many outlets, including The Wall Street Journal, to use the R word—recession, which historically has been commonly defined as “economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

The White House does not agree, however, and following the release of the data, President Biden said the US economy is “on the right path.” 

The comments come as little surprise. Treasury Secretary Janet Yellen had recently hinted that the White House would contend the economy wasn’t actually in a recession even if Q2 data indicated the economy had contracted for a second consecutive quarter.

“There is an organization called the National Bureau of Economic Research that looks at a broad range of data in deciding whether or not there is a recession,” Yellen said. “And most of the data that they look at right now continues to be strong. I would be amazed if they would declare this period to be a recession, even if it happens to have two-quarters of negative growth.”

“We have a very strong labor market,” she continued. “When you are creating almost 400,000 jobs a month, that is not a recession.”

Yellen is not wrong that NBER, a private nonprofit economic research organization, looks at a much broader swath of data to determine if the economy is in a recession, or that many view NBER’s Business Cycle Dating Committee as the “official recession scorekeeper.”

So White House officials have a point when they say “two negative quarters of GDP growth is not the technical definition of recession,” even though it is a commonly used definition.

On the other hand, it’s worth noting that federal statutes, the Congressional Budget Office, and other governing bodies use the two consecutive quarters of negative growth as an official indication of economic recession.

Phil Magness, an author, and economic historian points out that several “trigger” provisions exist in US laws (and Canadian law) that are designed to go into effect when the economy posts negative growth in consecutive quarters.

“For reference, here is the definition used in the Gramm-Rudman-Hollings Act of 1985,” Magness wrote on Twitter, referencing a clause in the Act. “This particular clause has been subsequently retained and replicated in several trigger clauses for recessionary measures in US federal statutes.”

It’s worth noting that Magness doesn’t contend the two consecutive quarters definition is the best method of determining whether an economy is in a recession, but simply points out that claims that it’s an “informal” definition of recession are untrue.

“It may not be a perfect metric, but it has a very long history of being used to determine policy during recessions,” Magness writes.

Some readers may find it strange that so much heat, ink, and energy is being spent on something as intangible as a word, which is a mere abstraction that has no value. And some policy experts agree.

“Whether [we’re] in a technical recession is less interesting to me than the following 3 questions,” Brian Riedl, an economist at the Manhattan Institute, recently said. “1) Are jobs plentiful? (Yes – good) 2) Are real wages rising? (Falling fast – bad) 3) Is inflation hitting fixed-income fams? (Yes – bad.)”

Others contend that definitions matter, and that by ignoring the legal definition of recession, the Biden White House can continue to argue that the US economy is “historically strong” even as economic growth is negative, inflation is surging, and real wages are crashing.

As Charles Lane recently pointed out in the Washington Post, words have power. He shares a colorful anecdote involving Alfred E. “Fred” Kahn, an economist who served in the Carter Administration who was instructed to never use the words “recession” or “depression” again.

In 1978, Kahn — a Cornell University economist in charge of President Jimmy Carter’s inflation-fighting efforts — said that failure to get soaring prices under control could lead to a “deep, deep depression.” Carter’s aides, perturbed at the possible political fallout, instructed him never to say that word, or “recession,” again.

We don’t know whether this instruction stirred the wrath of Kahn, a verbal stickler notoriously disdainful of cant and euphemism; in a previous government job, he had sent around a memo telling staff not to use words like “herein.”

It did trigger his wit, though: In his next meeting with reporters, Kahn puckishly said the nation was in “danger of having the worst banana in 45 years.”

Lane’s anecdote about Kahn is instructive because it reveals something important about these debates. While they may have a certain amount of importance as far as political spin goes, they are meaningless as far as economic reality is concerned. Substituting the word “banana” for recession did not change economic conditions or the economic outlook one bit, which no doubt was precisely Lane’s point.

My colleague Peter Jacobsen made this point effectively earlier this week.

“[You] don’t need a thermometer to feel if it’s hot outside,” he wrote. “Economic issues, especially inflation, top the list of concerns for voters going into the 2022 midterms, and it isn’t particularly close. So officially defined recession or not, it doesn’t really matter.”

Moreover, Jacobsen explains, macroeconomic data like GDP have historically been the tool of politicians and bureaucrats, who use them to justify economic interventions.

“When GDP numbers fall below a certain level, politicians can use that data to try to push income back up. Or perhaps when the economy is ‘running too hot’ politicians can use fiscal and monetary policy to slow down the economy.

All of these metaphors about economies running hot or stalling are based on a central planning view of the economy. In this view, the economy is like a machine which we can adjust to bring about the proper results. Without macroeconomic statistics, central planners have fewer means by which to justify particular interventions. We can’t claim we need stimulus if we can’t point to some data indicating it’s necessary.”

The takeaway here is an important one. We don’t need “bureaucratic weathermen” telling us when the economy is good or bad any more than we need them “managing” the economy with the money supply, which is precisely how we got here in the first place.

So while the debates over the R word are likely to continue, it’s important to remember it doesn’t really matter if you call this economy a recession or a banana. The fundamentals speak for themselves.


This article was published by FEE, Foundation for Economic Education and is reproduced with permission.

Leave the Gas Station Owners Out of It

Estimated Reading Time: 5 minutes

Over the Independence Day weekend, the Biden Administration shifted its blame for rising prices, and specifically rising prices of gasoline, from Vladimir Putin to gasoline retailers. On Saturday, July 2nd at noon, President Biden’s Twitter account inveighed:

My message to the companies running gas stations and setting prices at the pump is simple: this is a time of war and global peril. Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.

On July 1, 2022,  the average price of gasoline in the United States was $5.34 per gallon. That’s down from the high of $5.47 per gallon hit two weeks ago, but still a historically elevated level.  On the New York Mercantile Exchange (NYME), gasoline futures prices are up 57% in 2022. Diesel recently topped $5.75 per gallon and now sits at $5.73 per gallon, its highest price in decades.

The largest factor input for both gasoline and diesel is the price of oil, which has eased back some over the last month. The major reason for the price declines in both oil and products derived from oil are a mounting accumulation of economic data suggesting that an anticipated recession may already be here. (The first calculation of the second quarter US GDP number will be released on July 28th.) But even despite the recent price declines, West Texas Intermediate (WTI) remains up over 37 percent in 2022, Brent Crude up 38 percent.

Both misinformation and disinformation are essential skills in politics, but under the pressure of rising inflation and slowing economic growth the current administration has expanded the practice to new frontiers. The tweet, which was undoubtedly not written by the President but to which he has lent his name, begins with a salvo directed at “the companies running gas stations.”

In fact, of an estimated 145,000 fueling stations across the United States, less than 5 percent (7250) are owned by refiners who would be, as the President says, “setting prices.” But even that small number of gas stations are not ultimately setting the price of gasoline. The prices first derived on world oil markets, a major contributor to which are decisions of the Organization of the Petroleum Exporting Countries (OPEC), is the major factor.

Further, more than 60 percent of retail stations are establishments singularly owned by a family or an individual. And while the number has undoubtedly changed over the last decade, 2013 Census data reported that 61 percent of those stations are owned by immigrants. Thus the Democratic administration that rails daily against billionaires and “big companies” has taken direct aim at ‘mom & pop’ stores, in so doing assaulting the newest arrivals to the United States, upon whom it is clear the left and much of the Democratic Party stake their political future.

As for the present time being one of “war and global peril,” how tied the interests of the United States are to either of the combatants in southeastern Europe is a matter of opinion. If indeed peril is to be avoided, adopting a far more neutral stance than that which has tens of billions of taxpayer dollars and lethal weapons being sent 5000 miles would be a wiser approach.

But it is by admonishing gas station owners to lower their prices that what is deep-seated ignorance, profound dishonesty, or both are exposed.

In fact, even at the current prices, most gas stations earn a pittance from, or actually lose money, selling gasoline alone. According to IBISWorld, whereas the average US business has a profit margin of just under 8 percent (7.7 percent), the average gas station scrapes by at less than a quarter of that: 1.4 percent. At $5.34 per gallon, the average national price of gasoline over the Independence Day weekend, a 1.7 percent profit would come to $0.09 cents a gallon.

The Hustle estimates that after overhead (labor, utilities, insurance, credit card transaction fees, and so on), a gas station owner receives on the order of five to seven cents per gallon. Even selling a few thousand gallons of gasoline per day would only generate a few hundred dollars free and clear to the owner. Franchise City estimates that $50 spent at the gas pump goes

$30.75 to the oil company, $7.00 to refineries, $4.00 to the delivery company, $1.25 on processing and transaction fees, and finally right at the end of the chain you get $1.00. And that number can and does change, sometimes even lower, most owners suggesting an average [profit] of 1 to 3 cents net per gallon.

Meanwhile, the Federal gasoline tax of $0.18 cents per gallon yields a riskless, unearned fee to Washington of 3.4 percent per gallon. That’s twice what risk-bearing entrepreneurs, most of whom are small business owners and a sizable portion of whom are immigrants, are receiving. And this doesn’t take into account state gasoline taxes, the highest five of which are found in Pennsylvania ($0.57 per gallon), California ($0.51 per gallon), Washington ($0.49 per gallon), New Jersey ($0.42 per gallon), and Illinois ($0.39 cents per gallon).

And none of this takes into account other costs and headaches which accompany gas retailing. Miniscule profits come with the costs and recordkeeping associated with environmental regulations at the local, state, and federal levels. Competition tends to be fierce, with numerous locations clustering at high-volume transportation junctions. The price sensitivity of many drivers is active at differences of as little as one cent. Many stations operate 24/7 to maximize revenue. And for those which operate as franchises, in return for name recognition and some volume discounts the associated fees can be enormous. (Not only do franchisees have to pay fees to the parent company, they also have to price their product in accordance with national promotions, which can undercut profitability.)

The awful business economics of gas station ownership is, in fact, why large oil firms and refiners are not interested in it. And it is why they’ve reduced their exposure to the consumer-facing end of the energy sector over several decades. Unsurprisingly it is lousy financial prospects that have pushed fueling stations into retailing food, drinks, cigarettes, toiletries, and a wide variety of other goods travelers may want or need. All of those goods have appreciably higher profit margins than retail gasoline sales, and for many independent, single owner-operated service stations are the key to their very survival.

So why do so many immigrants choose a business with seemingly dismal financial prospects? Trisha Gopal explored that question in Eater a bit over a year ago; kindly remain mindful of Biden’s July 2nd tweet while reading her explanation:

As I speak to each owner, I realize the choice of a gas station is always a utilitarian one. When I ask her why they chose a gas station, Angelina Rizo gives me two answers. The first is one I hear from every restaurant owner I speak to: People need gasoline, so as long as people are driving, the more likely they are to have customers, and the more likely those customers will need something to eat. It’s an explanation rooted in the same immigrant mentality I’ve seen and heard my entire life: Look for opportunities, stay on your toes, and always find a way to be useful. When we wonder why immigrants are so entrepreneurial, it’s because so many of us are taught to first look to see where we are needed, and then, once we are there, go beyond.

There is a darker component to Biden’s redirection of blame as well. It is ironic that an administration built upon an ideological commitment to political correctness and the notion that words should be selected with surgical precision would message this clumsily. Gas station owners, a business community overrepresented by new immigrants to the United States, have frequently been targets of racist and xenophobic ire. Saddling them with blame for a particularly damaging aspect of the ongoing inflation increase is, beyond wildly inaccurate, irresponsible, and morally unconscionable.

No one expects government officials, especially career politicians, to understand any of this. Neither have they any incentives to take real economic, financial, and business details into their static, oversimplified missives. The image of gas station proprietors as richly-compensated corporate executives at the helm of multinational corporations earning is one the Biden Administration has a vested interest in promoting. And there is no better measure of a political body out of ideas than an increasingly frenzied leap from scapegoat to scapegoat.


This article was published by AIER, American Institute for Economic Research, and is reproduced with permission.

Inflation And The Rule of 72

Estimated Reading Time: 2 minutes

In the world of investing, there is a well-known concept referred to as the Rule of 72. It states that because of compound interest, 72 divided by your rate of return will always yield the number of years necessary to double your initial investment. The simplest math to do it with would be that it takes 10 years to double your investment at a 7.2% interest rate (72 / 7.2 = 10). However, below is an excel sheet drawing out the rule with rates of one through ten percent.

Mortell Picture 1

Because inflation detracts from your return, the most accurate way to find how often the real value of your investment doubles is to actually measure 72 divided by the rate of return minus the inflation rate. Forty years ago, to achieve a fairly large real rate was fairly feasible even in the face of what was considered fairly high inflation. In 1982, exactly forty years ago, the average CD was a little over 14%. So even though inflation was over 6%, all it took to earn an 8% real return was a simple short-term CD. At that difference of about 8%, it would only take 9 years to double your money!

Times have changed. Inflation today is right about 8.6%. However, artificial interest rates being held low by the federal reserve has led to the average CD rate sitting below one percent. As a result, the real return is between negative seven and eight percent! This means that it would take between nine and ten years, not for your money to double, but rather it would take less than a decade for your investment to be cut in half!

Mortell picture 2

Even this is only telling part of the story. This is because between 1982 and today, we’ve also changed the way in which inflation was measured. By the old metric, inflation would actually be sitting at about seventeen percent. Plugging that into the Rule of 72 would give us 72 / (0.73 – 17), which tells us that it will take under five years for your investment to be cut in half!

Realistically speaking, it’d be all but impossible to maintain this 8.6% (or 17% by the old metric) inflation for ten years or even five years. Such prolonged inflation would either have to snap into a recession or snowball into hyperinflation as Americans gave up all faith in the dollar. However, it is an important lesson in just how impactful inflation really is. It’s not always the most exciting, front-page topic, but inflation is so much worse than the brutal gas and home prices we are dealing with – though those are already crippling. It is on a high speed track to crippling and most literally halving the real return of your savings.

No matter what we’re facing, inflation like this is never worth it. As Ludwig von Mises has said:

No emergency can justify a return to inflation. Inflation can provide neither the weapons a nation needs to defend its independence nor the capital goods required for any project. It does not cure unsatisfactory conditions. It merely helps the rulers whose policies brought about the catastrophe to exculpate themselves.


This article was published by the Ludwig von Mises Institute and is reproduced with permission.

Government Debt and Inflation: Reality Intrudes

Estimated Reading Time: 3 minutes

The last couple of years has witnessed extraordinary spending by the federal government. It has been quite the party. Figure 1 shows government spending since 2000.

The increase to 30 percent of Gross Domestic Product (GDP) in 2020 stands out. Government revenue, also shown in Figure 1, does not jump. Federal government revenue in 2020 and 2021 is not particularly higher or lower than in earlier years. The increase in spending was financed by dramatic increases in debt. Public debt issued by the federal government increased from 107.4 percent of GDP at the end of the fiscal year 2019 to 127.6 percent two years later. As Figure 2 shows, the increase and the level are quite extraordinary.

Interest rates have been relatively low recently, which makes this level of debt not as onerous as it could be. In fiscal year 2021, the average interest rate on public debt was 1.8 percent per year. The low level of interest rates in the economy has made it possible for the federal government to borrow at historically low rates and to have relatively modest interest payments.

There is every reason to expect these low rates to disappear in the next year or two. In 1981, after the Great Inflation, the federal government paid an average interest rate over 13 percent in 1981 and 1982.

Inflation in the United States today is running over 7 percent per year; the low level of current rates will not persist. Whether the level of rates gets to 13 percent depends in part on the Federal Reserve. The Federal Reserve increased short-term interest rates at its meeting on March 15. Given the level of inflation of over 7 percent per year, there is little doubt that the Fed’s target interest rate and the interest rates paid by the Treasury will be rising quite a bit over the next year or even two if inflation is to be subdued.

The implications of higher interest rates for the federal government’s budget are not appealing. Even at the low average interest rate of 1.8 percent per year, interest payments were 12.7 percent of federal government revenue in fiscal year 2021.

What will happen when average interest rates on public debt increase? Holders of public debt today at 1.8 percent are losing on average more than 5 percent of the purchasing power of their funds in a year. An average interest rate of 5 percent on public debt suggests interest payments equal to 35 percent of current federal government revenue. This interest rate is hardly an attractive proposition though. At an interest rate of 5 percentage points, anyone holding public debt at current inflation rates still would be losing 2 percent a year in purchasing power. An average interest rate of 7 percent, high relative to recent interest rates but not high relative to recent inflation rates, would require 50 percent of the government’s revenue.

The Federal Reserve is currently committed to a slow increase in interest rates. A slow pace carries its own risks for controlling inflation. It does imply, though, that these extraordinary levels of interest payments compared to federal government revenue will not be reached in the near term. Just later rather than sooner.

There is a dilemma here though. Raising interest rates slowly given the current high inflation will let inflation get worse. Raising interest rates quickly has the potential to make the federal government’s budget deficit dramatically worse.

Sooner or later, absent substantially lowering government spending or raising taxes, interest payments will overwhelm the government’s budget. The situation might even be termed a sovereign debt crisis because all the spending, revenue, deficit, and inflation choices are unpalatable.

One plausible resolution of the dilemma is to increase inflation even more than people expect. This would inflate away the extraordinary debt issued in the last couple of years. In a way, it resolves the dilemma, just not in a very desirable way from the viewpoint of holders of depreciating US dollars.


This article was published by AIER, American Institute for Economic Research, and is reproduced with permission.

Rand Paul: Federal COVID Stimulus to Blame for Record Inflation

Estimated Reading Time: 3 minutes

Sen. Rand Paul, R-Ky., released a new report Tuesday detailing the effects inflation has had on families and businesses around the country and calling it a “hidden tax” on Americans.

In the report, Paul blames the federal COVID-19 stimulus spending for record-high inflation.

“$4.9 trillion in COVID-19 stimulus spending has led to one of the highest and most sustained levels of inflation in U.S. history,” Paul said. “While government stimulus spending was intended as a form of relief, and low and middle-income families, as well as small business owners, were promised that their taxes would not increase, Americans everywhere are now paying a hidden tax called inflation.”

In particular, lower-income families and small businesses have been the hardest hit, according to the report.

“This report concludes that, though no formal tax has been levied to pay for the government’s recent spending trends, a hidden, regressive tax has been levied on the American public, charging more from low and middle-income families and small businesses and less from wealthy families and big businesses,” the report said.

The report comes after record increases in prices in recent months. The Department of Labor’s Bureau of Labor Statistics released new inflation figures for December showing the price of goods and services have risen at the fastest rate since 1982.

“The all items index rose 7.0 percent for the 12 months ending December, the largest 12-month increase since the period ending June 1982,” BLS said. “The all items less food and energy index rose 5.5 percent, the largest 12-month change since the period ending February 1991. The energy index rose 29.3 percent over the last year, and the food index increased 6.3 percent.”

Meanwhile, the consumer price index data released this month showed the fastest rise in decades.

“This was the sixth time in the last 9 months it has increased at least 0.5 percent,” BLS said. “Along with the indexes for shelter and for used cars and trucks, the indexes for household furnishings and operations, apparel, new vehicles, and medical care all increased in December. As in November, the indexes for motor vehicle insurance and recreation were among the few to decline over the month.”

Small businesses have been hit hard by rising prices. The National Federation of Independent Businesses released a report last week showing that the recent spike in inflation is among small businesses’ top concerns.

The NFIB report found that 22% of small business owners point to inflation as the biggest problem for operating their business, a 20% increase from the year prior.

Paul’s report says that “82 percent of small businesses reported raising prices in the last several months, 42 percent reported raising prices by 20 percent or more” while “45 percent of small businesses reported taking out a loan to cope with the pressures of inflation in this last year.”

“Large corporations have reported consistent profit margins,” the report adds.

Paul’s report also highlights how higher prices on things like gasoline and food disproportionately affect poorer families.

“Low and middle-income families spend a larger portion of their income on high-inflation items, such as gasoline, used cars, and food,” the report said. “Families in the lowest income quartile spend nearly 40% of their annual income on these three categories. As a means of comparison, families in the top quartile spend only 10% of their annual income on these categories.”

Paul said the prices will likely only increase.

“In recent months, prices on nearly everything from gas, food, and clothes to electricity, car prices, and rent, have all increased, and unfortunately it’s only going to get worse,” Paul said. “Congress needs to realize that further spending at this time of rapidly rising prices is only going to continue the trend of rising prices on this nation’s already vulnerable businesses and families.”


This article was published by The Center Square and is reproduced with permission.

Photo credit: Gage Smidmore

Biden Brings Us Record Inflation, It Impacts Your Taxes Too

Estimated Reading Time: < 1 minute

Inflation rages due to runaway Federal spending by Joe Biden and his Democrat allies. John Williams of Shadow Government Statistics uses the numbers based on how CPI was calculated from 1980 and 2017 (real numbers), before the politicians took out a number of factors that results in the understatement of inflation.

For 2021, actual inflation rate was 15%. It does not just result in higher prices, but inflation also drives your taxes higher.

Here is a list of federal taxes not indexed for inflation:

1. Mortgage debt cap to which interest is deductible1.
2. Exemption for sale of a home
3. State and local tax deduction
4. Deductions for capital losses
5. Thresholds for the 3.8% surtax on net investment income
6. Threshold for paying taxes on Social Security payments, not adjusted since
7. No adjustment for inflation’s impact on investment income


This article was published in Texas Conservative Review, and is reproduced with permission.

Reasons for Optimism – America Is Waking Up

Estimated Reading Time: 6 minutes

For an American from the Conservative or Libertarian side of the spectrum, the last few years have been a difficult period.

While the seeds were planted years ago, we saw the full blooming of “Cultural Marxism” in the US, influencing almost all of our institutions ranging from major news networks, social media corporations, city administrations, local prosecutors, our military, even The Salvation Army is tainted, and most of our local schools and universities. That is just a partial list.

The simultaneous explosion of “wokeness”, the 1619 Project, Critical Race Theory, transgender militancy, inflation, and Covid related tyranny, has made 2021 a particularly ugly year.

It extends so deeply into business culture today that advertisers and their ad agencies have all but eliminated white people from television ads. White people, you see, are the source of all evil and a diminished presence helps the world, even if it is demographically ridiculous.

Universities and corporations basically put out the word they would not be hiring white people, especially if they are men. Past wrongs can be righted by committing present wrongs. Reverse racism and segregation, the lowest and most despicable intellectual position, are now all the rage in institutions of “higher learning” and in human resource departments.

All of this cultural ferment, quite revolutionary in flavor, has largely taken over one of the major political parties in this country and severely influenced the opposition party as well. The result has been radical legislation that has spent vast sums of money unparalleled except in global war. This has saddled younger generations with unconscionable debt and current generations with the worst inflation in 40 years. It has created a vast regulatory state where hardly any separation of power is observed, leading to a regime of unelected bureaucrats exercising massive control over almost every aspect of society. This administrative structure showed its ability to resist democratic change with the election of Trump while at the same time shifting gears to support the radical Democrat agenda.

With the outbreak of Covid, this administrative structure and its attitude seemed to have birthed many tiny tyrants been ranging from omnipresent Dr. Fauci all the way down to Phoenix Mayor Kate Gallego. Besides constant hectoring, they have forced mandates on all of us, destroyed medical privacy, closed schools and parks, restricted our work and travel, all while failing to control the virus. Their response to this failure is to double down on their policies.

In cultural matters, corporations lavishly subsidize Black Lives Matter, which openly calls for the destruction of the nuclear family and hetero normative behavior. Meanwhile, virtue signaling corporations and sports leagues play out their guilt for American slavery that ended 150 years ago, while ignoring present-day slavery in China.  Slavery only matters in the first country to move to abolish it. Otherwise, it is good business to trade with slavers.

With such pervasive influences operating, you might wonder what we have to be optimistic about?

In a nutshell, it is that the American people are waking up. The very boldness, tone-deafness, and extremism of the progressives may have finally awakened the American people. The polls clearly show this, with record low numbers for both President Biden and his cackling Vice President.

It is particularly interesting that Biden is losing the young vote as well as losing a significant portion of the Latino vote.

His standing among the all-important “independents”, often the swing factor in closely contested elections, is also dropping like a stone.

It appears the public is losing faith in Democrats in the one area they poll strongly, Covid policy. Mr. Biden said he had a plan and Trump did not. Yet Covid is more prevalent than ever and more Americans have died under Biden than under Trump. The public rightly asks if the vaccines are mostly ineffective, why would mandating their use be any more effective? Why push vaccines rapidly through the approval process while dragging your administrative feet on therapeutics? If we all, in the end, are going to get it, why the delay?

Above all, we got a good look at what government-run medicine looks like. It is top-down, one size fits all,  cover your administrative ass, bureaucratic/politically centered medicine, not patient-centered medicine.  You can start with your personal doctor. Next time he or she starts with “CDC guidelines say”, counter with you don’t care what distant bureaucrats think, you want to know what he or she thinks. You expect your doctor to treat you, not act like a postal employee.

People are growing weary of the restrictions and the dark and cranky manner the President addresses the virus. Most do not see the benefit of medical apartheid, dividing the unvaccinated from those that are, since the fully masked and vaccinated are both getting and transmitting the disease. Further, the contrast between Red states and Blue states is pretty clear. Blue states have worse outcomes and less freedom.

Mothers got an earful during the lockdown of what was being taught to their children and school districts revealed themselves as centers of left-wing indoctrination. Covid may turn out to be a blessing in at least this one area. Even teachers, usually highly regarded, revealed themselves as easily swayed or intimidated by the latest Marxist cultural fashion or just plain labor union thugs. As a result, homeschooling is booming, micro-schools are flourishing, and parents have become vocal opponents of school boards.

Social media has tipped its hand. Once thought a means to have a free global conversation, sort of an electronic Hyde Park where open discussion would flourish, the social media giants have been revealed as a group of censorious ideologues that directly interfere in our election process. Their actions have been so blatant, so biased, and their interferences in the elections so obvious, alternative and competing platforms are being organized. We are likely to see far more alternatives next year.

Left-wing late-night comedy is tanking and many now rightly regard progressives scolds as a threat to comedy itself. Left-wing news channels keep dropping in ratings and even the transgendered overreach is finally beginning to see counter-reaction. Women have discovered they have been defined away.

Meanwhile, well down from the intellectual and cultural plateaus, regular Americans are seeing their real wages shrink as food, gas, cars, homes, soar in price. It is not unusual to wait months to get air conditioners, household appliances, or the car you may want. Just engage in conversation the next time you lean over the meat counter with another patron and you will get the sense that Americans understand they are being screwed by their leaders. And no, most of these goods are not stuck off the Port of Long Beach in a Chinese ship. We don’t get our hamburgers from China.

However, our economic and cultural elites have been enjoying the “everything bubble”, the rapid price increases in stocks, bonds, art, gems, cryptocurrencies, real estate, that so far have protected them from inflation and tax increases.

But 2022 is increasingly looking like a “risk-off” year. The Federal Reserve, the enablers of excessive Congressional spending, has now painted itself into a policy corner. Increasingly, it looks like they either let inflation run or start to cut the money supply and raise interest rates in the face of multiple bubble-like markets. Historically speaking, such a policy conundrum does not end well.

When the donor class, the people who fund our politicians and Black Lives Matter, start to get hurt, you will hear the howls.  

Thus, a flock of irritated and angry chickens will come home to roost in 2022, just in time for the mid-term Congressional elections. A total humiliation of the Democrats is the minimum we would like to see.

Hopefully, the counter-revolution will be long, loud, deep, and long-lasting. We at The Prickly Pear will do all we can to see that it is.

The American people are waking up and understanding this is beyond partisan politics. Our institutions, our corporations, our educational establishment, our culture have been compromised by left-wing lunatics. This will require more than just voting. This will require a full-frontal assault on cultural Marxism. 

Defunding the Left is very important. Cut them off from tax dollars to the greatest extent possible. Getting viewpoint diversity in our universities is vital. With private universities, it may prove difficult, although even they get a flow of Federal dollars. They also have alumni that can’t be happy with what they see. But it would seem that some 23 Republican states, where the Governor and both legislative bodies are under GOP control, should prove to be a fertile area for education reform. There is no reason why a student going to a state university should be subjected to Marxist brainwashing. Private institutions will have to be reformed more through competition, loss of accreditation, and backlash from employers.

It is time for all of us to get in the fight.  To all American loving people – support alternative media like this publication, boycott woke corporations, attend school board meetings, try running for public office, contribute to campaigns, support corporations that don’t buckle to groupthink, and try to avoid doing business with those that do. Work to reform education and our universities so we get teachers that are more balanced.

We are now sort of like the Marines surrounded at the Chosin Reservoir. As General Chesty Puller observed, “We’re surrounded. That simplifies the problem. They are in front of us, behind us, and we are flanked on both sides by an enemy that outnumbers us 29:1. They can’t get away now.”

Perhaps the Conservative breakout year will be 2022.





Left and Right: Both Mistaken on Inflation

Estimated Reading Time: 3 minutes

With inflation hitting a 31-year high, commentators are now routinely giving their opinions on inflation. Unfortunately, most of them—on both the left and the right—are mistaken.

The left initially claimed there was no inflation before switching to its oft-repeated line that inflation is transitory, meaning not long-lasting. But inflation has proved to be quite resilient. More recently, many on the left have taken to extolling the apparent benefits of inflation, such as cost-of-living adjustment (COLA) increases for those on fixed incomes.

NBC correspondent Stephanie Ruhle recently tried to make the case that savings have risen faster than inflation, so people have the money to pay higher grocery bills, and those people are better off. But wages and savings have not kept up with inflation and consumers are worse off now than they were a year ago.

But some on the right have made the same misinformed arguments. Only days after criticizing a competitor’s misleading headline, Fox Business had an article citing record-setting COLA increases for Social Security recipients as a benefit from inflation.

This is no benefit at all. Those on fixed incomes are suffering through a year of rising prices to have their incomes raised some time in the future, and only as much as prices have increased. Meanwhile, anyone with a retirement account has seen its relative value decreased by the hidden tax of inflation.

And both the left and the right of late have ignored the reality of inflation when evaluating economic data.

The most recent retail trade report from the Census Bureau showed retail sales in October being significantly higher than expectations, but more than half of the increase was inflation. After accounting for this, the report was actually well below expectations.

Similarly, most people, regardless of political affiliation or philosophy, seem unaware of how inflation drives asset bubbles—which is contributing to the current growth in house and stock prices.

Those on the right also say deficit spending by the government will add to inflation. This is not exactly true either.

When pressed by a reporter, White House Press Secretary Jen Psaki said, “No economist out there is projecting that this [more deficit spending] will have a negative impact on inflation.” While her claim is completely untrue, since many economists argue precisely that, those economists are also misguided.

Under President Ronald Reagan, the nation had record-setting deficits and amassed record levels of debt, all while inflation decreased. Conversely, in the 1920s, the federal government ran a surplus every year of the decade, but inflation towards the end of that period caused a bubble in the stock market, leading to the infamous crash in 1929.

History—and sound economic theory—tells us that federal deficits are not the primary catalyst for inflation. Excessive government spending certainly has negative consequences, but inflation only arises when the Federal Reserve (the Fed) purchases debt instruments, like government bonds. That has happened whenever the Fed tries to implement monetary “stimulus,” which often happens to occur when Congress borrows excessively. This coincidence has clouded the distinction of which agency is causing what.

President Abraham Lincoln, while ruminating on the Civil War and the perspectives of both the North and South, observed that one side must be and both may be morally in the wrong. Similarly, the popular takes on both the left and right regarding inflation are incorrect; neither side understands the fundamental principles behind inflation.

Only the Fed can cause inflation because only it controls the ability to create money, which it does chiefly by purchasing government debt with money created out of nothing. Likewise, only the Fed can rein in the beast that it set loose.

The one data point in favor of those on the right is the recent rise of Modern Monetary Theory (MMT). It is a bit of a misnomer, as there is nothing modern about it and it focuses less on monetary theory and more on the fiscal policies of taxes and government spending.

Nevertheless, a key feature of the theory is that the Fed essentially acts as the principal financing arm of Congress’ deficit spending. With Lael Brainard as Vice Chair, the Fed will likely pursue MMT. That will make government deficit spending inherently inflationary. At that point, the political right will be genuinely right, but for the wrong reason.

As is often the case, the talking points of both the left and right on inflation are mistaken; it turns out their soundbites are not very sound.


This article was published on December 1, 2021, and is reproduced with permission from The Texas Public Policy Foundation.

No Pain Free Way Out

Estimated Reading Time: 5 minutes

The average person does not understand and could care less about Fed policy, Government budget deficits, and the National Debt. All he wants to know about “finance” is how much he earns and how much he has to spend to maintain his lifestyle.

Be that as it may, these big picture items have a major impact on our lives.

When the Government spends more money than it takes in, that requires the overspending to be financed by borrowing. When the Government borrows, it adds to the National Debt. The government borrows by issuing interest-paying bonds. Someone has to buy those bonds. As the National Debt grows, buying the Treasury’s bonds is seen as riskier for the investor. Would you rather borrow from someone heavily in debt or from someone with less debt?

In order to entice reluctant potential bond buyers, the seller has to raise interest rates.

However, the Government does not want to have to raise interest rates, because it means increasing its cash outlays, even more, compounding its deficit problems.
What has been happening is that the Federal Reserve (the Fed) has been buying government bonds that the public does not want. If this strikes you as just the left-hand selling to the right-hand, you are correct.

Most of the ever-increasing Government deficit is currently financed by the Fed buying the Treasury’s bonds. A lot of this was done under various crisis programs called “Q.E.” (Quantitative Easing), which were intended to be temporary in order to spur public spending and avert a recession. The Fed would now like to sell some of those bonds in the private market, but since those bonds were issued with low-interest rates, there is not much demand for them other than a discounted price. That means selling at a loss.

What happens to any losses suffered by the Fed? Answer: They are transferred to the Treasury. (Remember the part about the left hand and the right hand?). Losses transferred to the Treasury increase the National Debt still more.

The Fed also is involved with controlling interest rates. Although it does not set all interest rates, its actions have an enormous impact. At the moment, a 30-year Government bond pays an interest rate of less than 2%. With inflation running at over 6%, that means an investor buying these bonds gets a real rate of return of around minus 4%. It should not be hard to understand why investors don’t want to buy Government bonds currently.

To counter this reluctance, the Fed wants to restore interest rates to a normal level. They have kept interest rates low for a long time to counter various crises over more than a decade. It is time to get things back to some sort of “normalcy”. Otherwise, the problem of financing the Government’s enormous debt will only get worse, eventually causing inflation to spiral out of control. This happens because a Government bond is “money”, and when money loses value, that is the definition of inflation.

Wait a minute! There must be other solutions. Government spending could be reduced. Lots of luck on that one! Two-thirds of the economy is powered by consumer spending. A large amount of that spending is supported by “transfer payments”, which means Social Security, Medicare, Medicaid, unemployment compensation, and other welfare payments. Transfer payments are part of Government spending.

Taxes could be raised. Unfortunately, it would take increases that are politically unacceptable. Even if virtually all of the wealth of the billionaire class were confiscated by taxation, it would only make a dent in the problem. Nearly half the population already pays no income tax, and Social Security and Medicare taxes are inarguably insufficient at current levels. To massively increase taxes on the “hard-working” middle class would cause a revolution.

We could default on the Debt, which is what many other countries have done in the past. They were not all poor countries. Countries like France and Spain, which were at one time the most powerful in the world, defaulted on their debts, costing them their pre-eminence.

Default is not an option for the United States. It would lead to the collapse of much of the world’s economy since economics is now a global issue.  We issue the “reserve” currency of the world, held globally in bond form.  A US default would trigger a worldwide financial panic.

The Fed is trying to navigate a fine line. They realize that they cannot permanently tolerate a bond market that offers negative returns. That means higher interest rates. They would like to reduce their bond holdings before they raise rates, in order to keep their value from plummeting. They also understand that raising interest rates too fast will crash the stock market since stock prices intrinsically reflect the discounted present value of future earnings. Discounting recognizes that the current value of profits earned in future years is not worth as much today as are current earnings.

More spending that is not properly funded (i.e., using the phony accounting employed by both Parties to sell their programs to an unsophisticated public) is only going to exacerbate the problems.

I was once told by my Congressman that the lack of financial understanding by members of Congress is appalling.

The hope is that the problems will disappear if the economy grows enough, and that justifies still more Government spending to stimulate growth. That would be fine if the evidence did not show that increased levels of government debt have diminishing returns. In other words, each level of new excess spending produces less and less growth over time. Wishing that was not the case does not make it so.

The Fed will likely adopt a gradual approach to reducing their bond-buying and the raising of interest rates in order to avoid spooking the financial markets. (Markets can handle anything except sudden changes in any direction of anything affecting them.) Their difficulty is doing it if inflation gets too high for too long. In that case, public and political pressure to “do something” will cause them to “go big” and in so doing crash the markets.

Of course, those on the Left would cut military spending in order to free up funds for their favorite projects. This would be a temporary solution until China attacks Taiwan, Russia attacks Ukraine, or Iran starts bombing Israel. The difficulty with being the world’s hegemon in a globally connected world is that we cannot simply sit back and say that whatever happens in the world is of no concern to us. Had we done that in WWII, might we all be speaking German today?

Another approach that might be employed that has not been suggested so far is to mandate that pension funds and insurance companies buy a certain percentage of Government bonds. That is not unusual in a number of countries. Of course, it means that returns on those assets are lower since Government bonds have lower percentage returns than private investments, but that disguises the problems from a politician’s point of view since the negative impact is spread over a much larger base. Of course, most pension funds are extremely underfunded today and are struggling to earn enough to enable them to meet their current obligations.

There are those who say, “To hell with financial markets. They only benefit the rich people.” However, that ignores the majority of people with 401(k) or other pension plans or savings that depend on investment performance for retirement security, as does Social Security itself. If financial markets plummet, the rich will find a way to protect themselves; the rest of us will suffer.

This budgetary conundrum sounds negative because there appear to be no pain-free choices.  There must be other solutions that shift the pain to someone else or make it disappear in a magical cloud.

Unfortunately, the only real solutions are a much more prosperous economy that generates the revenue and taxes to support what we want, or else we have to reduce our perceived needs to the level of our ability to pay.