Has anyone else noticed that most of the visionary leadership in the civil sphere today is being offered by Republicans or Independents who are former Democrats? Their number includes Donald Trump, Elon Musk, RFK Jr., Tulsi Gabbard, and to some extent Nicole Shanahan (RFK’s VP candidate), among others. But the phenomenon isn’t new. If you wanted to go back a few years, you’d find that President Ronald Reagan was also a former Democrat.
What’s clear is that much of productive America is responding to this leadership. While the Republican Party has been churning out neocon warmongers, globalists, New World Order activists, world policemen, big government advocates, economic fascists, and opportunists who sell out their constituents (along with a few stalwart exceptions), the Democrat Party’s radical revolution against the Constitution has displaced many of that party’s most principled leaders. Now those leaders are finding their biggest fans among the disenfranchised legions of the Republican Party. These “Fordem” (former Democratic) leaders do not usually have exactly the same beliefs and priorities as small government conservatives, but the overlap is considerable—enough so that much of the country is showing these courageous folks a lot of love.
The situation is illustrative of the bigger battle being waged in America between productive America and rent-seeking America. There are scores of millions of the former, but the vast majority of organizational power rests with the latter. Which will prevail in the election? It’s anyone’s guess at this point. This author suspects that a fair and proper election would yield a solid Trump victory, but those qualifiers are anything but givens. And the first question prompts a second: Is buying an election by promising giveaways from the public purse fair and proper?
The times in which we live are passing strange. It’s no wonder mental illness and suicide are epidemic. We are coming unmoored from everything that stabilized American life for many, many decades. If you feel oddly disconnected from life, loved ones, and country, you are not alone.
But coming unmoored can have a positive effect. Nothing can emphasize the value of a mooring better than losing it. Many young people were born too late to experience the moorings from which the hoary headed in America have benefited, and that’s also a problem. But even the young are seeking something more solid than what they’re seeing. An aversion to chaos is apparently a common human trait, prompting even many young voters to respond to the visionary Fordem leaders mentioned above.
As the analysts whose work is summarized below are consistent to point out, the best and most stable mooring for a nation’s economic system has always been gold. Cutting that tie has led to a host of evils that are now bearing poisonous fruit. But the good thing is that an individual can still rely on something a nation has rejected. Gold works for people too. It even talks! And what it’s saying about our economic policy we blush to repeat. Read on for more on this and many other pertinent subjects.
Key Takeaways:
- Who knew that gold was so wise?
- Mandarins don’t always know best
- Interest rate relief for the rich
The McAlvany Weekly Commentary: Gold Laughs At Loose Rate Powell
David and Kevin discuss the Fed’s limitations this week. It might be able to lower the fed funds rate and thereby affect interest rates on loans throughout the economy, but bonds and gold have cried foul. Even as the Fed asserts that it is data dependent, much of the data argues for an increase in rates, not a decrease. This includes the “supercore” print, which measures non-housing, non-energy services costs. Employment data, which remains strong, also argues for an increase in the interest rate. And as Kevin points out, consumers don’t need government data to tell them that inflation is alive and well in the US. A simple trip to the grocery store offers evidence aplenty. In the face of all this contrary data, the Fed cut rates—and not by a little. The problem, of course, is that at some point reality intrudes. “You can’t have it both ways. Either the economy is strong…and we do not need a 50 basis point cut…or the economy is not strong.” The likely reason for this very apparent attempt to have it both ways is that interest payments on the national debt won’t permit the necessary steps to curb inflation. The problem is not just that we must negotiate the passage guarded by Scylla and Charybdis, it is that there is no safe space between them for transit. So Powell has chosen Scylla even as he talks peace and safety. Somehow, the sailors (consumers) being eaten alive are not convinced. But at least the officers (investors) are safe in the hold, with no fear of going down with the ship.
Credit Bubble Bulletin: Neutral Rates and Xi’s Whatever it Takes
Doug starts off his weekly summary with quotes from Bloomberg and Chicago Fed President Austan Goolsbee. Goolsbee feels the fed funds rate is way too high and only a number of rate reductions over the coming year will remedy the situation. His rationale sounds convincing until Doug takes him to task for the Fed’s failure to apply it during the years of ZIRP (zero interest rate policy). And that’s just the beginning of the takedown. “There are myriad price levels that impact financial and economic stability, with asset prices topping the list for importance. The Fed’s singular fixation on consumer prices is dangerously misguided.” Doug then asserts that during the mortgage finance bubble period the real fed funds rate actually failed as a policy indicator. His point is that low consumer price inflation that results in a high real fed funds rate is problematic in causing credit and asset bubbles that result in widespread systemic instability. And Doug especially faults the Fed for experimenting with risky practices in dangerous times such as we now live in. For those mesmerized by Fed “logic” and authority, this is a necessary antidote. Doug also provides excerpts and analysis on Xi Jinping’s “whatever it takes” injection of liquidity into the Chinese economy. The result, as intended, was a massive jump start for the Chinese stock market.
Hard Asset Insights: Taking a Break—Sort Of
Morgan finds himself in the middle of a major move to a new home this week, so sends his readers best wishes and provides a summary of asset prices in anticipation of the return of HAI commentary next week.
Golden Rule Radio: Markets React to FED Announcements
Miles’ summary of precious metals action for the week has gold and silver up significantly, while platinum and palladium were much more subdued in their price movements. His conclusion is that such results have a monetary cause rather than one centered in commodities. Leaning on helpful research from a client, Miles analyzes the possible rationale for aggressive and extensive interest rate cuts, and concludes that the compelling case is offered by the real estate market. No other major sector has quite the need for relief that real estate does, especially the commercial real estate market—which Miles says is “just a whisper away from shambles.” Tory points out the true nature of this kind of market support because it effects a massive wealth transfer from the lower and middle classes to the upper one, one-tenth, or even one-hundredth percent. “Why,” he asks, “is it important for people to go further into debt?” The hosts then dismantle this issue by pointing out that the problem isn’t interest rates, it’s home prices. Prices right now are beyond the means of lower and middle class incomes. The beneficiary of this interest rate cut is BlackRock, which is aggressively buying homes for its portfolio.
