Tag: economy

Tax Cuts Without Spending Cuts Won’t Reduce the Taxpayers’ Burden

As this election cycle has demonstrated yet again, Democrats are not shy about calling for tax increases. In every election cycle they call for more taxes, whether through corporate taxes or through taxes on unrealized capital gains.

Donald Trump, meanwhile, has pledged to cut some taxes. I say “some” because Trump has also pledged to raise taxes on imports.

Nonetheless, Trump ran on the idea that he would reduce the tax burden on Americans if elected.

Unfortunately, Trump has no plans to cut government spending, and this means there is little chance that ordinary taxpayers are going to experience any real tax relief.

This is because tax cuts without spending cuts don’t actually lessen the cost of government. A tax cut without a spending cut simply moves around the tax burden, and often replaces explicit taxation with the stealth tax of price inflation.

Unless accompanied by spending cuts, a tax cut simply increases deficit spending, and taxpayers will pay for deficits one way or another. Typically deficits are paid for using one or more of the following: future taxes, present interest payments, and monetary inflation. Unfortunately for the taxpayers, when it comes to paying off deficit spending, “the future” is already here. In the 2024 fiscal year, the taxpayers had to pay nearly $900 billion in interest on the debt. That huge tax bill exists because federal politicians in the past spent more than they had in revenues.

Forcing the taxpayers to pay off old debts isn’t exactly popular, however. So, federal technocrats have found a way to push down interest rates on government debt. This reduces the amount of interest owed and nominally reduces the cost of government debt.

But this also ends up costing the taxpayers bigtime because the way that technocrats suppress the cost of interest is by having the central bank buy up more federal debt. (By buying government debt, the central bank artificially drives up demand, so the Treasury doesn’t have to pay as much in interest to attract buyers.) And where does the central bank get the money to buy up government debt? It prints the money. That then leads to both monetary inflation and (eventually) price inflation.

So, tax cuts that increase deficits only end up placing new and different burdens on the taxpayers. They’re not a real tax cut at all.

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German Government Collapses As Mass Strikes Grind Economy To A Halt

It’s not a good day for the establishment. Just hours after Kamala Harris – and the Democrats – staggering loss which ushered in Trump as president for the third time and gave Republicans a sweep of Congress, Germany’s three-party ruling coalition which had been on the verge of collapse for months, imploded on Wednesday evening after Chancellor Olaf Scholz announced he will fire Finance Minister Christian Lindner over persistent rifts on spending and economic reforms, a move that paves the way for a snap election at the end of March.

The firing ejects Lindner’s fiscally conservative Free Democratic Party  (FDP) from the troubled coalition, forcing Scholz to call for a confidence vote that he said would take place on January 15. If Scholz loses that vote, which is virtually certain, a snap election is set to take place by March.

The collapse of Germany’s government came just hours after Donald Trump’s clear win in the U.S. election, a result that stunned German political leaders, who depend on American military might for their country’s defense and fear Trump’s tariff policies will hobble German industry.

“Dear fellow citizens, I would have liked to have spared you this difficult decision, especially in times like these, when uncertainty is growing,” said Scholz – viewed as the weakest German chancellor in decades – in a statement at the chancellery.

But the rifts inside the coalition proved too great to overcome. Caught in the middle of an impossible battle, Lindner and his conservative FDP insisted that the German government stick to strict spending rules and cut taxes, even as his left-wing coalition partners wanted to maintain social spending and boost German industry through economic stimulus.

“All too often, Minister Lindner has blocked laws in an inappropriate manner,” said Scholz in a statement. “Too often he has engaged in petty party-political tactics. Too often he has broken my trust.”

Scholz said he had offered Lindner a deal to create an emergency fund to aid Ukraine that would exist outside Germany’s regular budget, but Lindner refused to participate in such fiscal gimmicks that saw the UK recently redefine the nature of “debt.”

“Olaf Scholz has long failed to recognize the need for a new economic awakening in our country,” said Lindner. “He has long played down the economic concerns of our citizens.”

As Politico reports, the FDP is the smallest party in the coalition and is now polling at only four percent — below the threshold needed to make it into the German parliament — meaning its leaders have been mulling a coalition break in order to save their political futures.

Crisis talks in the coalition of Scholz’s Social Democratic Party, the Greens and Lindner’s Free Democratic Party had come to a head after the FDP issued a paper with demands for liberal economic reforms that were difficult for the other two parties to accept.

Lindner’s recent policy paper, leaked to the media last week, called for tax cuts and a scaling back of climate policies in order to stimulate economic growth — both positions that put the party at odds with his coalition partners.

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STUNNING: In October, Biden and Harris Created More Illegal Aliens Than Jobs

Joe Biden and Kamala Harris are delivering for the American people. Unfortunately, no one wants what they’re delivering.

In the month of October, we had a disastrous jobs report with only 12,000 jobs being created. On the flipside, there was no shortage of illegal aliens flowing over the border in October. Biden and Harris really succeeded with that number.

These people do not deserve to be in power.

Breitbart News reports:

Biden/Harris Deliver More Migrants than Jobs in October

President Joe Biden’s border deputies invited four times more migrants in October than the number of extra jobs created by CEOs, according to data obtained by NewsNation.

Business groups created 12,000 additional jobs in September, amid an economic slowdown at the strike at Boeing. The 12,000 number was one-ninth of the 112,500 new jobs that were expected.

But Biden’s deputies also invited 49,840 more parole migrants to fly or bus into the U.S. for jobs during October. Those legally contested “parole migrants” are welcomed by the Office of Field Operations (OFO) at the ports of entry along the border.

An additional 56,580 migrants– including many women and children – crossed the border illegally and were registered by the Border Patrol. Some will be deported.

Biden’s deputies also welcomed at least 150,000 legal immigrants, foreign temporary workers, and refugees.

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Russian Economy Zooms Ahead, Outpaces US and EU Growth

When the special military operation (SMO) was launched to end the NATO-orchestrated Ukrainian conflict, the political West insisted that Russia was finished (precisely what it tried to ensure back in the 1990s). Its economy was supposed to be ruined, with the Kremlin even expected to default after much of its forex reserves were frozen (i.e. stolen) by Western banks.

After all this failed, the US-led belligerent power pole tried to impose the laughable price cap on Russian oil, one that even the most prominent Western nations tried to circumvent, including Japan and even the pathologically Russophobic United Kingdom. As for the United States, it continued buying Russian commodities while criticizing everyone else who did. Still, through its Neo-Nazi puppets in Kiev, NATO launched a virtual total war on Moscow in an attempt to disrupt its economy and cause as much damage as possible.

And yet, it all failed once again. The Kremlin secured economic stability despite being forced to conduct the SMO against the entire political West. Not only that, Russia overtook Germany as the world’s fifth and Europe’s largest economy, a humiliating defeat for its EU/NATO rivals who expected quite the contrary. Berlin’s economic performance was worse than in decades, while London was at its lowest in well over 300 years (since 1709, to be specific).

And yet, to “add insult to injury”, even Western data showed that the initial estimates of Moscow’s economic performance were wrong and that it was actually even better in both 2023 and 2024. Updated IMF’s forecast of 2.6% GDP growth doubled its previous assessment. According to the Financial Times, this increase of 1.5% was the largest for any economy featured in an update to the IMF’s World Economic Outlook, released on January 30 this year.

Top-ranking Russian officials, including the current Defense Minister Andrei Belousov (previously tasked with economic development), expected the growth to be stable enough for the Eurasian giant to overtake Japan by 2030. However, what was supposed to happen in no less than six years, actually happened in less than six months. According to this year’s data, President Putin’s forecast of increased economic growth (over 3.5-4%) not only turned out to be true, but even conservative, although the mainstream propaganda machine attempted to portray it as “too overoptimistic”. However, the only thing that was actually too overoptimistic was the political West’s expectation that the sanctions would work. Namely, according to earlier World Bank data updates for this year, Russia indeed managed to overtake Japan as the fourth largest economy in the world (in terms of GDP PPP).

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Wisconsin Reporter Puts Kamala Harris in the Hot Seat, Spars with Her Over High Grocery Prices, Asks Why She Hasn’t Already Done What She’s Proposing

Kamala Harris sat down for an interview with Wisconsin’s WISN 12 News Political Director Matt Smith with just 7 days to go until Election Day.

Matt Smith put Kamala Harris in the hot seat and asked her why she hasn’t already done what she is proposing.

“I think what some voters are struggling with, and we’ve heard this across the state [Wisconsin] is when you discuss your plan, they come back and ask, ‘well why haven’t you done it already?’”

Kamala Harris laughed and blurted out, “Well, I’m not president!”

“You’re Vice President!” Matt Smith said.

“Exactly, but I’m gonna tell you what I’m doing as president when I have the ability, then, to do what I know based on my experience is a new approach that is about building on the good work that is happened, but there’s more to do,” Kamala Harris said.

Kamala Harris did extraordinary damage as vice president since she cast the tie-breaking vote on the measures that brought us the worst inflation crisis in more than 100 years.

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Why Nobody Believes The “Data”: Surging Prices Of Everyday Items Are Excluded From CPI

As inflation remains painfully high for American consumers, the Consumer Price Index (CPI) is woefully inadequate in terms of reflecting reality.

For starters, CPI excludes several significant costs faced by households today – ranging from property taxes to soaring interest payments.

While price levels remain notably higher than before the pandemic, according to the CPI, inflation has slowed – reaching a 2.4% increase for the year ending in September. That’s only part of the picture, Bloomberg reports.

“The CPI is capturing the goods and services that you purchased for consumption, but there are things that affect your cost of living that are outside of that,” explains Steve Reed, a BLS economist. For instance, interest charges on rising consumer debt are largely absent from the CPI. Roughly $628 billion in revolving credit card debt now bears an average interest rate of about 22%, yet these costs aren’t reflected in consumer inflation data.

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Government Gaslights People About the Economy

Public opinion polls consistently show the economy is one of the top issues, if not the top issue, for American voters. This may strike some as odd, since official government statistics show low unemployment and declining price inflation, suggesting the Federal Reserve has engineered a “soft landing” bringing down inflation without causing a recession. So why the concern over the economy? One reason is more people are realizing government economic figures hide the truth about the economy.M

“Recession Since 2022: US Economic Income and Output Have Fallen Overall for Four Years” is a Brownstone Institute research paper by Dr. E.J. Antoni, a research fellow at the Heritage Foundation, and Dr. Peter St. Onge, a fellow with the Mises Institute. It details how the federal government understates inflation, while making wages, profits, and economic growth appear stronger.

Dr. Antoni and Dr. St. Onge use a more accurate measure of inflation than that used by government to uncover the true state of the economy. Their calculations show that the US economy has been in recession since 2022. The government claims that Gross Domestic Product (GDP) increased by approximately 13.7 percent from 2019 through the first half of 2024. When the more accurate inflation number is used, the result is a 2.5 percent decline in GDP.

The federal government’s figures also show the American people’s disposable income increased by 12.9 percent from 2019 through the first half of 2024. However, when the more accurate way of calculating price inflation is used, it shows Americans’ disposable income declined by 2.3 percent. Dr. Antoni and Dr. St. Onge are hardly the first to expose how the government uses doctored statistics to make the economy look stronger. John Williams’s ShadowStats has regularly shown how government manipulates data to underreport unemployment and price inflation.

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From High Inflation To Hyperinflation: How Close Are We?

The Federal Reserve is now entering a monetary easing and rate-cutting cycle in an environment of elevated inflation.

The last time this happened was during the 1970s, a decade that saw inflation spiral out of control.

The 1970s: An Optimistic Scenario

In the early 1970s, under Chairman Arthur Burns, the Fed faced rising inflation and concerns about economic growth and unemployment.

Despite elevated inflation, the Fed cut interest rates multiple times until 1972 to stimulate economic growth.

Inflation soared to over 12% in the months that followed.

In response to the rising inflation, the Fed raised rates aggressively in 1974, pushing the federal funds rate from around 5.75% to 13%.

However, as the economy entered a deeper recession, the Fed began cutting rates again in 1975 despite inflation remaining elevated at around 9%.

By the end of the decade, inflation had reached double digits again at over 11% in 1979 and peaked at 13.5% in 1980.

The raging inflation of the 1970s and early 1980s is a stark illustration of the danger of cutting interest rates in an environment of elevated inflation… such as the one we are in today.

However, as bad as the 1970s inflation was, I believe it’s an optimistic scenario.

That’s because the out-of-control inflation then was only tamed when Paul Volcker hiked rates above 17%… an option that is not available to the Fed today because of the skyrocketing federal interest expense.

In fact, the Fed could only raise rates to about 5.25%—less than a third of what Volcker had to do—before capitulating recently.

In other words, the higher the debt load, the less room the Fed has to raise rates because of the interest expense.

As the debt pile and accompanying interest expense grow exponentially, I am skeptical of their ability to hike rates to even 5.25% again; forget about higher than that.

Imagine what could have happened in the 1970s and early 1980s if Volcker could have raised rates to only 5.25% instead of over 17%.

This is the environment the US now finds itself in.

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WashPost OpEd: Young Americans ‘Must’ Shrink Their American Dream

President Donald Trump says he’s running to restore the American Dream by cutting migration, but the Washington Post says young Americans should resign themselves to small houses in a nation packed with millions of government-imported renters and buyers.

“The new American Dream should be a townhouse,” two Washington Post journalists declared in the headline of their October 21 op-ed, adding:

The American Dream is fundamental to what it means to be American. Keeping that dream alive for millennials, Gen Z and beyond requires right-sizing it by building more apartments, condos, duplexes and, especially, townhouses.

“In an age of tight money and its Toyota Camrys and Kirkland wine, it’s time to readjust the scope … townhouses consume less energy and foster healthy habits and social connection better than single-family homes,” a Washington Post opinion editor added on October 21.

The progressive cheerleading for pushing young Americans into small houses with postage-stamp lawns, steep stairs, minimal parking, and little privacy comes as Democrats insist on continuing President Joe Biden’s high-migration policies.

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No Compromise With the Fed!

Some people argue like this: Although the Fed as it now exists is very bad, a nation needs a central bank to regulate its money supply, and the Fed is better than nothing. That being so, we should try to urge the Fed to adopt a non-expansionary monetary policy. In this view, calls to “End the Fed” are mistaken. I’m sure most of my readers already know what I’m about to say, but, just to be clear, that view is disastrously wrong. We do not need a central bank, and to argue in the way indicated is to betray the great Murray Rothbard and the great Dr. Ron Paul, whose slogan “End the Fed” has galvanized so many of us.

What we need is the classical gold standard, based on 100% reserve banking. There is no need for an expansion of the monetary system, even a gradual expansion. In fact, monetary expansion is inflationary and dangerous. As the leading Rothbardian authority on money, Professor Joseph Salerno, explains: “Under the classical gold standard, [which prevailed in the nineteenth century before World War I] if people in one nation demanded more money to carry out more transactions or because they were more uncertain of the future, they would export more goods and financial assets to the rest of the world, while importing less. As a result, additional gold would flow in through a surplus in the balance of payments increasing the nation’s money supply.

Sometimes, private banks tried to inflate the money supply by issuing additional bank notes and deposits, called ‘fiduciary media,’ promising to pay gold but unbacked by gold reserves. They lent these notes and deposits to either businesses or the government. However, as soon as the borrowers spent these additional fractional-reserve notes and deposits, domestic incomes and prices would begin to rise.

As a result, foreigners would reduce their purchases of the nation’s exports, and domestic residents would increase their spending on the relatively cheap foreign imports. Gold would flow out of the coffers of the nation’s banks to finance the resulting trade deficit, as the excess paper notes and checks were returned to their issuers for redemption in gold.

To check this outflow of gold reserves, which made their depositors very nervous, the banks would contract the supply of fiduciary media bringing about a monetary deflation and an ensuing depression.

Temporarily chastened by the experience, banks would refrain from again expanding credit for a while. If the Treasury tried to issue convertible notes only partially backed by gold, as it occasionally did, it too would face these consequences and be forced to restrain its note issue within narrow bounds.

Thus, governments and commercial banks under the gold standard did not have much influence over the money supply in the long run. The only sizable inflations that occurred during the 19th century did so during wartime when almost all belligerent nations would ‘go off the gold standard.’ They did so in order to conceal the staggering costs of war from their citizens by printing money rather than raising taxes to pay for it.”

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