Tag: economy

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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No Central Bank Wants To Stop Price Inflation

Many citizens want more government control of the economy to curb rising prices. It is the worst strategy imaginable. Interventionist governments never reduce consumer prices because they benefit from inflation, dissolving their political spending commitments in a constantly depreciated currency. Inflation is the perfect hidden tax. The government makes the currency less valuable by issuing more units of fiat money, partially dissolves its debt in real terms, collects more taxes, and presents itself as the solution to rising prices with subsidies in an increasingly worthless currency.

That is why socialism and hyperinflation go hand in hand.

Socialism rejects human action and economic calculation and sells a false image of a government that can create wealth at will by issuing more units of fiat currency. Obviously, when inflation arrives, the socialist government will use its two favorite tools: propaganda and repression. Propaganda, which accuses stores and businesses of driving up prices, and repression, which occurs when social unrest intensifies and citizens legitimately hold governments accountable for scarcity and high prices, are the two main strategies.

If you want lower prices, you need to give less economic power to the government, not more. Only free markets, competition, and open economies help decrease consumer prices. Many readers might think that we currently have a free market with competitive and open economies, but the reality is that we live in increasingly intervened and overregulated nations where central banks and governments work to perpetuate unsustainable public deficits and debt. Therefore, they continue to print more money, leading many to question why it is getting harder for families to make ends meet, buy a home, or for small businesses to prosper. The government is slowly eating away the currency it issues. They call it “social use of money.”

What is “social use of money”? In essence, it means abandoning one of the main characteristics of money, the reserve of value, to give the government preferential access to credit to finance its commitments. Therefore, the state can announce larger entitlement programs and increase the size of the public sector relative to the economy, creating a self-fulfilling prophecy. The state issues more currency, which makes people’s money less valuable. Citizens become more dependent on the state, and they will demand more subsidies paid in the currency the state issues. It is, in essence, a process of control through debt and currency depreciation.

When governments and central banks talk about price stability, it means a two percent annual depreciation of the currency. Aggregate prices rising an average of two percent is hardly price stability because it is measured by the consumer price index, which is a carefully crafted basket of goods and services weighted by the same people who print the money. That is why governments love CPI as a measure of inflation. It fails to fully reflect the erosion of the currency’s purchasing power. This is why the CPI’s basket calculation fluctuates so frequently. Even if it accurately measures, it will underestimate the rise in prices of non-replaceable goods and services by adding them to a basket of things we consume maybe once or twice a year at best. When you put together shelter, food, health, and energy with technology and entertainment, there will always be distortions.

Thus, governments and central banks are never going to defend price stability. If aggregate prices fell, competition soared, and citizens saw their real wages rise and their deposit savings increase in real value, their jobs would disappear.

When a central bank like the Fed cuts rates and increases the money supply after an accumulated 20.4% inflation in four years, it is not defending price stability; it is defending price increases. This strategy serves to conceal the government’s financial insolvency. A currency with a declining value.

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Dirty Barack Obama Who Was Caught Spying on Candidate and President-Elect Trump – Now Takes Credit for Trump’s Booming Economy

Democrats turned to Barack Obama this week to stop the bleeding from the Kamala Harris campaign.

Obama spoke in Pennsylvania on Thursday and used his time on stage to attack President Donald Trump and then lie about his record.

During his appearance in Pennsylvania on Thursday Barack Obama attempted to take credit for the booming Trump economy.

What a crock.

Obama has a lot of nerve slandering President Trump. After all, it was the Obama Administration that was caught spying on the Trump Campaign, President-elect Trump, Trump’s family, and the Trump administration.

Here is a reminder on how Barack Obama was caught spying on Trump from our earlier reporting.

The Gateway Pundit was the first to report back in 2018 that the Deep State was using foreigners to spy on then-candidate Trump in 2015.  President Trump tweeted our report by Joe Hoft the following day and the fake news mainstream media immediately attacked him for promoting what they called a “conspiracy theory.”

We later discovered more evidence in 2020 that we were 100% correct in our initial reporting.

Joe Hoft reported on this development at the time.  In June of 2018 The Gateway Pundit posted an article identifying unredacted words in previously redacted texts between corrupt cops Peter Strzok and Lisa Page, two individuals supposedly having an affair and key players at the top of the FBI involved in spying on candidate and then President Trump.

The discovery came from an individual on Twitter who was later removed from the platform, named Nick Falco, who identified a word uncovered in a Senate text that the corrupt DOJ previously redacted.

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Israel looking at $66bn war bill as economic woes deepen

The total bill for Israel’s war on Gaza and Lebanon over several years will be some $66 billion, about 11 to 12 percent of Israel’s pre-war GDP, according to the Israeli Central Bank.

The number was revealed by Adam Tooze, a history professor and director of the European Institute at Columbia University in New York, who has written extensively about financial crises.  

He stated in a 7 October interview with Foreign Policy that Israel is fighting a war of choice, which includes the goal of unleashing mass violence to make Gaza “unlivable” and “deal” with Hezbollah.

Israel “is in a deliberate way escalating the destruction in Gaza and the effort to deal with Hezbollah in Lebanon. So this is expensive,” Tooze observed.

Even with US aid, which Tooze estimates at roughly $14 billion to $15 billion per year, the cost of the war is a strain on the Israeli government and society, he added.

Separately, a report published by Brown University’s Costs of War project said the US has given Israel $17.9 billion in military aid in the past year, and spent at least $22.76 billion assisting Israel, the highest amount in the two countries’ histories.

Tooze noted further that as a result of the war, Israeli tourism has collapsed by 75 percent, and hundreds of thousands of workers have been taken out of the economy at times while serving as reservists in the army.

“This is obviously disruptive to Israel, with a population of 10 million. If you take that number out of the workforce, prime-age, working young people, this is going to hurt.”

Tooze says that the Israeli economy, in particular the construction sector, has further suffered after imposing a ban on some 80,000 to 150,000 migrant Palestinian workers from the West Bank.

Estimates of Israeli GDP growth have fallen from three or four percent to roughly zero in the near future. At the same time, it faces a large surge in government spending.

In contrast, the relatively small economy of the West Bank, with a GDP of as little as $18 billion, has plunged roughly 20 to 25 percent.

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Global Food Prices Jump Most In 18 Months As Supermarket Inflation Storm Worsens

The world could be on the cusp of another food inflation shock as the benchmark for world food commodity prices recorded the fastest monthly increase in 18 months in September.

A perfect storm of war in Eastern Europe and broadening conflicts in the Middle East, snarled maritime supply chains, extreme weather across croplands, de-growth climate change policies pushed by the far-left in the West, and rogue central bank money printing have all contributed to sticky food inflation.

The Food and Agriculture Organization of the United Nations’ Food Price Index, which tracks the international prices of a basket of globally traded food, averaged 124.4 in September, up 3% from August and 2.1% higher versus the same month one year ago.

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US Government Behind ‘Housing Crisis”

Make no mistake, the housing shortage is directly the responsibility of the US Federal government and Federal Reserve policies going back to the 1990s. Based on Governor Walz surprise revelation promise of three million new homes, and downpayment assistance, the problem is about to get worse should they be elected. As our great departed President Reagan once said, “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help. “. The questions are how did we get here, what is the solution, and how do we implement the solution?

Prior to 1934, homeowners purchased homes with cash or small bank loans that were underwritten by banks. Obviously, this limited homeownership to those with means and hence ownership was historically 46.5%. In 1934 President Roosevelt created the Federal Housing Administration. The objective was to help builders and developers, not necessarily homeowners. Homeownership rates grew to around 65%. In the 1990s, the government encouraged and created a lending environment, along with quasi-governmental agencies backing loans that were increasingly more likely to fail, but with a government backstop, there seemed to be no limit. Homeownership grew to 69% by 2004. The limit, however, was reached, as loans reached maturity, along with a recession in 2008, that led to one of the worse economic crises in US history.

The fallout of the 2008 housing crisis had far reaching consequences that most Americans who are not in building or developing understand. From the 1980s until the year 2000, annual single-family housing starts fluctuated from 750,000 to 1.2 million homes. The supply chain around those number of starts, the number of builders, even considering consolidation, was steady, lot acquisition and development, real estate companies, mortgage lenders, and construction workers all found equilibrium. But when products like 3-1 ARMs with low introductory rates, low rate construction loans, interest from Wall Street in monetizing construction, and fly by night mortgage brokers flipping loans to Freddie and Fannie began, the whole industry was thrown into chaos.

From 2000 to 2005, housing starts ramped from 1.2 million to 1.7 million. In order to supply products like lumber, engineered lumber, brick, mortar, windows, doors, roofing, plumbing materials and fixtures, electrical materials and fixtures, heating and air conditioning units, et cetera, industry invested in new facilities to match the “new normal” rate of construction. Land developers had to acquire and develop hundreds of thousands of new lots, and given rezoning and permitting, the lead time is around 18 months to 2 years. Large builders made up a lot of the slack, but new “builders” were leaving jobs in insurance, banking, landscaping, trades or whomever wanted to fulfill their American dream of owning a business. Small banks were being created out of thin air and lending to all these new, inexperienced builders with 100% financing. All was going well until the bottom fell out.

Beginning in 2007 and continuing through 2009, housing starts fell from 1.7 million to less than 500,000, where it remained until 2013. In 2014, the rate of new starts got back to the historic level of 700,000 homes annually, and remained in the historic band between 750,000 to 1.2 million. The trouble is the intervening years, the population continued to grow and the shortfall grew to 4.5 million homes where we stand today. In fact housing starts really grew rapidly until 2021, when the combined Covid scare and Federal Reserve rate increases caused another correction in the market.

For the long period of sub-3% mortgage interest rates, buyers again flooded the market to buy up all the existing inventory and any new homes being built. This had the combined effect of low supply and massive demand, leading to increased prices of homes. Everyone felt comfortable that we had weathered the worst of the post-2008 market, but unfortunately the Fed created yet another bubble. Once they raised rates well above the historic level, and mortgage rates skyrocketed to 7-8%, the market once again was stuck in a dilemma created by the government.

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Union boss who threatened to ‘cripple’ economy lives in luxe 7,000-square-foot mansion

Harold Daggett — the union boss who has vowed to “cripple” the US economy if ports don’t ban automation and raise dockworkers’ wages sharply — had a Bentley convertible parked outside his sprawling mansion in New Jersey this week, exclusive photos obtained by The Post reveal.

Photos taken by drone on Tuesday show the British luxury car parked with its top up outside what appears to be a five-car garage that’s connected to his 7,136-square-foot, Tudor-style home by a covered skyway.

The hulking, two-story mansion — located on a 10-acre property in Sparta, a leafy enclave 50 miles west of New York City — encircles a spacious backyard patio with an amoeba-shaped pool.

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