Tag: economy

The Reason Socialism Appeals to the Youth

The establishment continues to dismiss the growing support for socialism among young people as nothing more than college indoctrination. That is only part of the story. If we refuse to understand why an entire generation is losing faith in capitalism, then we are destined to repeat the very mistakes that gave rise to socialism throughout history. The Fox News analysis citing Heartland Institute and Rasmussen polling noted that 53% of Americans aged 18 to 39 said they would support a Democratic Socialist for president, while 76% favored nationalizing industries such as health care, energy, and big tech. The overwhelming motivation is not ideology, it is economic despair.

Young Americans have entered adulthood during one of the most distorted economic periods in modern history. Housing has become unattainable for millions. According to the same polling, 74% of young voters believe America is facing a housing crisis, 62% say the economy is unfair to young people, and 36% describe themselves as struggling financially or in outright crisis. When asked why they supported democratic socialism, the most common answer was simple: housing costs. This is precisely what governments never want to admit. People do not abandon free markets because they suddenly become Marxists. They lose faith when the system no longer appears to reward hard work or provide a realistic path toward owning a home, raising a family, or building wealth.

This is hardly unique to the United States. Across Europe, Canada, Australia, and much of the developed world, younger generations face soaring rents, stagnant real wages after inflation, enormous student debt, and some of the weakest housing affordability on record. Many graduates cannot find careers matching their education, while others remain trapped in temporary work or are forced to live with their parents well into adulthood. Governments spent decades inflating asset prices through endless debt expansion and artificially low interest rates. Those who already owned homes and financial assets became wealthier, while those entering the workforce found themselves permanently priced out. That is not capitalism functioning properly. It is the direct consequence of governments manipulating markets and accumulating unsustainable debt.

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Japan’s Keynesian Mirage: How Debt, Inflation, & A Collapsing Yen Expose A Failed Model

Japan’s yen crisis exposes the long‑running failure of the Keynesian strategy that has dominated the country’s economic policy: chronic deficits, exploding public debt, and engineered inflation are now eroding Japan’s purchasing power, competitiveness, and monetary stability.

For decades, many mainstream analysts pointed to Japan as proof that a rich, “monetarily sovereign” country could keep an extremely high public debt without relevant consequences. The argument was simple: as long as the state can issue its currency, it can always print whatever is needed to cover deficits, refinance debt, and support public spending.

In reality, that has meant public debt soaring to around 250% of GDP, one of the highest levels in the developed world, while repeatedly increasing government expenditure and leaving large, persistent deficits. Even the IMF notes that, even after several years of moderate growth, prudence is “key to keep debt‑to‑GDP on a firmly downward path,” admitting that the current level is a structural vulnerability.

Japan’s apparent stability depended on a crucial external factor, the country’s enormous exporting capacity.

As a leading exporter of cars, technology, and capital goods, the country attracted a continuous inflow of US dollars and foreign capital that supported a stable currency and kept inflation low, despite fiscal excess. That protective layer is eroding fast. Headline inflation has edged up from 1.4% in April 2026 to 1.5% in May, while core inflation has held at 1.4%, still below the Bank of Japan’s 2% target but clearly positive after three decades of near‑zero price growth.

A key factor of the Japanese model was its export engine and the “golden goose” of capital inflows.

These two factors allowed the country to live with large debt and deficits without immediately triggering high inflation. However, that mirage is vanishing as external performance falters and inflation, though moderate, bites into real incomes.

Keynesianism did not spur growth or improve Japanese citizens’ lives. It just bloated an unsustainable government machine.

Recent data show that price increases are now broad‑based, not confined to a few categories. In May 2026, overall CPI inflation was 1.5% year-on-year. However, food prices rose 3.5% year-on-year, which is a heavy burden for households. Goods inflation stood at 2.0%, while services inflation was around 1.0%.

Underlying inflationary pressures, particularly in services and wage‑sensitive sectors, are now embedded in the system rather than an isolated energy shock. Meanwhile, real net wages are stagnant or declining. Japanese citizens face an affordability crisis.

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US Debt Exceeds 100% of GDP for the first time since World War II

The United States has crossed a milestone that Washington has spent decades pretending would never arrive. Federal debt held by the public has now exceeded 100% of GDP for the first time since the aftermath of the Second World War. According to the latest government data, debt held by the public reached approximately $31.27 trillion while the nation’s annual economic output totaled roughly $31.22 trillion, pushing the debt-to-GDP ratio to 100.2%. The Congressional Budget Office now projects debt held by the public will average 101% of GDP this year and continue climbing to 120% by 2036 if current law remains unchanged.

The media continues to compare today’s numbers with the end of World War II, but that comparison completely misses the point. After 1945, the United States emerged as the world’s dominant industrial power. Soldiers came home, factories shifted from producing tanks to automobiles, the population expanded rapidly, and economic growth far outpaced government borrowing. Debt declined because the nation was producing wealth. Today we are doing precisely the opposite. Washington continues borrowing during periods of economic expansion, not because the country faces an existential war, but because politicians refuse to tell voters that promises have become mathematically impossible to keep.

The numbers expose just how unsustainable the fiscal position has become. The Congressional Budget Office estimates the federal deficit will total roughly $1.9 trillion this fiscal year, equal to 5.8% of GDP. By 2036, annual deficits are projected to exceed $3.1 trillion, or 6.7% of GDP. Federal spending will consume 23.3% of GDP this year, while revenues amount to only 17.5%. Washington is spending approximately $1.33 for every dollar it collects. That gap is no longer the result of recession or emergency stimulus. It has become the permanent operating model of government.

The real crisis is not simply the debt itself. It is the cost of carrying that debt. Net interest payments exceeded $1 trillion for the first time last year, consuming roughly 14% of all federal spending. Interest on the debt now exceeds what Washington spends on national defense. Every increase in long-term interest rates compounds the problem because trillions of dollars in Treasury securities must continually be refinanced at higher yields. Governments cannot borrow indefinitely without eventually becoming captive to their creditors.

This is exactly why I have repeatedly explained that the sovereign debt crisis, not inflation, will define this decade. Every government has embraced the Keynesian fantasy that deficits do not matter as long as borrowing remains possible. They assume they can simply issue another bond and postpone the consequences for another administration. That strategy works only until confidence begins to disappear. Sovereign debt crises are never caused by running out of money. They begin when lenders question whether governments possess either the ability or the political will to restore fiscal discipline.

Our computer has never suggested that the sovereign debt crisis would begin with a sudden default. It unfolds gradually through rising interest costs, capital migration, declining confidence, and governments searching for new ways to finance themselves. That inevitably leads to higher taxes, inflationary policies, capital controls, and expanding regulation of private wealth. Politicians will never admit they overspent. They will instead insist that the problem is wealthy citizens who have not contributed enough, corporations that have not paid their “fair share,” or investors who moved capital abroad. Governments always blame the people before accepting responsibility for their own fiscal recklessness.

Crossing 100% of GDP is not merely another statistic. It marks the point where the United States officially joins the group of heavily indebted nations that believed perpetual borrowing could replace sound fiscal policy. Unlike 1946, there is no peace dividend waiting on the horizon, no manufacturing boom capable of overwhelming the debt, and no political appetite to reduce spending. Every election promises more benefits, more subsidies, and more borrowing. That is why this cycle will end as every sovereign debt cycle throughout history has ended, with a crisis of confidence rather than a shortage of promises.

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Banking On Magic

Monthly Budgets Under Assault

American consumers are being squeezed. Between high grocery prices, rising utility bills, and hefty prices at the pump, little float remains in monthly budgets. An unexpected medical bill or car repair is all it takes to blow the household budget.

We’re all living through stressful macroeconomic crossroads here in mid-2026. For a while, it appeared the post-pandemic inflationary dragon had been slain. We were promised inflation would soon return to the Federal Reserve’s 2 percent target.

But that was before the U.S.-Israel attacked Iran and a new energy shock was triggered. Perhaps the MOU negotiations and reopening of the Strait of Hormuz, with UN evacuation, will soften things in the months ahead. Nonetheless, we do not expect there to be long-lasting relief.

When energy costs spike, they don’t just stay at the pump. They weave their way into the price of just about everything you buy, eat, or touch. And right now, as the Federal Reserve transitions into a new era under inbound Chair Kevin Warsh, the combination of elevated oil prices, persistent consumer price inflation, and nosebleed stock market valuations have created an abundance of risks that are not being properly appreciated.

In short, your purchasing power is being eroded, the new Fed chief is caught between a political rock and an inflationary hard place, and the stock market is behaving like gravity doesn’t exist. To understand why your monthly budget is under assault, we must look at how inflation is composed.

Economists love to talk about core inflation. This metric conveniently strips out food and energy prices because they tend to be volatile. It’s the economic equivalent of saying, “Aside from the rain, it’s a perfectly dry day.”

But as consumers, we live in the real world. We can’t choose to skip buying food or filling the gas tank.

Invisible Tax

Right now, the headline numbers are singing a discordant tune. The May 2026 Consumer Price Index (CPI) report clocked in at a stubborn 4.2 percent year-over-year inflation. The April Personal Consumption Expenditures (PCE) index – the Fed’s preferred metric – sat at 3.8 percent. Both are a country mile away from that 2 percent target.

Thanks to ongoing geopolitical friction and conflict with Iran, a barrel of West Texas Intermediate (WTI) crude – the light sweet stuff – spiked above $100 a barrel in May. It has since dropped to about $69. However, this is well above the $57 price that a barrel of WTI crude fetched at the start of the year. Moreover, the Strategic Petroleum Reserve has been drained to a 43-year low. Refilling it will put an elevated price floor under the price of oil in the months ahead.

Higher oil prices haven’t just been an inconvenience for commuters. Rather, they’re a supply shock that behaves like an invisible tax on the entire global supply chain. When a barrel of oil crosses the triple-digit threshold, a domino effect ripples through the economy.

For starters, diesel fuel gets much more expensive. The trucks delivering fresh produce to your supermarket, the container ships bringing electronics across the ocean, and the delivery vans bringing packages to your doorstep all pass those fuel surcharges directly down the line.

Modern farming is also incredibly energy intensive. From petroleum-based fertilizers to the diesel that runs massive harvesters, expensive energy directly translates to more expensive eggs, milk, and bread.

So, too, there’s the rising input costs for petrochemicals. These are the building blocks of 95 percent of manufactured goods, including packaging, synthetic fabrics, medical devices, and construction materials.

When energy prices rise, it doesn’t take long for transitory spikes to harden into long-term, sticky consumer price inflation. Businesses can absorb higher input costs for a month or two, but eventually, they protect their margins by changing the price tags. That is exactly what we are seeing play out across the retail landscape today.

Oil prices may be moderating. But the impact on consumer prices from the oil price spike is here to stay.

This is why consumer prices will never return to where they were last year, and certainly not to where they were in January 2020. Not unless new Fed Chair Kevin Warsh gets his productivity miracle… 

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DOJ urges states to join investigation into major oil companies

The Department of Justice (DOJ) and the Federal Trade Commission (FTC) are urging states to join a sweeping probe into major oil companies.

In a joint three-page letter sent to state attorneys general on Friday, federal antitrust regulators called for localized investigations into oil distributors for potential price-fixing, market monopolization and consumer fraud.

Federal antitrust lawyers are asking states to deploy all tools available, as they believe several companies are keeping prices high despite a steep drop in wholesale crude costs.

The coordinated federal-state push comes on the heels of an executive directive from President Donald Trump last week.

On Monday evening, the president accused oil corporations of “gouging” American drivers.

“Gasoline Retailers must get their Prices down, IMMEDIATELY! They’re too high considering that Oil is now at $68 a Barrel, and heading south,” Trump wrote on Truth Social. “The Retailers must quickly react to this statement, and so what they know is right — DROP YOUR PRICE FOR OUR GREAT AMERICAN PEOPLE!”

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The U.S. Dollar’s Eroding Purchasing Power

The U.S. dollar has lost nearly 30 percent of its purchasing power since 2020, a stark illustration of inflation’s impact on American households. According to analyses citing data from the Consumer Price Index (CPI), what cost $100 in early 2020 would cost roughly $130 for the same goods and services by mid-2026.

The CPI is a statistical tool compiled by the U.S. Bureau of Labor Statistics (BLS). It tracks changes in the price of a basket of consumer goods and services. It shows a cumulative price increase of 29 percent over the past six years, equating to an average annual inflation rate of roughly 4.3 percent.

Factors driving the erosion include massive fiscal and monetary responses to the Covid-19 pandemic, such as trillions of dollars in government stimulus and Federal Reserve bond buying. This boosted demand, while supply chains faltered.

Inflation Understatement

Some argue that the CPI understates inflation by underweighting essentials such as housing, groceries, and fuel for many families. Reporting for The New American in 2008, analyst Dr. John Fisher explained that “changes to the CPI … have increasingly distorted official statistics” to create a false sense of economic stability. This distortion is destructive because “the Treasury and the Federal Reserve use the CPI as one of the measures for establishing U.S. monetary policy.”

The first major adjustment to how the CPI is calculated occurred under President Richard Nixon, with introduction of the “core” CPI, which intentionally omits essential items such as food and energy, though they are essential and their cost increases are often most acute. Commentators described it at the time as calculation of “inflation after inflation has been excluded.”

The next series of changes came in the 1980s, and they collectively produced a reported inflation rate roughly six to eight percentage points lower than the previous methodology would show. This is according to economist John Williams, who describes the adjustments at ShadowStats.com.

The substitution effect assumes consumers swap expensive goods for cheaper alternatives when prices rise, effectively penalizing households for being priced out of their preferred purchases. Hedonic adjustments, which discount price increases by attributing them to quality improvements in products such as electronics and automobiles, further suppress the reported number. Owners’ Equivalent Rent replaced actual home purchase prices with a hypothetical estimate of what homeowners would charge themselves to rent their own homes, a figure that consistently understates real housing costs.

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Open Borders Contributed to Real Estate Inflation

Politicians continue insisting that mass migration carries no economic consequences. Anyone who questions the policy is immediately accused of being anti-immigrant. That has always been the tactic. Rather than debate the economics, they attack the person asking the question. Yet reality eventually catches up with political slogans, and now even economists are beginning to quantify what common sense should have told us years ago.

A new working paper from economists at the Federal Reserve Bank of Dallas examined the unprecedented surge in unauthorized immigration between 2021 and 2024. The researchers estimate that unauthorized immigrant workers accounted for roughly 30% of employment growth in the average metropolitan area during that period. More importantly, they found that in markets where housing supply could not expand quickly enough, a 1% increase in unauthorized worker inflows was associated with approximately a 2.2% increase in home prices and about a 1.4% increase in rents.

When population rises rapidly while housing construction fails to keep pace, prices climb. More people competing for a limited number of homes means higher prices. Demand rises faster than supply. The laws of supply and demand do not disappear because politicians prefer open borders. The Federal Reserve researchers also noted that housing construction did not expand sufficiently to absorb the additional demand, leaving existing residents competing for the same inventory. This is basic economics that governments have chosen to ignore.

The numbers illustrate just how severe the housing shortage has become. Freddie Mac estimates the United States remains short roughly 3.7 million housing units. The National Association of Realtors has repeatedly reported that existing home inventory remains well below historical norms, while the median existing-home price reached another record high during 2025. Meanwhile, mortgage rates have remained around 6% to 7% for much of the past two years, dramatically increasing monthly payments and pushing homeownership further out of reach for younger Americans. The result has been exactly what our computer projected years ago, employed adults increasingly remaining with their parents because housing has become unaffordable.

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Mamdani’s NYPD cut ‘blindsided’ City Council — leaving pols bracing for other surprises in $126B budget they passed

Clueless City Council members were blindsided by Mayor Zohran Mamdani’s 11th-hour move to ax nearly 600 promised new NYPD cops from the city’s behemoth budget – leaving them bracing for more surprises, sources revealed.

Mamdani sprung the cut on City Council Speaker Julie Menin late Monday right after they hashed out a backroom deal for the eventual $125.8 billion budget, insiders told The Post.

The ambushed lawmakers had taken Mamdani at his word weeks ago that he’d hire 580 more officers — even though that pledge angered the democratic socialist’s lefty allies because it broke a campaign promise to freeze the NYPD’s headcount at 35,000 cops.

“We were completely blindsided when the mayor sucker-punched us with this reversal after a deal was done,” said David Carr (R-Staten Island), the City Council’s minority leader.

“When an administration publicly announces that it is hiring 580 police officers, you’re supposed to be able to take them at their word. Not once from the announcement was there any sense that this needed expansion of the uniform headcount could be on the chopping block.”

The far-left-appeasing move also put the City Council speaker in a bind because if she objected, it would have derailed a budget deal as the city was already in danger of blowing past a Wednesday deadline, insiders said.

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Is This Gavin Newsom’s Biggest Lie Ever?

California Gov. Gavin Newsom, perhaps best described as “seven lying serpents in a skinsuit,” just told a lie so big that even my jaded self had to sit back, take a sip of coffee, and admire the handiwork of whoever steam-cleaned the soul out of his body.

According to a video statement posted Tuesday to X, California under Newsom’s management “grew from three trillion dollars to four and a quarter trillion dollars. That’s a roughly 40 percent growth.”

In just seven years? Impressive, if true.

Meanwhile, poor Florida’s economy grew just 31.2% in that time, and those lazy laggards in Texas eked out even less growth than that, at 30%.

And you know what? It is true. The governor is 100% factually correct. Newsom is absolutely right when he says that “no other jurisdiction in the United States has come close” to California’s economic growth since 2019…

…with one tiny caveat. It’s only the smallest of details, a mere hideous cold sore breaking out on prom night.

You see, California did grow more than any other state, city, territory, or purely imaginary fantasyland in the United States, provided that you adjust every other state, city, territory, or purely imaginary fantasyland for inflation, but don’t adjust for inflation in California.

“We have no peers,” Newsom insisted. Yes, in sheer unadulterated cask-strength gall.

Braver souls than I have tried and failed to make it through the entire 26-second video, but here it is, should you decide to test your mettle.

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California’s Self-Inflicted Squeeze

Energy Island

Long time readers may recall the many articles we wrote over many years highlighting the madness of California planners and policymakers. We were born and raised in the land of fruits and nuts and lived and worked there for over four decades.

About four years ago, we made our California exodus. At the time, we thought our coverage of the Golden State’s self-destruction would continue. We still have family and friends there who we visit from time to time. But, as we’ve found, without a front row seat to the big show we’re less inclined to gawk at the insanity. Articles on California have diminished to a slow trickle.

Today, however, following a recent conversation with a friend and California resident, we aim our sights at our former home state. Once again, California delivers a rich example of what happens when central planning outweighs economic reality. Here the specific example involves extreme intervention in oil and gas markets.

Policymakers in Sacramento, over many decades, have operated under the assumption that if petroleum production, refining capacity, and fuel consumption were made sufficiently difficult and expensive, the market would rapidly transition to their preferred alternatives. The California Air Resources Board (CARB) has been the principal vehicle for implementing this vision through increasingly stringent fuel regulations, emissions mandates, low-carbon fuel standards, permitting requirements, and compliance costs imposed upon refiners operating within the state.

Yet the result has not been the energy transition that was promised. Instead, California has become increasingly dependent on foreign suppliers for products it once produced itself. This trend is particularly problematic because California is effectively an energy island. Unlike much of the United States, California lacks extensive pipeline connections to the major refining centers along the Gulf Coast.

The state also requires unique fuel formulations that relatively few refineries outside California are equipped to produce. Consequently, California’s fuel market functions largely as a self-contained system. When local refining capacity disappears, replacement supplies cannot simply be redirected from Texas or Louisiana with the turn of a valve.

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