Look Ma! It’s a Recession!

Posted on August 20, 2019 by admin

This just in: I haven’t been blogging for a while. I’m not exactly sure why but “futility” comes to mind. I’m just one person shouting into the wind. However, I think the time has come for me to post a few times; at least enough to clear my head.

Today, I’m going to talk about economics and the coming recession. A recession can have a few definitions but generally, it is a fall in Gross Domestic Product for 2 successive quarters. In short, we become less productive for about 6 months or more.

The two options available are Monetary and Fiscal.

Monetary refers to the abundance or scarcity of money. When there is more money in circulation, we tend to spend it. When we spend it, companies have to produce more. Jobs are created etc. To put more money into circulation, the Federal Reserve lowers interest rates. Lower rates mean we can borrow money cheaply. We buy houses and then fill those houses with stuff. Historically, the FED will take a 6.5% interest rate and maybe lower it to 2% or something like that. However, right now, money is already cheap (2.25%) so there is not much room to lower it even more. So, monetary policy is basically neutralized…not available to make a big impact.

Fiscal refers to government spending and taxation. The government can raise taxes that will take money out of consumer pockets and thus, cut spending. So, doing the opposite – cutting taxes, will put more money into people’s pockets and increase spending and thus, get the economy moving. However, we have already cut taxes more than we can afford to (see skyrocketing national debt). But wait, the government can increase spending and that will put money back into the economy. This works! However, if we are already spending more than we have, this should be kept as a last-ditch effort. For example, deficit spending is considered one of the best ways to get yourself out of a recession, once you are already there.

Tariffs are a form of taxation. In spite of what you are hearing from the White House, Americans are paying the taxes we are imposing on Chinese goods in the form of tariffs. There is no economic justification for the current tariffs. Yes, there seems to be some political justification but that is more of a Trump Personality issue. If we remove the tariffs, that gives us immediate relief from one of the biggest taxes out there.

Immigration, or lack of it, is a real problem. If we don’t allow immigration, we will not be able to sustain any real economic growth. This is because our population growth without immigration is dropping every year. If we have a fixed population and we want to have economic growth, then those that are working, have to be more productive year after year. Imagine how much you contribute to our economy right now. Next year, you must do even more, then more again. Immigration is not an economic burden. Immigration is an Economic Necessity if we are to avoid a recession. It is an Economic Necessity if we find ourselves in a recession and want to get out of it.

Green Energy is the next big economic driver in the world. If we want to be a part of it, we need to start playing. Economically, I am progressive. I’m looking forward and all I see is Green. Someone that is conservative is holding on to a past that is fading in our rearview mirror. Yes, you can invest in coal…but I wouldn’t recommend it and it is an industry in decline.

Trade opens more markets for our goods. Trade deals help amplify the benefits of trade. For us to make these agreements, we need to do two things: (1) make sure the interests of the other parties are also satisfied or they will not play and (2) make sure that people entering trade deals with us are confident that we will hold up our side of the deal. Right now, the entire world is side-stepping the United States on economic issues because we satisfy neither of these two requirements.

That’s enough for now. Time to save the world.

Up, up and away…

Jim

Trump is an Economic Moron

Posted on May 8, 2019 by admin

This just in: Trump has successfully marketed himself as a Deal Maker. I beg to differ. In fact, his sense of deals, business and the economy are all at a level of what I would suspect is a D level student.

Let’s start with his bankruptcies...

Trump has filed for Chapter 11 bankruptcy 6 times. That is 6 times more than I have.

Let’s look at his known taxes from the mid 80’s into the 90’s…

Trump lost over $1 billion. One of his ways of making money back then was to buy a lot of stock in a company and then let it leak out that he wanted to buy that company. This would cause the stock price to rise. When it did, Trump would sell at a profit. This worked for a couple of years until people found out he was conning them. Trump then lost all of the money he’d made through this scam.

Let’s look at his deal making...

So far he has reneged on the Paris Climate Accord, the Russian Missile Treaty, the Iran Nuclear Treaty, the Trans-Pacific Partnership and NAFTA. None of these has been replaced. He claims great progress is being made on all of these….He also claims that he has a plan for great health care so we know what to expect…nothing. How are you going to make a deal when you have a legacy of failure, conning and reneging?

Let’s take a look at his tariffs…

Tariffs are taxes paid by the country that is importing goods to the United States. So, if China wants to send us $100 of goods, they have to pay $25 in taxes. Trump claims this is hurting China and making us rich. However, a recent study showed that China is just adding that extra cost on to whatever they sell us. So, what you used to buy from China for $100 is now costing us $125. This means that it is the American Economy that is footing the bill for Trump’s tariffs. At the same time, China retaliates with tariffs on our exports to them. So, American soybeans now cost more in China. what happens? China buys soybeans from someone else. We lose again.

Everyone is welcome to like whatever political person they want. However, If you think Trump is a Deal Maker; if you think he is an economic genius…you are holding the score card upside down.

Time to save the world.

Up, up and away…

Jim

No Collusion, No Puppet

Posted on April 2, 2019 by admin

This just in: It appears that the Mueller report could not find enough evidence to charge Trump with Collusion with Russia. The report, what we know of it thus far, did state specifically that it did not exonerate Trump from the charge of Obstruction.

Of course, in the face of direct evidence to the contrary, Trump goes on tour and announces “The report completely exonerates me!” And his followers go wild.

I have long suspected that Trump did not have a collusion agreement with Russia. My primary reason for this is that Trump is not intellectually capable of such a complicated plot. What I do suspect is that Trump is what Hillary claimed in the debates – A puppet for Putin. And…Trump is not even aware of this. Putin strokes Trump just right and Trump does what Putin wants.

But let’s forget about Russia. If Russia didn’t exist, would Trump be a good president?

I would argue the following short list off the top of my head makes him unqualified:

Subverting the Constitution to spend money not authorized by Congress to build a border wall.

Statements like “There are good people on both sides” when referring to white supremacists and counter protesters.

When given the choice between compassion and cruelty, he chooses the latter. Note: Families seeking asylum at the southern border or Puerto Rico.

Cutting off aid to Central American countries in an effort to stop immigration. Completely ignoring the fact that this aid was helping to stem immigration to begin with.

Promotes “healthy asbestos” and “Vaccines cause Autism”.

Denies climate change and does everything in his power to promote the carbon industry while squashing the Green industries.

Lies constantly. For example, just before the 2018 elections he announced that they were working on a major tax cut of 10% for middle class families. This only existed in his head. Now he is claiming a great healthcare plan with better coverage and lower costs. To see it, all you need to do is re-elect him in 2020.

Supports brutal dictators around the world in places like Russia, Turkey, Saudi Arabia and North Korea.

Does not even pretend to be president for All Americans. You are either on his team or you are the enemy.

Supported a tax bill that adds trillions to our national debt while benefiting only the already very rich.

Likes to “grab them by the pussy” because when you’re famous you can get away with it.

Opposes the entire world by withdrawing from the Paris Climate Accord.

Calls members of Congress names in very much the same way a schoolyard bully would do.

Belittles our NATO allies and often muses about getting out.

Turned over our role as an international trade leader to China.

I could go on and on. My point is that the “Russia Thing” is just a small slice of Trump’s complete Pie of Incompetence.

Just a note on his healthcare plan. First of all, there is no plan. The Republicans have had 10 years to come up with a plan and the best they can do is “No, you shut up.” Anyway, Rick Scott has been put in charge of this. When asked how his plan is shaping up, he basically said, “Our plan, that does not exist, would be great except Nancy Pelosi will block it at some point in the future.”

He is actually blaming Pelosi for something she didn’t do to something he hasn’t created.

And yet…there are still people out there that vote for Republicans.

Amazing.

Time to save the world.

Up, up and away…

Jim

The insanity of Trump’s economics

Posted on July 3, 2018 by admin

This just in: It has been said that economics is a “soft science” because the outcomes of certain actions are not always predictable. In fact, there is an entire field of economics known as Behavioral Economics, that tries to find out why this is so. This diversity of outcomes from a repeated experiment is why we find several economic opinions that all differ with regards to nearly any given topic.

But there are some things we can count on, either by observation or irrefutable logic. On these types of issues, the economic world is in nearly unison with their recommendations.

One such issue is Trump’s fantasy world of economics. Nationally and abroad, the absurdity of Trump’s actions are astounding anyone that is paying attention.

Let’s look at a broad view of what I mean.

I will lay this out in steps, trying to put order to something that is nearly random.

Trump wants to deport millions of illegal aliens. These are people that have raised families here. They pay taxes. They commit crimes at a much lower rate than others. And, this is important, they are filling many of the jobs that most of us would not take due to the low pay. Trump’s policy of deporting these people is, in large part, justified by “They are taking away jobs that belong to U.S. citizens.” Somehow, Trump is saying that for every field hand we deport, a high paying job is Silicon Valley opens up.
Trump, and the Republican Congress passed a tax bill that takes from the nation as a whole, and gives to the vastly rich. There are two ideas behind this: (1) Rich people will hire us to mow their lawn if they have more money. This is known as Trickle-Down economics and is the most widely disproven economic theory there is. And (2) Corporations will use their tax breaks to raise wages. This makes the assumption that corporations are benevolent. Instead, companies exist to make a profit. If they already have employees that come to work for $x per hour, why would they pay more? In fact, they didn’t. Instead, they are in the process of buying back company stock which has the effect of enriching shareholders, not workers.
Trump cut subsidies for Green Energy, one of the fastest growing industries in the world today. Many of the jobs in this industry are good paying. Instead, Trump is investing in coal and other fossil fuels; an industry that is rapidly shrinking.
Trump dropped out of the Trans Pacific Partnership and is now threatening to drop out of the World Trade Organization. There is no clear reason for doing this but the outcomes are certain. These are the exact steps one would take if they wanted to reduce the amount of goods we sell overseas. Confusingly, Trump complains about the Trade Deficit all the time. He thinks its a bad thing (it’s not) and then he does the exact opposite of what it would take to increase exports.
Trump is putting tariffs on everyone that pisses him off. As president, he can levy a tariff as high as 25% if it is deemed necessary for national security. So, suddenly, Canadian cheese imports are a threat. The result of this is two-fold. First, is causes our trading partners to levy counter-tariffs against us. These counter-tariffs raise the price of our goods overseas. Harley Davidson is a good example of this. Tariffs placed on their product means they will sell fewer of these overseas…unless….they move the factories and jobs overseas…which is exactly what Harley Davidson is doing. Secondly, we now pay more for good that are imported. If we put a tax on imported steel, then everything that uses imported steel will cost us more. Already we are seeing spikes in goods like automobiles.

In summary, Trump touts jobs and then does everything he can to eliminate them. He claims he is putting more money into the hands of the middle class and yet, they small amount we all get from the tax cut is quickly eaten up by the higher prices we are paying for anything imported.

And here is the kicker. Europe, China and the rest of the world want to make this stop. they actually want to know what it will take to make Trump stop this Globally Destructive behavior.

The thing is, even Trump doesn’t know what he wants. The conversation goes like this…

Trump: Here are some tariffs on the rest of the world.

The World: What can we do to make you change your mind?

Trump: I have no idea.

Time to save the world.

Up, up and away…

Jim

My Progressive Rationale

Posted on June 8, 2018 by admin

This just in: I want to spend some time on today’s blog talking about why I “lean left”. But first…I’d like to tip my hat to Anthony Bourdain. He tragically took his own life yesterday. Those of us left behind get to miss him. As for Anthony…he is truly off on the final trip to Parts Unknown.

So, why am I a Progressive? Why do I use that term instead of “Liberal” or “Democrat”?

To me, “Progressive” describes someone that recognizes the world is in constant flux, always moving forward, not backward. Success belongs to those that prepare for what is coming rather than hugging on to that which is past.

“Liberal” makes me turn away. It sounds like a person that wants to give stuff away for free because it makes them feel good for some reason.

“Democrat” means “Not Republican” so I could live with that one.

I’d like to list a few items and tell you why I support them.

I support DACA and a path forwards for citizenship. I support this because these people are an integral part of our society. They are doctors and farm laborers. They pay their taxes and, as they stay in the United States, the look for ways to make things better for their families. In short, they contribute more to our economy and society than they take away from it.
I support Gun Control. Keep in mind, this is not “taking away guns.” People blame porn, lack of a God, energy drinks, mental illness and solar flares on the 35,000 gun deaths we experience every year. I think that is all nonsense. Why? Because every other country that experiences all of those things, does not kill itself with guns at anything near the rate we do. Guns guns the only difference. (see tab above for ideas about Gun Control)
I support higher taxes on the wealthy. Yes, this is a redistribution of wealth…but so was the latest tax cut which redistributed billions from the poor and middle class to the wealthy. This has nothing to do with envy or whatever the Atlas Shrugged people want to call it. When we have income inequality, the overall economy of our country suffers. Watch this TED talk about income inequality. Our overall quality of life, economy and position of power internationally all improve when this inequality is less.
I support universal health care. There is only one reason for this – it works far better than our current system in 100% of the countries that use it….and all industrialized countries besides the United States use it. We pay more and have poorer outcomes because…politics.
I support efforts to combat climate change. There is only one reason for this – 98% of all scientists and our military claim that climate change is real and is the greatest threat to our national security.
I support any program that makes sure children don’t go hungry. I do this because each child represents two potentials: (1) someone that drops out of school and becomes a burden to society and (2) someone that grows up, has a family and contributes to society. I believe a child with a full stomach is nudged towards the more positive of these two potentialities.
I support free education to whatever level you would like to attain. There is only one reason for this: We need educated people if we are to compete with the rest of the world. Short of making education free, we are only allowing the rich to attain it. Who is to say that the children of the top 1% have more potential than the other 99%.
I support higher taxes that give a positive return on investment. We can spend $10 billion on tanks and get nothing in return. Or, we can spend $10 billion on high-speed transportation which enables people to live outside the overprices housing markets in cities and still work in those cities. Money on universal healthcare and education is money that gives us a greater value in return than that of the tax dollars we invested.
I support getting out of the conflicts in the Middle East. We started going there for oil. We stayed there because we wanted to have influence and military bases. Today, we can conduct a war anywhere without actually having a base nearby. History books will have a hard time explaining why we are sending our kids to die in “over there” and why we are spending trillions of dollars to do so.
I support legalized abortion. Why? Because making it illegal only drives abortions into the alleys. It does nothing to reduce abortions. I support Planned Parenthood because it is the single biggest contributor to stopping unwanted pregnancies, and thus abortions.
I support government regulation. Not all regulations but those that protect the population and the environment. Why? I want to be able to eat grapes that don’t kill me. I want us to be in the game for the long run which means realizing that Earth is a finite resource that needs to be managed or lost.
I support a Constitutional Amendment that overturns Citizens United. Ever since that ruling, our government has become increasingly more corrupt. It’s not so much the money grabbing that’s bad. It’s the bad policy that comes from the money grabbing that it pulling us down.

Notice that none of these say, “I am a good person” or “God told me this”. I’m just going with the facts. When the data says universal healthcare works, I believe it. When Hannity says it doesn’t…I know he is lying.

The crux of the matter is being informed. If you think guns are not the problem, then you and I don’t differ on philosophy, we differ on degrees of information.

So there you have it. Am I a liberal? I don’t think so but you can call me that if it works for you.

I’m a progressive. I want policies that make us stronger overall. I want policies that use data to drive decisions.

And…I want to save the world.

Up, up and away…

Jim

Basking in the Glory of “Words”

Posted on May 24, 2018 by admin

This just in: I see that Trump allowed himself to get played by North Korea; today, stepping out of the proposed summit so that “He could do it before they did.”

Just in case you missed it, Trump has accomplished virtually nothing since taking office. Yes, some things have happened but nothing that would (or should) be considered an accomplishment.

Trump is very big on making a bold promise and then basking in the adulation. Here’s the deal…he actually doesn’t do anything other than say the words. I’m going to post a list of things that Trump has claimed credit for doing simple because he “says he’s going to do it.”

First, a couple of footnotes: (1) Trump recently told Leslie Stahl of 60 minutes that he calls news fake so that people will not believe it when bad stories are written about him and (2) In his book, The Art of the Deal, he says you can lie to people and then do whatever you want to do.

Here is my list….

Trump promised better healthcare at a much, much lower price. “The best healthcare you have ever seen.” He got lots of applause for this on the campaign trail…then did nothing. That’s not quite true. He actually made it worse by eliminating the “individual mandate”; a move that is supposed to add $1,000 to the average medical bill next year.
Trump promised to cut taxes which will bring jobs back to America, lower the debt and spur grow “like we’ve never seen before.” He claimed, without evidence, that GDP would grow at a rate above 5% under his plan. Again, people ate this up on the campaign trail believing that Trump could turn water into wine. As it turns out, he had no plan. This allowed the GOP to cut taxes for their billionaire donors, leaving the rest of the 99% to foot the bill of the largest deficit ever.
Trump promised to deal with North Korea. So far, his strongest action has been a tweet calling the leader of North Korea “rocket man.” On his watch, North Korea has developed the ability to strike North America with a nuclear tipped ballistic missile.
Trump said he would deal with the Iran threat. Instead, he reneged on a treaty with Iran and 5 other countries; opening the door for Iran to once again pursue the development of nuclear weapons.
Trump claimed that he would renegotiate the TransPacific Partnership trade deal. Instead, we dropped out and the deal moved forward without us; effectively reducing our ability to trade with about half the world.
Trump claimed that he would renegotiate NAFTA. Instead, both Canada and Mexico are looking for trading partners to replace us with.
Trump claimed he was going to “deal with China”. Instead, China claimed the South China Sea as their own. Economically, they have outplayed him in every way. China knows that Trump responds to flattery and bribes so they use both to great effect.
Trump claimed he would build a Mexico wall and have them pay for this. His supporters (those that fear we will become a non-Christian, non-white country) loved this idea. Mexico has told him to pack sand.
The biggest one is simply Trump getting on television and saying, “We have been the most productive administration of all time.” His followers believe this and applaud wildly.

Sadly, this too is just words. He brags. People hear what they want to hear. He retains his power.

Sad.

Time to save the world.

Up, up and away…

Jim

The Art of Donald Trump’s Con

Posted on May 8, 2018 by admin

This just in: Trump has failed at nearly every business undertaking except for real estate. If he had taken his dad’s money and just invested it in a Stock Market Index Fund, he would be worth more than 3 times what he is reportedly worth today. He has declared bankruptcy several times. Within the last decade, he has found that banks in the United States would no longer loan him money. He turned to Russia and now appears to be cash-rich. He started buying properties at market price and then, without making any improvements, sold those properties to Russians for huge profits; a practice most often associated with money laundering.

Take all of this in and then ask yourself, “Is Trump a genius or a con man? Is Trump laundering money with help from Russia? Is there a link between Trump’s benevolent attitude towards Russia and his financial dependence upon them?”

Let’s put all of that aside. Forget about it.

I now have a new question: Is Trump a genius negotiator or an idiot? In other words, is he a legitimate president or just a con man?

Let’s look at the deals he’s been involved with since taking office.

Healthcare: He promised much better healthcare at much lower prices. It turns out that neither he, nor the Republican Party had a plan. In fact, Trump has no idea how healthcare works. He claimed he was going to fix it without knowing what he was talking about.

NAFTA: Trump calls this the “worst deal ever,” and claims he will negotiate a much better deal for us. It turns out that his threats to back out of NAFTA have caused two of our top trading partners to look elsewhere for goods. Trump has never given any indication that he understands what is even in NAFTA.

TPP: This is another deal Trump calls “the worst deal ever.” He says this without once mentioning a single thing he does not like or would change. He apparently does not understand TPP any more than he understands NAFTA or Healthcare. He calls previous deals “the worst deal ever” so his followers can nod in agreement and pretend, along with Trump, that he has a plan.

Paris Climate Accord: Another deal that is the “worst ever.” Trump has demonstrated that he has no idea what is in this agreement saying, “He wants to negotiate a fairer deal for the United States,” even though everything in the accord is voluntary. If we want to participate less or pay less, then we can.

The Iran Non-Nuclear deal: Again, “the worse deal ever.” Trump has been saying the Iranians violated the deal by testing missiles. Clearly, he didn’t understand that Iran is free to test missile within the bounds of the agreement. Every other country that joined with the United States on this deal has urged Trump to stay with the agreement. Instead, Trump is stepping away.

All these deals were already made. The United States had already agreed to them. What Trump has done is renege on these deals without understanding even the basics about the deals and having no alternative. Why? So he could pretend that he could fix things.

But let’s continue…

Trump is imposing tariffs without understanding the very basics about such an action. He appears to know less about Economics than someone who has just completed their first week of Econ 101.

Trump supported a tax reform plan that gives virtually nothing to the middle class while enriching the top 1% of the population. In this instance, I’m not sure if he doesn’t understand the tax break or if he did this on purpose. Notably, there was a last minute “pass through” issue that basically enriches anyone in the real estate business…like Trump.

The Con continues as Trump takes credit for progress between North and South Korea. He does this expecting us to believe that his tweets about “Rocket Man” have brought the North to its knees. He has done nothing to help in that part of the world. Even North Korea says Trump has had nothing to do with the denuclearization talks going on now.

Trump has the Black Midas Touch. Everything he does make things worse. His EPA is dismantling itself; allowing for the rapid rise in nearly every area of pollution. He’s weakened consumer protection. He’s alienated NATO allies. He’s shown racist tendencies and legitimatized the rise of white supremacy. He’s actively supported the NRA while calling for “thoughts and prayers” and armed gym teachers as solutions to violence in schools. He thinks saying “don’t do drugs” will cure the opioid crisis. He thinks telling teens “don’t have sex” will lower teen pregnancy.

Notice all of this exists in addition to the Russian Collusion allegations or Trump’s constant lying.

This guy is a train wreck…and we put him in charge.

Just sayin…

Gotta run. It’s time to save the world.

Up, up and away…

Jim

How would you spend your taxes?

Posted on May 2, 2018 by admin

This just in: On 60 minutes a couple of weeks ago, there was a segment about a program at MIT where students invented stuff. Combine this with stories we often hear about soldiers that come back from the Middle East, traumatized, and with no idea of why they were sent there in the first place.

This made me think, “If I were King, how would I spend my tax dollars.”

I thought I would offer up a few choices.

Let’s start with…

Which would you rather do: (1) Pay no taxes and have only toll roads and private schools or (2) Pay taxes to finance things that promote the public good?
Which would you rather spend tax money on: (1) sending soldiers to Syria or (2) doubling the budget for NASA?
Which would you rather spend tax money on: (1) sending soldiers to Afghanistan or (2) high speed transportation between cities and population hubs?
Which would you rather spend tax money on: (1) Subsidizing the oil industry or (2) financing research into finding cures for things like Alzheimer’s or cancer?
Which would you rather spend tax money on: (1) A military that is larger than the next 10 militaries put together (many of whom are allies) or (2) State of the art education that is available to all Americans, not just the wealthy?
Which would you rather spend your tax money on: (1) Building a wall between the U.S. and Mexico that can be defeated by a $20 ladder or (2) Universal healthcare that makes sure no one ever goes without healthcare and no one ever declares bankruptcy because of their medical bills?
Which would you rather do: (1) Spend money on tanks and foot soldiers suitable for warfare as it existed 50 years ago but has no relevance to today or (2) Revitalize inner cities with the goal of every American being able to live free of fear with equal opportunity to the benefits of being an American (healthcare, education, freedom etc.)

And now one final one for my Republican readers (if there are any)…

Which would you prefer: (1) a food program that makes sure no child in our country ever goes hungry of (2) allowing millions of children to go hungry because less than 1% of those on such a program are lazy?

There you have it.

Now…I have to run off and save the world.

Up, up and away…

Jim

Choices

Posted on April 16, 2018 by admin

This just in: I was in Miami Beach last weekend. As I walked along a harbor, I was able to marvel at the super yachts lining the piers. These are boats that can easily cost tens of millions of dollars.

The thought crossed my mind, “I wonder how many of these yacht owners took their multi-million dollar tax cut and turned it into jobs?”

The answer is zero, of course.

People and companies don’t hire people unless they need to. They also don’t give pay raises unless they need to.

In other words, the tax break for the rich did nothing to increase wages or create jobs. This is Economics 101. If you don’t agree with this, then you lack education. This is not “a matter of opinion.” It’s a simple fact.

So, where did that tax break money go to? Well, individuals bought yachts or nicer houses or new dresses. Corporations bought back stock which served to enrich shareholders. If you don’t own stock, then you missed out on this as well.

The latest Congressional Budget Office analysis of the Republican Tax Bill is that it is going to bankrupt our country. It is increasing our national debt by $1-$2 trillion a year…forever going forward.

Meanwhile…90% of American see no benefit. None….

Eventually we will have to make some choices. Let me list a few here…

We can spend money on education. We can pay teachers living wages. We can buy textbooks and computers. OR…we can let the very rich continue to buy yachts.
We can maintain our roads and bridges. We can invest in high speed transportation that brings labor into cities that are too crowded and too expensive to live in. OR…we can continue to elect Republicans which are funded by groups like the Koch Brothers who are now making an additional $1 billion a year thanks to the tax break.
We can create a healthcare system that is the envy of the world. Or…we can allow income inequality to continue to grow so that for every $1 our country earns, $.99 go to the top 50 richest Americans…so they can buy more yachts.
We can provide for Social Security so that our elderly don’t spend the last few years of their lives in poverty or as burdens to their children OR we can continue to believe the line that “Big Government is Bad” and thus continue to elect people that will govern to the needs of the rich.

These are the kinds of choices we face. They are not new choices. They have always been there.

The right choice seems clear in every case. The only roadblock is the Populist Agenda. This is where someone with no educational background to support their assertion will tell you, “Vote for me and I’ll give you the best healthcare in the world and it will cost you nothing,” or “Vote for me and I’ll give you the biggest tax break in history and our economy will blossom with high paying jobs.”

Populism is basically promising people whatever they want to hear knowing that a large percentage will vote for you “just in case you really do know how to turn lead into gold.”

Populists are gullible and therein lies the problem.

Time for me to save the world.

Up, up and away…

Jim

La Ze Faire

Posted on March 22, 2018 by admin

This just in: I thought I would explain the impact of Trump’s tariffs in an easily digestible way.

First of all, tariffs cause inflation. Why?

Let’s suppose you by bagels at your local store for $1 per bagel. Then, one day, the son of the grocer wants to start making and selling his own bagels. Since the son is just starting out, he doesn’t have everything streamlined just yet so it costs him more to make a bagel than the original supplier. He needs to sell his bagels for $2 each. Now, the dad wants his son to succeed so he tells the original bagel supplier that for now on, he must pay a tax of $1.10 for each bagel sold at the store. This means his son’s bagels are cheaper than the competition and his business begins to thrive.

Good for the grocer; helping out his son that way.

What does this mean for you? Well, you used to pay $1 for a bagel and now you pay $2. This is inflation.

Trump is seeing our steel industry in much the same way as the grocer saw his son’s bagel shop. Good for Trump.

Except for the inflation part. We put a tariff on steel so, in the future, everything made from imported steel becomes more expensive.

Yes, this could help our steel industry but that would take decades. It’s not like a steel mill can be bought and unpackaged like something from Amazon Prime.

So, point #1: Tariffs cause inflation.

What else happens?

Countries that feel tariffs are unfairly imposed will fight back by putting tariffs on products that they import. Europe, China, Canada and Mexico are already preparing to do this.

Let’s go back to the Grocer example.

Suppose the grocer has a major customer for its vegetables. That customer is the brother of the original bagel manufacturer. The bagel guy tells his brother, “Hey, that grocer is charging me extra to sell my bagels, I think you should tell him that you will stop buying his vegetables unless he gives you a huge discount. That will teach him a lesson.”

So, the grocer lowers the selling price for his vegetables. Now, he can’t pay as much for his incoming vegetable supplies so he passes the loss to the farmer. The farmer can’t make a living at the new prices so he cut back on how many vegetables he grows hoping that the smaller supply will drive up prices. In the meantime, he has to lay off a bunch of workers.

In the end, bagels cost more; vegetables cost more and jobs disappear.

So, point #2: Unfair tariffs cause retaliation with side effects

What else happens?

The government/Central Bank has basically two ways to impact the economy: Fiscal and Monetary.

Fiscal policy is when the government increases or decreases spending to stimulate (or cool off) the economy. For example, if they want there to be more money in the economy, they can lower tax rates. Alternatively, they can increase employment. People with jobs will spend more money. This causes economic growth; at least in the short run. The problem is that putting more money into the economy causes inflation.

This brings us to Monetary Policy. The Federal Reserve (central bank) can raise and lower interest rates. When interest rates are low, people spend money instead of saving it. This causes inflation. When interest rates are high, people save money (because saved money earns high interest). This takes money out of the economy and lowers inflation.

The problem with raising the interest rate to control inflation is that is affects everything. If you want to by a house and have $500K to spend, you can by a bigger house when interest rates are low. When they are high, you can only buy a smaller house. If you own a house and interest rates go up, the value of your house goes down because it is now more expensive for someone to borrow money to buy your house.

Higher interest rates also cause companies to save. Instead of expanding they save. They won’t spend $10 million on a new production line if the interest on the money borrowed to buy that line eats up all of the potential profit from that line. No new line = no new jobs.

We recently lowered our taxes. Today, we just imposed tariffs.

It should come as no surprise that the Federal Reserve just raised interest rates.

So, point #3: We can control inflation but it comes at a price.

From my perspective, we are trying to fix an economy that isn’t broken by pulling on both ends of a rope at the same time. We cut taxes to to incentivize people to spend more which creates jobs. We impose tariffs that cause inflation. We raise interest rates to control inflation which causes us to save instead of spend which results in job loss.

This is the type of economic policy we get when we don’t have knowledgeable economists working in the White House.

Time to save the world.

Up, up and away…

Jim