We Have Seen This Play Before

The American economy is based on consumerism. Americans buy things and the economy continues. It is a rather delicate balance that can be manipulated for political purposes. We are currently watching an attempt to manipulate that economy for political purposes–President Trump’s strongest positive for re-election is the impact his administration has had on the economy. If the Democrats can ruin the economy, they might have a chance to win the presidency in 2020. After watching their behavior for the past two years, I am not surprised by any tactic they might use. So how are the Democrats and their friends in the media attempting to impact the economy?

The Associated Press reported today:

The threat of a recession doesn’t seem so remote anymore for investors in financial markets.

The yield on the closely watched 10-year Treasury fell so low Wednesday that, for the first time since 2007, it briefly crossed a threshold that has correctly predicted many past recessions. Weak economic data from Germany and China added to recent signals of a global slowdown.

That spooked investors, who responded by dumping stocks, sending the Dow Jones Industrial Average into an 800-point skid, its biggest drop of the year. The S&P 500 index dropped nearly 3% as the market erased all of its gains from a rally the day before. Tech stocks and banks led the broad sell-off. Retailers came under especially heavy selling pressure after Macy’s issued a dismal earnings report and cut its full-year forecast.

The article goes on to list things that the writer is convinced are evidence of an imminent recession. But let’s step back a minute. The American economy is cyclical. We have been in a growth spike for the past two years due to tax cuts and deregulation. Those factors are not changing. Unemployment is at historic lows. There are more jobs than workers. There is no evidence of that changing. We might be due for a correction in the stock market, but it’s not time to panic.

This tactic has been used before. In 1990, President George H.W. Bush agreed to a tax bill with the Democrats. The agreement broke his pledge of ‘no new taxes’, but it also did something else. The tax increase on luxury items worked its way through the economy causing a recession. Workers in industries making ‘luxury items’ lost their jobs are sales of these items decreased due to the tax increases. As those workers lost their jobs, they stopped going out to dinner, traveling, and doing the things that people do when economic times are good. People in service industries and tourism lost their jobs. The impact trickled through the economy, and we were in a recession. We were coming out of the recession during the campaign, but the media failed to note that.

In the coming days, watch for a media narrative of ‘the sky is falling’. That narrative will be in play for the next year in order to convince American voters to vote Democrat.

The only way to crash this economy is to panic the public. Large investors in the market with a political agenda can begin that process. The media can fan the flames.

The fundamentals of the American economy are strong. If Americans refuse to play along with a media-created financial panic, all will be well.

The Economy Continues To Move In A Positive Direction

Ed Morrissey posted an article at Hot Air today about the latest economic numbers. As usual when a Republican is President, the ‘experts’ were surprised that the numbers were better than expected.

The article reports:

It’s not great news for the White House, but it could have been a lot worse. The US economy’s growth slowed to 2.1% in the second quarter, down a full point from Q1. However, with economists predicting a recession right around the corner, the growth is still substantial enough to look positive:

Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the second quarter of 2019 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 3.1 percent.

The Bureau’s second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The “second” estimate for the second quarter, based on more complete data, will be released on August 29, 2019.

The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), federal government spending, and state and local government spending that were partly offset by negative contributions from private inventory investment, exports, nonresidential fixed investment and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The deceleration in real GDP in the second quarter reflected downturns in inventory investment, exports, and nonresidential fixed investment. These downturns were partly offset by accelerations in PCE and federal government spending.

President Trump weighed in on Twitter:

The article at Hot Air concludes:

“Not bad” is a little bit of an understatement, actually. It’s pretty good, especially in the context of the global economy. That’s the bigger anchor, especially the trade disputes that at least for one quarter hit our exports hard.

The steady growth with low inflation should result in the Federal Reserve lowering interest rates in the near future.

The House Of Representatives Accomplished Something Good

On Tuesday The Hill posted an article about the vote in the U.S. House of Representatives on the bill titled, “Opposing efforts to delegitimize the State of Israel and the Global Boycott, Divestment, and Sanctions Movement targeting Israel.” A similar bill was introduced in the Senate, but was referred to the Committee on Foreign Relations on March 25, 2019. No further action has been taken on the Senate bill.

The final vote was 398 yeas, 17 nays, 5 voting present, and 12 not voting. (The numbers are from the U.S. House of Representatives website.)

The article at The Hill notes:

The resolution’s opponents included progressive freshmen Reps. Ilhan Omar (D-Minn.) and Rashida Tlaib (D-Mich.), who support the BDS movement.

House Democratic leaders brought the resolution to the floor under a fast-track process that required a two-thirds majority for passage and limited debate to 40 minutes. No one spoke in opposition to the resolution during the allotted debate, but the two progressives delivered floor speeches earlier in the day to express why they’d vote against it.

Tlaib, citing her family’s Palestinian roots, said she “can’t stand by and watch this attack on our freedom of speech and the right to boycott the racist policies of the government in the state of Israel.”

Someone should point out to Tlaib that Palestinians have full rights in Israel. They are more free and more prosperous than the Palestinians that live anywhere outside of Israel.

The article continues:

Lawmakers opposed to BDS stressed that the boycott movement against Israel is unlike other boycotts in American history, arguing that it espouses anti-Semitic views and undermines the prospects for peace in the long-running Palestinian conflict

“Here’s the thing about the global BDS movement: I don’t believe it promotes racial justice or social change at all. It promotes a one-sided view of the Israeli-Palestinian conflict that seeks to marginalize Israel, that would deny the Jewish people the right of national self-determination,” House Foreign Affairs Committee Chairman Eliot Engel (D-N.Y.) said during floor debate.

“You want to criticize a government, that’s your right. You want to stop buying products from a certain country, that’s also your right. But participating in an international commercial effort that undermines Israel’s legitimacy and scuttles the chances of a two-state solution isn’t the same as an individual exercising First Amendment rights,” Engel added.

Unfortunately, the Palestinians have illustrated the fact in recent years that they are not interested in becoming a positive member of the global community. In 2005 Israel removed its settlers from the Gaza Strip and turned the land over to the Arabs. Up until that point the Gaza Strip was the home of greenhouses that supplied fruit and vegetables around the world and had a flourishing economy. The first thing the Arabs did was destroy the greenhouses (and thus destroyed the basis for the thriving economy). Since that time the Gaza Strip has been used as a base for firing rockets and building terrorist tunnels into Israel. Money given to the Arabs that was earmarked for humanitarian purposes has been instead used to buy weapons and build tunnels. The Palestinians do not want to exist peacefully in a two-state solution–they want to destroy Israel.

The following is taken from an article I posted in January 2018:

Until the Palestinians stop training their children to kill Jews, there will be no peace in the Middle East. The BDS Movement is simply another way to attack Israel. I am glad most of the House of Representatives understood that.

The Arrival Of Robin Hood

Remember teaching your children that money doesn’t grow on trees and that they have to earn it? Evidently some of our members of Congress never learned that lesson.

Yesterday Breitbart posted an article about some recent statements made by Representative Rashida Tlaib, a Democrat from Minnesota.

The article reports:

Far-left “Squad” member Rep. Rashida Tlaib (D-MI) spoke at the NAACP convention over the weekend and railed against the GOP tax cuts in a pitch for her anti-poverty BOOST Act, promising to take money from the rich and give it “back to the people that earned it.”

Tlaib introduced her anti-poverty legislation – the Building Our Opportunities to Survive and Thrive (BOOST) Act – last month and spoke about it at the NAACP convention over the weekend. The proposal offers a guaranteed income – up to $6,000 per year – to families and individuals under certain financial thresholds via a “refundable tax credit that can be paid monthly.”

The Michigan lawmaker’s BOOST Act serves as her response to what she calls the “GOP Tax Scam,” despite the fact that two-thirds of Americans will pay less in taxes in 2018, thanks to the tax cuts.

“Recently, I introduced the Boost Act. This legislation completely repeals the GOP Tax Scam that is only helping wealthy individuals – the rich, the corporations,” she told the crowd.

“And do you know what I did with that money? Do you know what I said? We’re going to go ahead and put it in the pockets of folks like everyday Americans,” she said, noting that families making less than $100,000 could get up to $6,000 per year.

Taking the moral route, Tlaib said it is important to give money back to the people who actually “earned” it, suggesting that wealthy individuals do not earn or deserve to keep the fruits of their labor.

 I guess the Democrats have decided that class warfare works better than racism. Their playbook is getting very old.

The article notes the impact of the GOP tax cuts:

The economy has seen a boost from the GOP tax cuts, with companies issuing employee bonuses and announcing plans to invest billions in the U.S., thereby providing thousands of new jobs.

Last year, Exxon Mobil announced that it would invest $50 billion in the U.S. economy, adding 12,000 new jobs, thanks to the GOP tax cuts.

Even Starbucks, a notoriously left-leaning company, used millions of its corporate tax cut to raise the wage for existing workers.

Under Tlaib’s economic plan, the people who would benefit are the people who are not working; and the people who would lose are the people who work for a living. How long would it be before those who are working to give those who don’t work a free ride would see the folly of their ways and quit producing? That’s where socialism always winds up.

How Do You Run Against This Record?

Yesterday Byron York posted an article at The Washington Examiner about the 2020 Presidential election. The title of the article is, “Byron York: Dem 2020 task: Convince voters to overlook economy.” He is right assuming that the economy continues to do as well as it has. We need to remember that the Federal Reserve is in a position to undercut our prosperity. A few key interest rate raises would definitely slow down our growth. The fed is already making noises that it might not cut rates this year as previously expected. That might also have a negative impact on our growing economy. I am not convinced that the problem the Democrats have is to convince voters to overlook the economy as much as all Americans need to make sure that political forces do not move to wreck a good economy for political gain.

The article concludes:

“Trump’s tenure is straining one of the most enduring rules in presidential politics: the conviction that a strong economy benefits the party holding the White House,” wrote analyst Ron Brownstein in The Atlantic. “Across many of the key groups in the electorate, from young people to white college graduates, Trump’s job-approval rating consistently runs at least 25 points below the share of voters who hold positive views about either the national economy or their personal financial situation.”

Of course Democrats can’t ignore the economy. So far, when they have addressed it, they haven’t been terribly creative, relying on the standard-issue Democratic critique of Republican presidents — that Trump is creating an economy that only benefits his rich friends.

“Who is this economy really working for?” asked Elizabeth Warren at the first Democratic debate. “It’s doing great for a thinner and thinner slice at the top.”

It’s not clear how well that will work. As the Wall Street Journal editorial board pointed out recently, under Trump, “wages are rising at the fastest rate in a decade for lower-skilled workers, and unemployment among less-educated Americans and minorities is near a record low.” The result of the president’s policies, the Journal argued, “has been faster growth and less inequality.”

Another way to say that is that millions of Americans are better off than they were four years ago. The question in 2020 will be whether that matters.

Actually, if the  Democrat debates continue at their present level of relevance, President Trump may easily cruise into another term as President.

Wrong Again

Remember when the talking heads on television told us that because of the tariffs President Trump had placed on China, the cost of imports would go up. Well, they misread the tea leaves again.

The Gateway Pundit posted the following from the Bureau of Labor Statistics:

Prices for U.S. imports declined 0.3 percent in May, the U.S. Bureau of Labor Statistics reported today, following an increase of 0.1 percent the previous month. Lower fuel and nonfuel prices contributed to the May decline in import prices. U.S. export prices fell 0.2 percent in May, after advancing 0.1 percent in April, 0.8 percent in March, and 0.6 percent in February.

Imports

U.S. Import prices fell 0.3 percent in May, the first monthly decline since a 1.4-percent drop in December. Import prices advanced 1.8 percent from December to April before the downturn in May. The price index for overall imports decreased 1.5 percent over the past 12 months, matching the drop in January. These were the largest over-the-year declines since the index fell 2.2 percent in August 2016.

Fuel Imports: Import fuel prices declined 1.0 percent in May, after rising 25.4 percent over the previous 4 months. Lower prices for both petroleum and natural gas contributed to the May decline. Petroleum prices fell 0.9 percent in May, after a 4.7-percent advance in April. The May decrease was the first monthly decline since a 15.3-percent drop in December. Natural gas prices fell 6.8 percent in May following a 51.1-percent decline the previous month. Overall fuel prices decreased 1.1 percent over the past year. The decline was driven by a 1.9-percent drop in petroleum prices which more than offset a 2.5-percent rise in natural gas prices.

The Gateway Pundit article concludes:

The lower costs on fuel allowed the overall import costs to go down for the month.  This is in the face of tariffs the Trump Administration put on China as a result of inaction from the Chinese in coming together on a trade agreement with the US.

Despite what all the liberal naysayers said about increasing tariffs costing Americans millions, the costs of imports are actually down.

Overall the US economy is in very solid shape –

The experts seem to be having a very difficult time getting things right under the Trump administration.

The Trump Economy Is Doing Very Well

CNBC posted an article yesterday about the economy under President Trump.

The article reports:

The total number of workers hired rose to a new high in April, according to Labor Department data released Monday. But despite this, the amount of available jobs still vastly outnumbers unemployed workers.

Hirings increased to 5.9 million for the month, a gain of 240,000 from March, the Job Openings and Labor Turnover Survey (JOLTS) indicated. The hiring rate rose to 3.9%, an increase of one-tenth of a percentage point. The total hirings was the most recorded in the data series’ history going back to December 2000.

On the openings front, the gap between vacancies and available workers continued to be huge.

The article explains:

“In sum, the labor market remains strong and poised for continued solid job growth,” Ward McCarthy, chief financial U.S. economist at Jefferies, said in a note. “Despite the 21.4 [million] private sector jobs that have been generated to-date this cycle, the private business sector continues to generate a very strong demand for labor that is evidenced by the very large number of job openings that business wants to fill. The biggest threat to job growth is available supply, not demand for labor.”

Separations increased by 70,000 to 5.58 million, a rate of 3.7%, which was unchanged from March.

The JOLTS data lags other employment indicators by a month but is nonetheless watched closely by the White House and the Federal Reserve as an indicator of labor market slack. A large number of available workers compared with job openings would indicate a tight market in which wages should be rising.

The current economy has created wage increases and job opportunities for the middle class, which languished under President Obama. Unemployment among minorities is lower than it has ever been and wages are increasing for minorities. This is a success story the media is working very hard to ignore.

We Need To Get Healthcare Right

Yesterday Issues and Insights posted an article about ObamaCare 10 years out.

The article reports:

Based on polling data, Obamacare has been a miserable failure, and Obama will be far from the last president to grapple with this issue.

The most recent Wall Street Journal/NBC News poll finds that health care is at the top of the nation’s priority list, with 24 percent of respondents listing it as their top priority for the federal government. Next on the list is immigration, at 18 percent, and after that, economic growth at 14 percent. 

The poll also found that 42 percent list health care as either their first or second choice on the priority list.

Back in June 2008, when Obama was running for president, only 8 percent rated health care as a top priority, just 20 percent as their first or second priority. Of course, the economy was in a recession and the country at war with Iraq, both of which weighed heavily on the public’s mind at the time.

But even in earlier years when the economy was doing well, health care ranked far lower on the list of priorities than it does today. In June 2006, only 14 percent ranked it as No. 1 on their list. A year later, 15 percent said it was their top priority.

The public has not been impressed with ObamaCare:

An ongoing Gallup survey finds that the public was actually more satisfied with their own coverage and quality of health care in 2007 than they were in 2018. Other surveys find cost remains a major complaint.

The article lists a few problems with ObamaCare:

It has done nothing to slow, much less reverse, the rising cost of health care. In fact, Obamacare itself caused premiums in the individual market to more than double in its first four years.

…National health spending, which was 16.3 percent of GDP in 2008, is now 17.9 percent and is slated to hit 19.4 percent by 2027. Per-capita spending on healthcare jumped from $7,898 to $10,739 over those years.

Far from driving the deficit down, Obamacare is pushing federal red ink up. The Congressional Budget Office has calculated that repealing Obamacare would cut the deficit by some $473 billion in the first 10 years

Rather than admit failure, the Democrats simply want to throw more money at it.

The article concludes:

Naturally, because of these failures, the Democrats’ answer is to dump even more taxpayer money into government-run health care programs, with most now favoring a $32 trillion plan developed by socialist Bernie Sanders to have the government nationalize the entire health insurance industry.

Only in government, and only among fans of big government, are massive failures like Obamacare rewarded with still more government. 

Sad News For The American Economy

One entity that controls the American economy is the Federal Reserve (which is not controlled by the government). It’s board members are nominated by the President and approved by Congress, but it is a private entity. Unfortunately it is part of the globalist cabal that seeks to undermine American sovereignty. President Trump has attempted to put two skilled businessmen on the Federal Reserve recently. The globalists in Congress have caused both men to withdraw their nominations. In the coming year, you can expect the Federal Reserve to subtly move to make the re-election of President Trump more difficult. I expect rate hikes leading up to the election to counter a healthy economy that is rapidly expanding. President Trump is not a globalist, and the globalists really want him gone. Globalists in Congress include both Democrats and Republicans (that is why it is so difficult to secure our borders).

The Gateway Pundit is reporting today that Stephen Moore has withdrawn his nomination to the Federal Reserve Board.

The article reports:

Stephen Moore has a distinguished career in leadership roles at Heritage and The Wall Street Journal. Stephen Moore is a founder at the Club for Growth. Moore was an early Trump campaign supporter and wrote the book Trumponomics.

Moore is a presidential adviser and friend and is an architect of the greatest economic boom since Ronald Reagan.

In September Stephen Moore spoke at the Gateway Eagle Council in St. Louis, Missouri.

And in December Steve criticized Federal Reserve Chairman Jerome Powell for his irresponsible and dangerous rate hikes and threats of rate hikes. Powell was able to unilaterally stall the US economic boom in its tracks and cost the US economy hundreds of billions of dollars.

Moore wrote that it was time for Powell to resign. Moore was right.

The article includes excerpts from a World Net Daily article explaining why Jerome Powell should resign:

The Fed had already reduced the monetary thrust that it provides to the economy eight times since Dec. 15, 2015, by raising its federal funds interest rate from 0.25 percent to 2.25 percent. Each time, the Fed claimed that it needed to guard our economic airliner from inflationary “overheating” – as if its job is to prevent too many people from working and to make sure that paychecks aren’t rising too quickly.

Unfortunately, if you cut engine power too far on a jetliner, it will stall and drop out of the sky.

On Wednesday, Dec. 19, despite the numerous market-based alarms that were sounding in the cockpit, Federal Reserve Chairman Jerome Powell and his co-pilots on the Federal Open Market Committee – a committee within the Federal Reserve System charged under the United States law with overseeing the nation’s open market operations and which makes key decisions about interest rates and the growth of the U.S. money supply – voted to raise the funds rate to 2.50 percent. This sucks more dollars out of the economy at a time when the world is demanding more dollars – thanks to Trump’s tax-cutting and deregulation policies.

Powell has been entirely tone-deaf to the financial markets he seeks to protect. The Dow Jones Industrial average, which had risen by 382 points on hopes that the Fed would listen to Trump and stop cutting power, plunged by 895 points after the 2 p.m. announcement, and closed the day down 352 points (1.49 percent). Poof. Trillions of dollars of wealth vanished.

The article at The Gateway Pundit concludes:

The Democrats and Deep State apparatus does not want Stephen Moore on the board of the Federal Reserve. Stephen is the perfect pick for the job. Now the deep state is attacking Steve and his family.

Republican Senators Joni Ernst (R-IA), Shelley Moore Capito (R-WV), Lisa Murkowsky (R-AL) and anti-Trumper Mitt Romney (R-UT) expressed reservations this week. The Republican senators effectively killed Steve Moore’s nomination.

The Republicans voiced concerns over Moore’s nomination for comments he made nearly 20 years ago about women earning as much as men in fields like women’s sports.

On Thursday Steve Moore withdrew his nomination for the Federal Reserve Board.

It was a victory for anti-Trump globalists everywhere.

Stephen Moore’s withdrawal of his nomination is America’s loss.

The Latest Economic Numbers

On Friday, Market Watch reported that the U.S. economy did better than expected during the first three months of 2019.

The article reports:

Reports of the demise of the U.S. economy proved unfounded as first-quarter activity showed surprising strength. The U.S. economy expanded at a 3.2% annual pace in the first three months of 2019, the government said Friday.

The gain was well above forecasts. Economists polled by MarketWatch had forecast a 2.3% increase in gross domestic product. The economy grew at a 2.2% rate in the final three months of 2018.

Inflation moderated a bit in the first quarter.

The article includes other good economic news:

Final sales to domestic purchasers, which excludes trade and inventory behavior, rose 2.3% in the first quarter, the smallest gain in three years, but still well above what economists were expecting.

The value of inventories increased to $128.4 billion from $96.8 billion, adding to GDP.

The trade sector added a little more than 1% to growth in the first quarter. Exports rose 3.7%, while imports dropped by the same amount, leading to a smaller trade deficit.

Offsetting these gains, consumer spending decelerated to a 1.2% gain, the slowest increase in a year.

Business fixed investment decelerated to a relatively slow 2.7% gain, down from a 5.4% gain in the prior quarter. Investment in structures fell 0.8%, the third straight decline.

Investment in new housing was another weak spot. Residential investment dropped 2.8%, the fifth straight quarterly decline.

I believe that the weakness in the housing market is being caused by a number of things. The millennials, the generation that would currently be entering the housing market, are weighed down by student debt. There is also a different attitude among young Americans about owning a house that there was a few generations ago. In the past, many Americans looked at their home as an investment–something that would grow in value over the years. Many older people began with a ‘starter house’–a small house that allowed them to enter into the housing market. Today, couples are having children later than previous generations. Their first house is paid for by two incomes, and they are not dealing with the expense of having children. The concept of a ‘starter house’ is no longer with us. Those facts, along with the price of the home most young people want to own are working to slow down the housing market. I am not convinced any of those factors are going to change.

Trying To Drive A Stake Through The Establishment

On March 22, President Trump nominated Stephen Moore to serve on the Board of the Federal Reserve. The establishment began their attack almost immediately. Why? Because Stephen Moore is a respected economist who will rock the boat of the establishment. He supports the economic policies of President Trump (which incidentally have been successful in reviving a struggling economy). The negative reports and personal attacks are all through the mainstream media–very little is being said about the accomplishments of Stephen Moore.

In December 2018, World Net Daily posted an article by Stephen Moore titled, “Fire the Fed.” Stephen Moore called on Chairman Powell to resign in wake of interest-rate hike.

In the article, Stephen Moore states:

In one of the most remarkable Abbott and Costello routines in modern times, the economic wizards at the Fed again raised interest rates on Tuesday. Their crackerjack logic for doing so is to steer America on a course toward recession so they have the tools in hand to end the recession they themselves created. Can anyone tell us who’s on first?

Worse, this Fed move doubles down on its blunderous interest rate rise in September. President Donald Trump turned out to be exactly right: The central bank pullback on money would slow growth and crush the stock market in order to combat nonexistent inflation.

…Since its peak on Oct. 3, which, not coincidentally, was right after Powell gave a speech suggesting that the Fed might be through tightening money, the Dow has fallen by more than 3,500 points. Market fears about his bad judgment have cut the value of all U.S. stocks by about $4.5 trillion, which is enough to buy 16,000 Boeing 787 Dreamliners.

The Fed economists use twisted logic that the economy is “strong enough” to absorb the rate hikes – which is simply an admission that their policy will slow growth.

Stephen Moore needs to be on the Board of the Federal Reserve. His presence might prevent the Federal Reserve from raising rates just before the 2020 election in order to cause a recession. Just as the Federal Reserve kept rates low during the Obama administration to give the appearance of a healthy economy, they may raise those rates in the coming year to give the impression that President Trump’s economic policies are not working. They need a watchdog.

Even The Good News Is Clouded With Doom When The Media Reports It

Market Watch posted an article yesterday about the January trade deficit in America. The article notes that the deficit shrank to $51.1 billion in January from almost $60 billion in December. That is really good news. However, the media doesn’t seem to want good economic news.

The article notes:

Economists polled by MarketWatch had forecast a $57.7 billion deficit.

Notice that they were more than a little off.

The article continues:

The lower U.S. trade deficit, if it persists, could provide a small boost in the first quarter to gross domestic product, the official scorecard of the economy. But the drop in imports could also be taken as sign of softening demand in the U.S. that adds to worries about a slower growth.

Whatever the case, the U.S. is coming off the highest annual deficit in a decade and it’s unlikely the gap will shrink much if at all in 2019.

The President is renegotiating trade deals. This is not an ‘instant’ process. His negotiating skills and business acumen are responsible for the growing economy–the unemployment rate is down and the workforce participation rate is up. Can someone in the media please give President Trump a little credit and show a little optimism.

Propping Up A Dictator

One America News is reporting today that two Russian air force planes landed in Venezuela’s main airport on Saturday carrying a Russian defense official and nearly 100 troops. This is reported by a local journalist.

The article reports:

Reporter Javier Mayorca wrote on Twitter on Saturday that the first plane carried Vasily Tonkoshkurov, chief of staff of the ground forces, adding that the second was a cargo plane carrying 35 tonnes of material.

An Ilyushin IL-62 passenger jet and an Antonov AN-124 military cargo plane left for Caracas on Friday from Russian military airport Chkalovsky, stopping along the way in Syria, according to flight-tracking website Flightradar24.

The cargo plane left Caracas on Sunday afternoon, according to Adsbexchange, another flight-tracking site.

It sounds as if the Russians are attempting to duplicate what they did in Cuba many years ago, support an unpopular dictator who will be a thorn in the side of America. The Russians have another reason to want to keep Venezuela indirectly under their control.

On March 22nd The Miami Herald reported:

Cuba would have to spend nearly $2 billion a year to meet its domestic oil needs if Venezuela’s National Assembly and interim president Juan Guaidó manage to stop deliveries to the Caribbean island.

“Cuba’s demand for oil is about 130,000 barrels per day, and Cuba produces about 50,000 barrels per day, which means a deficit of about 80,000 barrels per day,” said Jorge Piñón, director of the Latin American Energy Program at the University of Texas at Austin.

Piñón estimates that Cuba has fuel reserves for about 45 days. But the end of deliveries by Venezuela’s PDVSA oil company would force the government to spend nearly $5.2 million per day at the market price of $65 per barrel for the 80,000 barrels per day it would need to import to meet demand.

By the end of one year, that would add up to nearly $2 billion for an economy that economists agree has not reached 2 percent annual growth in recent years and has probably experienced a recession.

The National Assembly, controlled by the opposition, recently ordered a suspension of crude shipments to Cuba, which started under an agreement to exchange oil for medical services negotiated by the late Fidel Castro and Hugo Chávez.

PDVSA now ships an estimated 40,000 to 50,000 barrels per day to Cuba, not quite half of what the oil company sent before it spiraled into an unprecedented crisis under the Nicolás Maduro regime.

There is also another aspect of Venezuela’s oil shipments.

In November 2013, I reported:

On Friday the Associated Press reported that PDVSA, the government-owned oil producer in Venezuela, seized control of two oil rigs owned by a unit of Houston-based Superior Energy Services. The company had shut down the rigs because the Venezuela oil monopoly was behind on payments.

Nicolas Maduro, the successor to Hugo Chavez, has not taken over any industries during the six months he has been President of Venezuela. This is the first move he has made in that direction. When Hugo Chavez began taking over industries, one news analyst observed that it would be difficult for him to keep those industries running at their profit levels without the knowledge of the companies that owned them. The seizure of these two rigs, which are repair rigs, is an illustration of that point.

Like it or not, free enterprise generates more wealth for more people than socialism.

It is a safe bet that oil production is only a fraction of what it was before Maduro took over the oil industry. That adds to the financial woes of Venezuela and will also have an impact of Cuba.

Following The Money On Renewable Energy

John Hinderaker at Power Line Blog posted an article yesterday about the cost of the a green energy proposal in Minnesota. The article illustrates what will happen if this sort of program is attempted on a national scale.

The article reports:

Today Center of the American Experiment released a groundbreaking paper that addresses a relatively mild “green” proposal: legislation that would raise the renewable energy standard in Minnesota from 25% to 50%. Two of my staffers have been working on the paper for months, drawing on publicly available (but rarely consulted) sources to understand what would be necessary to achieve that 50% goal, what it would cost, how it would impact the state’s economy, and what effect it would have on global temperatures.

The paper is titled “Doubling Down on Failure: How a 50 Percent by 2030 Renewable Energy Standard Would Cost Minnesota $80.2 Billion.” With appendices, it runs to 75 pages. I am not aware of a similarly comprehensive analysis that has been done of any “green” proposal at either the state or the federal level. The paper is fully transparent: all assumptions, data and calculations are clearly set forth. The appendices are largely spread sheets. If anyone disagrees with the report’s conclusions, it should be easy to identify where and why those disagreements arise. You can read the paper here.

The article cites a few highlights from the report:

* Building and maintaining “green” wind and solar facilities, along with transmission lines and necessary natural gas complementary plants (to provide electricity when the wind isn’t blowing, i.e. 60% of the time), would cost $80.2 billion through 2050. For a state like Minnesota, that number is out of the question.

* Every household in Minnesota would pay an average of $1,200 per year, in 2016 dollars, through higher electricity rates and otherwise.

* Electricity prices would rise by 40.2%.

* Electricity-intensive industries like mining, agriculture, manufacturing and health care would be hurt the most. Once again, urban greenies are hammering rural, and physically productive, America. [That last is my commentary, not found in the executive summary.]

* Higher electricity prices are a dead loss that will reduce spending in other areas as household budgets are squeezed. Therefore, according to economist John Phelan, using the generally accepted IMPLAN software, achieving the 50% renewable goal would cost Minnesota 21,000 permanent jobs, and reduce the state’s GDP by $3.1 billion annually. It is one small step on the road to Venezuela.

This really does not sound like a good idea. The push for green energy has always been about government power–whether at the state or federal level. It is interesting that the political left has chosen to attack fossil fuels just at the time when America has achieved energy independence because of fossil fuels and fossil fuels are driving our economic success. Economic success is the enemy of those who espouse socialism–if people are become prosperous, why would they want something different?

Facts Are Such Inconvenient Things

The biggest advantage the Republicans will have in 2020 is a strong economy. Because the Democrats know this, they are trying very hard to downplay the economic recovery that is currently taking place. They have invented some interesting facts in their attempt to do this. However, the alternative media has learned to fact check these attempts to downplay President Trump’s economic success.

Townhall posted an article today that includes some recent fact checking.

The article reports on some recent statement by Kamala Harris:

First, I’m not sure many economists or Republicans cite the stock market as the top indicator of economic health, despite her initial straw man claim. There are many other metrics that are more indicative and more helpful to building that argument, which we’ll mention in a moment.  But it’s also worth pointing out that a robust stock market is not merely good news for people who own stocks, as Harris sarcastically says.  Plenty of workers’ benefit and retirement funds, including those of many public sector employees, are tied into the performance of the stock market — so it’s not just investors who benefit when markets are humming along, and it’s not just investors who feel pain when markets sustain hits. 

Second, in her attempt to downplay the impressive, stable and low US unemployment rate, Harris recycles a claim for which AOC was slapped down by fact-checkers a few months ago.  Even left-leaning Politifact assigned her a “pants on fire” rating.  Harris’ spin is less explicitly clumsy and wrong than AOC’s, as she didn’t specifically state that the low rate is directly attributable to people working more than one job, which makes absolutely no sense — but she does use this argument to undercut the (compelling) argument that the economy is in good shape because so many Americans are employed.  While it’s certainly true that a substantial number of people are working multiple jobs in order to make ends meet, it’s not accurate to pretend that this phenomenon is sufficiently widespread as to justify Harris’ talking point.

The article further reports:

The February jobs report found that just five percent of the employed population is working more than one job, down from 5.2 percent one year ago.  The experiences of the people who constitute that five percent matter, of course, but they are not evidence of a larger trend — and certainly not a trend that represents a real basis to shrug off the historically-low unemployment rate.  The jobs report that came out on Friday was a major ‘miss’ on a key number, with the US economy adding only 20,000 jobs last month; economists were expecting 180,000.  That’s a potentially concerning data point, underscoring the folly of simply assuming that the current prosperity streak will continue unabated.  But there were positive statistics, too.  The previous two months’ job creation data was revised upward by 12,000, and the overall unemployment rate fell to 3.8 percent.  That marks 12 consecutive months, a full year, with the U3 figure at or below four percent, which is unambiguously good.

The article concludes:

Sustainability is a fair worry for the White House, but as of this moment, the most useful measuring sticks of the US economy are unemployment (3.8 percent), GDP growth (3.1 percent Q4 to Q4), and wage growth (3.4 percent).  All three are impressive.  Harris’ snarky point, therefore, is weak.  

As wages and jobs increase, voters will have to decide whether to believe what they are experiencing or what they are being told.

This Lady Needs To Read American History

The Herald Mail Media reported yesterday that Representative Alexandria Ocasio-Cortez, speaking at the South by Southwest conference in Austin, Texas, stated the following:

“Capitalism is an ideology of capital — the most important thing is the concentration of capital and to seek and maximize profit,” Ocasio-Cortez said. And that comes at any cost to people and to the environment, she said, “so to me capitalism is irredeemable.”

Although she said she doesn’t think all parts of capitalism should be abandoned, “we’re reckoning with the consequences of putting profit above everything else in society. And what that means is people can’t afford to live. For me, it’s a question of priorities and right now I don’t think our model is sustainable.”

…While America is wealthier than ever, wealth is enjoyed “by fewer than ever,” she said.

“It doesn’t feel good to live in an unequal society,” she said, citing an increase in homelessness in New York City among veterans and the elderly while penthouses sit empty. “It doesn’t feel good to live in a society like that.”

Let’s look at those statements through the lens of American history. In November 2005, the Heritage Foundation published an article about communism in America.

The article included the following notes on American history:

Recalling the story of the Pilgrims is a Thanksgiving tradition, but do you know the real story behind their triumph over hunger and poverty at Plymouth Colony nearly four centuries ago? Their salvation stemmed not so much from the charitable gestures of local Indians, but from their courageous decision to embrace the free-market principle of private property ownership a century and a half before Adam Smith wrote The Wealth of Nations.

Writing in his diary of the dire economic straits and self-destructive behavior that consumed his fellow Puritans shortly after their arrival, Governor William Bradford painted a picture of destitute settlers selling their clothes and bed coverings for food while others “became servants to the Indians,” cutting wood and fetching water in exchange for “a capful of corn.” The most desperate among them starved, with Bradford recounting how one settler, in gathering shellfish along the shore, “was so weak … he stuck fast in the mud and was found dead in the place.”

The colony’s leaders identified the source of their problem as a particularly vile form of what Bradford called “communism.” Property in Plymouth Colony, he observed, was communally owned and cultivated. This system (“taking away of property and bringing [it] into a commonwealth”) bred “confusion and discontent” and “retarded much employment that would have been to [the settlers’] benefit and comfort.”

The most able and fit young men in Plymouth thought it an “injustice” that they were paid the same as those “not able to do a quarter the other could.” Women, meanwhile, viewed the communal chores they were required to perform for others as a form of “slavery.”

On the brink of extermination, the Colony’s leaders changed course and allotted a parcel of land to each settler, hoping the private ownership of farmland would encourage self-sufficiency and lead to the cultivation of more corn and other foodstuffs.

As Adam Smith would have predicted, this new system worked famously. “This had very good success,” Bradford reported, “for it made all hands very industrious.” In fact, “much more corn was planted than otherwise would have been” and productivity increased. “Women,” for example, “went willingly into the field, and took their little ones with them to set corn.”

The famine that nearly wiped out the Pilgrims in 1623 gave way to a period of agricultural abundance that enabled the Massachusetts settlers to set down permanent roots in the New World, prosper, and play an indispensable role in the ultimate success of the American experiment.

A profoundly religious man, Bradford saw the hand of God in the Pilgrims’ economic recovery. Their success, he observed, “may well evince the vanity of that conceit…that the taking away of property… would make [men] happy and flourishing; as if they were wiser than God.” Bradford surmised, “God in his wisdom saw another course fitter for them.”

There will always be inequities in wealth. A person who works 12-hour days will generally earn more than a person who works a 6-hour day. People who invent things or have new ideas generally do very well financially. Rewarding innovation provides an incentive for progress. Capitalism (or the free market economy) is not perfect, but it creates fewer problems than any other economic system. Those touting the wonders of socialism need only look at the economic history of Venezuela during the past ten years. Once the wealthiest country in South America, now a place of unspeakable poverty. That is the fruit of socialism or communism.

Representative Ocasio-Cortez, please learn your history.

The Power Of The Media Illustrated

This is the current polling from RealClearPolitics:

This is some recent economic news reported by The Washington Times on January 9:

Given the dazzling December economic data, it’s no wonder the press gave it short shrift. According to the U.S. Bureau of Labor Statistics, the economy added a whopping 312,000 jobs, far more than the expected 176,000. After revisions, job gains have averaged an impressive 254,000 per month over the past three months. Job growth in 2018 (an average of 220,000 per month) passed that of both 2016 (195,000) and 2017 (182,000). Payrolls increased by 2.6 million in 2018, the highest since 2015.

The sunny jobs picture encouraged 419,000 new workers to enter the workforce and sent the labor force participation rate up to 63.1 percent. Unemployment rates among blacks, Latinos and women are at or near historic lows.

Job growth has also meant significant wage growth. Wages are up a stunning 3.2 percent from last year and .4 percent from November. December was the third straight month that the yearlong growth in nominal average hourly earnings was above 3 percent in nearly a decade; the last time we saw that trend was April 2009. Wages are also being given an assist by inflation being kept in check.

The article at The Washington Times concludes:

His (President Trump’s) astounding economic track record is their worst nightmare. It puts the lie to the nonsense Mr. Obama, the Democrats and the media have been shoveling for years: That anemic economic growth, high unemployment, the collapse of manufacturing and grotesque trade imbalances were the “new normal.”

It also pointedly demonstrates that the statist vision — radical wealth redistribution, socialized medicine, green energy chimeras, social justice enforcement, limits on free speech, private property and gun ownership, and the rule of the leftist mob — creates only tyranny, poverty, injustice and servitude. (Note the deflection: These are things the left claims to want to eradicate.)

Mr. Trump and his economic thunderbolt are exposing the left and its policies as irredeemably bankrupt, economically and morally. And that is perhaps the biggest reason why they must try to destroy him.

A lot of this economic news has not been reported. However, people do notice when there are more jobs available and there is more money in their paycheck. President Trump’s approval numbers are finally in positive numbers. The economy is booming. What would be the basis for most Americans believing America is headed in the wrong direction? Might it be the constant negative reporting from the media? Can you imaging what President Trump’s approval rating would be if the media were actually balanced? Just remember–the people vote. The media represents only a small percentage of votes.

The Quality Of Life Index

Who knew that there was a Quality of Life Index? I certainly didn’t, but there is one, and Investor’s Business Daily posted an editorial about it on February 8th.

The editorial reports:

Unemployment at historic lows? Wages climbing at a fast pace? Who knew? The news media, fixated on Trump scandals, hasn’t exactly been broadcasting that good news. And media fact checkers busied themselves after the speech nitpicking Trump’s economic boasts.

But the upbeat assessment clearly resonated with the public, most of whom gave Trump’s speech top marks. Turns out they have been firsthand witnesses to the strength of the economy over the past two years.

How do we know? Look at the IBD/TIPP Quality of Life Index, which asks the public whether they think their quality of life will be better, worse or the same over the next six months.

In the 17 years IBD has been compiling this index, it’s averaged 56.2. Under President Obama, it averaged just 53.7. Even if you only include Obama’s second term, it was well below the 17-year average.

Under Trump? The Quality of Life Index has averaged 59.3. That’s a 10% increase over the average during the Obama years.

To be sure, there’s a partisan element to this. Republicans tend to rate their quality of life higher than Democrats when there’s a Republican in the White House, and vice versa. But look at independents: Their quality of life averaged 52 under Obama. It’s averaging 58.8 under Trump — a 13% bump.

What’ more, the gains are across the board. Households making from $35,000 to $50,000, for example, saw an 8% gain in this index when you compare Trump to Obama. Those making from $50,000 to $75,000, an 11% gain.

This is what winning looks like for the Middle Class.

Regulations Have Consequences

The Washington Free Beacon posted an article today about the impact of regulations on business franchises put in place during the Obama administration.

The article reports:

An industry study found that the Obama administration’s crackdown on franchising has cut hundreds of thousands of job openings and dealt a $33.3 billion blow to the economy each year dating back to 2015.

A report put out by the International Franchise Association and a Chamber of Commerce found that the Obama administration provoked an “existential threat” to the franchise model in which small business owners operate under the umbrella of a national corporate brand. The Obama administration departed from decades of precedent when the National Labor Relations Board held that parent companies could be held liable for labor violations committed by franchisees. The report estimated that the new joint employer standard set curtailed expansion in the industry, leading to between 142,000 and 376,000 lost job opportunities—a 2.55 to 5 percent reduction in the workforce.

“All of this economic cost was predictable and avoidable,” IFA spokesman Matthew Haller said. “Franchise owners have incurred significant losses.”

The article details the Trump administration’s response to the study:

The Trump NLRB has turned to rulemaking to solidify the previous joint employer standard, which only held parent companies liable if they were directly involved in a violation. A previous decision overturning the Obama agency ruling was dismissed after an ethics official said Trump appointee William Emanuel should have recused himself because his old law firm handled joint employer cases. Bird and Haller said the effects of the regulation would not immediately reverse the damage caused by four years of uncertainty, but would be a first step to helping the industry begin creating new job opportunities and expand existing hiring.

“There is the opportunity to this [Trump NLRB] regulation to remove much of that source of fear and to remove the uncertainty—that is the minimum first step to recovering and removing these costs,” Bird said.

The report featured 77 one-hour interviews with lawyers, franchisees, and franchisors of all different sizes across the country. IFA has submitted the report to the NLRB as part of the public comment period for the rule proposal. The agency will begin reviewing these comments and all replies by Feb. 11.

Hopefully the ruling make during the Obama administration can be overturned and more people can go back to starting franchise businesses.

 

How Does This Statement Make Sense?

Yesterday I posted an article that included the following:

…Newly-elected Rep. Rashida Tlaib (D-MI) also endorsed impeaching Trump on her first day in office, according to The Nation, which described Tlaib as calling for “immediate steps” to remove the president from the White House.

“Each passing day brings more pain for the people most directly hurt by this president, and these are days we simply cannot get back. The time for impeachment proceedings is now,” Rep. Tlaib declared.

I really am confused about how this president is hurting people. I am further confused by looking at Representative Tlaib’s statement in view of some economic news that was reported today.

For instance, CNN is reporting today:

US employers added 312,000 jobs in December, well above what economists expected and underlining that the American economy remains strong despite recent market turbulence.

The unemployment rate rose to 3.9% as more people were looking for work. It had been at a 50-year low of 3.7% for two of the last three months.

Employers added 2.6 million jobs in 2018, compared to 2.2 million in 2017. Revisions to the October and November estimates added an additional 58,000 jobs to the 2018 total.

…Paychecks grew as employers raised wages to attract new workers. Average hourly pay was up 3.2% compared to a year earlier. The average number of hours people worked also edged up.

…The unemployment rate rose because more than 400,000 people joined the labor force looking for jobs. The percentage of the working-age people in the work force matched a five-year high.

“Yes, the nation’s unemployment rate rose to 3.9%, but for the best of reasons,” said Mark Hamrick, Bankrate.com senior economic analyst. “That’s a deal we’ll take if more people are participating in the workforce.”

The chart that I watch to see how things are going is from the Bureau of Labor Statistics. It is the chart of the Workforce Participation Rate. It indicates how many Americans are actually part of the workforce. This is the chart:

Note that we have reached the 63.1 percent participation rate only three times since 2014. When President Obama took office, the rate was 66.2. By the time President Obama left office, the rate was 62.7. That was after the federal deficit doubled due to the stimulus package that was supposed to create jobs.

The House of Representatives has a choice–they can either join in the efforts of President Trump to improve the American economy and the lives of American workers, or they can do everything they can to slow it down. Unfortunately, the new rules they are putting in place will bring us laws and policies that will slow the economy down. That is unfortunate–Americans deserve better, even though they elected these people.

The Law Of Unintended Consequences

It’s hard to defend the actions of the Federal Reserve right now. The people who propped up the economy under President Obama seem determined to destroy the economy under President Trump. But we know that the Federal Reserve is apolitical. Sure we do. However, there may be some unintended consequences of the current Federal Reserve actions.

The Gateway Pundit posted an article today which explains some of those consequences.

The article reports:

The Chinese were relentless in their efforts to obtain Western technology and grow their economy.  They set up trade barriers and manipulated their currency in ways that helped China. The US was at a disadvantage in trade resulting in massive deficits into the billions.

Along comes the Trump Administration, the first administration to address China’s unfair trade advantage.  President Trump is a shrewd negotiator and he obviously believes now is the time to encourage China to make changes to their trade barriers with the US.  China may have no choice but to go with what the US offers to keep its economy afloat.

The more pressing issues for China surround real estate, in a manner similar to the US in 2008.  As China grew, it invested in its infrastructure and in addition it invested in large housing projects throughout the country.  These efforts helped bolster China’s already fast growing economy.

The problem is that China over invested in these random properties all over China and these properties today remain empty.

…Now to add to China’s misery, the Fed is doing all it can to kill the US economy.  China is dependent on the US economy to stay afloat.

…The US debt now stands at $21.8 trillion. A 2.25% interest increase on this amount of debt is an annual increase in debt interest payments of $500 billion!!!

The Fed is doing all it can to destroy President Trump’s economy. What the Fed doesn’t realize is that a flat US economy means disaster to the Chinese.

China’s financial crash may make the 2008 crash in the US look small.  The implications will no doubt impact the entire world.  Jerome Powell at the Fed has no idea what he is doing!

Hang on to your hat, if the Federal Reserve continues on its current path, this may be a very bumpy ride.

Exactly What Is The Federal Reserve Trying To Accomplish?

The Gateway Pundit posted an article today that included Economist Stephen Moore’s comments on the recent rate hike by the Federal Reserve. Mr. Moore does not pull his punches.

Mr. Moore states:

In one of the most remarkable Abbott and Costello routines in modern times, the economic wizards at the Fed again raised interest rates on Tuesday. Their cracker jack logic for doing so is to steer America on a course toward recession so they have the tools in hand to end the recession that THEY themselves created. Can anyone tell us who’s on first?

Worse, this Fed move doubles down on its blunderous interest rate rise in September. President Trump turned out to be exactly right: the central bank pull back on money would slow growth and crush the stock market in order to combat nonexistent inflation.

The Fed had already reduced the monetary thrust that it provides to the economy 8 times since December 15, 2015, by raising its Fed Funds interest rate from 0.25% to 2.25%. Each time, the Fed claimed that it needed to guard our economic airliner from inflationary “overheating” – as if its job is to prevent too many people from working and making sure that pay checks aren’t rising too quickly.

Unfortunately, if you cut engine power too far on a jetliner, it will stall and drop out of the sky.

On Wednesday, December 19, despite the numerous market-based alarms that were sounding in the cockpit, Chairman Powell and his co-pilots on the FOMC voted to raise the Fed Funds rate to 2.50%. This sucks more dollars out of the economy at a time when the world demanding more dollars – thanks to Trump’s Tax cutting and deregulation policies.

Chairman Powell has been entirely tone deaf to the financial markets he seeks to protect. The Dow Jones Industrial average, which had risen by 382 points on hopes that the Fed would listen to President Trump and stop cutting power, plunged by 895 points after the 2:00 PM announcement, and closed the day down 352 points (1.49%). Poof, trillions of dollars of wealth vanished.

Since its peak on October 3, which, not coincidentally, was right after Chairman Powell gave a speech suggesting that the Fed might be through tightening money, the Dow has fallen by more than 3,500 points [now 4,500]. Market fears about his bad judgment have cut the value of all U.S. stocks by about $4.5 trillion, which is enough to buy 16,000 Boeing 787 Dreamliners.

The Fed economists use twisted logic that the economy is “strong enough” to absorb the rate hikes – which is simply an admission that their policy will slow growth.

And for what purpose?   Since the last rate hike the economy has slipped into an anti-growth deflationary cycle with commodity prices – oil, copper, cotton, lead, steel, silver among others – falling by about 10 percent. The new Fed policy is sure to accelerate the deflation and farmers, ranchers, coal miners, oil and gas drillers will get further crunched by the dollar shortage.

Can someone at the Fed Temple please explain how falling commodity prices indicates inflation? Inflation is too many dollars chasing too few goods.

The commodities index is about the only read-out that a monetary pilot truly needs. And, right now, the CRB Index is blaring “Pull up!  Pull up!”

Mr. Powell warned of a slowing economy in 2019 – but he failed to acknowledge that the headwinds the economy is facing are the drag the Fed is itself creating. It was almost as if the Fed believes there is some weird Puritan-like virtue to slowing down the investment, employment and wage-growth spurt Trump policies have created.

What is to be done now? Trump wants to fire the Fed chairman though it is doubtful he has the authority to do that. Much better for Mr. Powell to do the honorable thing and admit that his policies have had disastrous economic and financial consequences and resign.

If not this, at least Mr. Powell should hold an emergency meeting of the Federal Reserve Board and immediately cancel the rate hikes. Better yet, the Fed should announce ways to inject money into the dollar-starved economy.

For much of the past two decades, America’s economic problems of slow growth and flat wages were due to the drag of fiscal and regulatory mistakes. Now at the very moment in time when we FINALLY have a president who is slashing tax rates and regulations and is making America a much more business-friendly nation, the Fed’s monetary policy has come unhinged.

Cockpit warnings have been sounding for months, not only from the markets, but from President Trump and many other growth economists – including ourselves. We are now suffering the financial ramifications of this “pilot error” on the part of Chairman Powell.

The article includes the following chart:

It’s time either to get rid of the Federal Reserve or put someone in charge without a political agenda. Crashing the economy is the only way the Democrats can take the presidency in 2020, and political insiders know that. The recent drastic rate increase are not done without purpose.

The Real Numbers

Yesterday Investor’s Business Daily posted an editorial about the federal deficit and federal revenues. The numbers tell a very different story than the one the media would have you believe.

The editorial reports:

The latest monthly budget report from the Congressional Budget Office shows the deficit jumping $102 billion in just the first two months of the new fiscal year.

…A true apples-to-apples comparison, the CBO says, shows that the deficit climbed by just $13 billion.

So, no, the deficit is not soaring.

The editorial explains:

In fact, the CBO report shows that overall tax revenues climbed by $14 billion in the first two months of the year, compared with the same months last year. Which means they continue to hit new highs.

The CBO report shows that combined income and payroll taxes were the same in the first two months of the new fiscal year as they were last year. That’s even though far less money was withheld from paychecks thanks to the Trump tax cuts.

It also found that corporate income taxes went up by $5 billion. That’s despite the “massive corporate tax giveaway” that Democrats want to repeal.

Why are these revenues flat or up? Simple: The tax cuts help spur accelerated economic growth, which create jobs and spark income gains. More workers and higher wages mean more tax revenues. On the corporate side, a bigger economy means more profits, which even when taxed at lower rates can produce more revenue. This is exactly what advocates of Trump’s pro-growth tax cuts said would happen.

Meanwhile, revenue from “other sources” climbed by $8 billion. (To be clear, at least some of that $8 billion came from the re-imposition of ObamaCare’s nefarious tax on insurance premiums, which Congress had suspended the year before.)

But while revenues climbed by $14 billion, spending in the first two months of the new fiscal year climbed by $27 billion.

The obvious solution to the deficit problem is to limit spending. If we can’t agree on that, we could lower taxes again to increase revenue further, but I suspect that would really cause some Congressional heads to explode.

The Economy Under President Trump

I am not an economist, but I have learned over the years to listen to the people with the best track records on analysis. One of those people is Stephen Moore, who posted an article at The Wall Street Journal yesterday.

The article reports:

Liberals are tripping over themselves to explain why the economy has performed so much better under Donald Trump than it did under Barack Obama. The economy has grown by nearly 4% over the past six months, and the final number for 2018 is expected to come in at between 3% and 3.5%. The U.S. growth rate has doubled since Mr. Obama’s last year in office.

When Mr. Trump was elected, many Democratic pundits predicted an economic and stock-market meltdown. Then the economy started surging and they abruptly changed their tune, arguing that Mr. Trump was simply riding a global growth wave. That narrative was shattered when U.S. growth kept steaming ahead even as global growth—especially in China and Germany—stalled.

The people who predicted an economic crash if President Trump was elected are now saying that the tax cuts have given us a ‘sugar high’, and the market will crash when the sugar wears off. That makes about as much sense as President Obama taking credit for the move toward American energy independence.

The article continues:

The real contradiction in the “sugar high” argument is that it ignores the slow growth of the Obama years, which featured an avalanche of debt spending. Deficits as a share of GDP were 9.8% in 2009, 8.6% in 2010, 8.3% in 2011 and 6.7% in 2012. Where was the sugar high then? Instead of the expected burst in output coming out of the 2008-09 recession, borrowing more than $1 trillion a year for four years yielded the worst recovery since the Great Depression. Even excluding 2009, Mr. Obama’s deficits averaged more than 5% of GDP throughout the rest of his presidency but produced less growth than Mr. Trump has with lower deficits.

This wasn’t what Keynesians expected. Mr. Obama’s economic team predicted 4% growth every year coming out of the recession. Instead the “sugar high” from record peacetime deficits produced measly 2% growth. By 2016 GDP was running about $2 trillion below the trend line of a normal recovery.

The fastest growth rate over the past three decades was recorded in Bill Clinton’s second term, when federal government spending fell from 21.5% to 18% of GDP and deficits disappeared into surpluses. So much for the idea that deficit spending is a stimulant.

Mr. Trump’s fiscal policies have produced more growth than Mr. Obama’s because they were designed to incentivize businesses to invest, hire and produce more here at home. The Obama “stimulus,” by contrast, went for food stamps, unemployment benefits, ObamaCare subsidies, “cash for clunkers” and failed green energy handouts.

The article concludes:

Those pushing the “sugar high” fallacy also don’t realize that the Trump tax cuts aren’t going away soon. The 2017 business tax cuts can’t cause a recession in 2019 or 2020 because they don’t expire until 2025. They aren’t sugar pills.

The biggest threats to the economic boom and financial markets today are a deflationary Federal Reserve and the specter of a global trade war. Solve those problems and the American economy can keep flying high on its own power. And Mr. Trump’s critics will be proved wrong again.

When you decrease taxes and regulations on businesses, we all gain. That combination, if allowed to continue, will bring us continued economic growth.

Putting Politics Before The Welfare Of Americans

Yesterday Investor’s Business Daily posted an editorial about the coming Congressional session. The title of the editorial is, “Market Turmoil Shows Why Trump’s Pro-Growth Policies Must Continue.”

The editorial explains:

Kudlow (President Trump’s top economic advisor, Larry Kudlow) tried to calm the waters. “Corrections come and go,” he told reporters at the White House. “I’m reading some of the weirdest stuff how a recession is in the future. Nonsense. Recession is so far in the distance I can’t see it. Keep the faith. It’s a very strong economy.”

Let’s be clear. Economic forecasts have been overly pessimistic for most of the Trump administration, with actual results consistently coming in “unexpectedly” higher than forecast. And Kudlow is right. There’s no sign of a recession on the horizon.

The editorial points out the indications of a strong economy and the steps needed to keep it strong:

Unemployment is at 50-year lows. Wages are growing at the fastest rate since the financial crisis. There are a million more job listings than officially unemployed people. Productivity grew 2.2% in the third quarter, after jumping 3% in the second quarter — the fastest growth rate in four years. Small business optimism and the IBD/TIPP Economic Optimism Index remains at record highs.

After eight long years of sluggish growth under President Obama, the economy has been booming.

Still, the Fed has been raising interest rates, and as we’ve pointed out repeatedly in this space, the risk is always that they will go too far, too fast, and crash the economy. The trade war with China is taking its toll. And the economic expansion is old. The last recession ended 113 months ago, making this the second longest in the post-World War II era.

Which is all the more reason for the federal government to continue wringing every bit of growth-inhibiting policies out of the system. For his part, Trump needs to get a trade deal in place with China when he meets with President Xi Jinping at a G-20 summit later this month. And he needs to continue to deregulate where he can.

Unfortunately the Democrats in Congress have little interest in continuing the policies that have resulted in the current economic growth. They will make every effort to roll back the tax cuts and increase the size and spending of the federal government. Hopefully their efforts will not be successful.