The Impact Of Inflation

On Thursday, The Center Square posted an article about the impact of inflation on homebuyers.

The article reports:

(The Center Square) – The housing market is not immune from inflationary woes as buyer’s purchasing power has significantly diminished in four years. Home buyers in 2024 need 80% more income to purchase a home than they did in 2020, according to a new report by Zillow.

“The income needed to comfortably afford a home is up 80% since 2020, while median income has risen 23% in that time,” the report states. That equates to $47,000 more than four years ago.

“Home shoppers today need to make more than $106,000 to comfortably afford a home,” according to the report. “That is 80% more than in January 2020.”

A monthly mortgage payment for a typical U.S. home has nearly doubled since January 2020, the report notes, up 96.4% to $2,188. The calculations are based on a 10% down payment.

Home values also increased over 42% in the last four years, with the typical home nationwide worth roughly $343,000, according to Zillow’s January market report. Mortgage rates in January 2020 were 3%, the report notes. By February 2024, they are closer to 7%.

The article notes:

The report’s analysis was based on quarterly median household income from the American Community Survey, Moody’s Analytics, and the Bureau of Labor Statistics’ Employment Cost Index.

The findings were announced as total household debt reached a record $17.5 trillion in the fourth quarter of 2023, according to a Federal Reserve Bank of New York report. Mortgage debt increased by $112 billion in Q4 2023 to reach $12.25 trillion. Balances on home equity lines of credit increased by $11 billion, the seventh consecutive quarterly increase after Q1 2022. There are currently $360 billion in aggregate outstanding balances, the Fed states.

The overspending of our government impacts all of us. There will eventually be a tipping point where the housing market crashes because people cannot afford to buy houses. We need to un-elect any Congressman or Senator that continues to vote for overspending.

It’s Past Time For This!

On Tuesday, The Epoch Times posted the following headline:

The Time to Audit the Fed Is Here

A site called worldtraining.net explains some of the history of the Federal Reserve:

On June 4, 1963, a little known attempt was made to strip the Federal Reserve Bank of its power to loan money to the government at interest. On that day President John F. Kennedy signed Executive Order No. 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve. Mr. Kennedy’s order gave the Treasury the power “to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury.” This meant that for every ounce of silver in the U.S. Treasury’s vault, the government could introduce new money into circulation. In all, Kennedy brought nearly $4.3 billion in U.S. notes into circulation. The ramifications of this bill are enormous.

        With the stroke of a pen, Mr. Kennedy was on his way to putting the Federal Reserve Bank of New York out of business. If enough of these silver certificates were to come into circulation they would have eliminated the demand for Federal Reserve notes. This is because the silver certificates are backed by silver and the Federal Reserve notes are not backed by anything. Executive Order 11110 could have prevented the national debt from reaching its current level, because it would have given the government the ability to repay its debt without going to the Federal Reserve and being charged interest in order to create the new money. Executive Order 11110 gave the U.S. the ability to create its own money backed by silver.

        After Mr. Kennedy was assassinated just five months later, no more silver certificates were issued. The Final Call has learned that the Executive Order was never repealed by any U.S. President through an Executive Order and is still valid. Why then has no president utilized it? Virtually all of the nearly $6 trillion in debt has been created since 1963, and if a U.S. president had utilized Executive Order 11110 the debt would be nowhere near the current level. 

The Federal Reserve creates money out of thin air and then loans it to the government at interest. It’s a great scheme.

The Epoch Times reports:

This week, Sen. Rand Paul is pushing an amendment to a major spending bill that would finally do what should have been done decades ago. It should have been an annual undertaking for the past 100 years. He wants a thorough and external audit of the Fed, using prevailing accounting standards to figure out where the billions and trillions are coming from and where they’re going.

Please follow the link to read the entire article. This needs to be done.

One Way Tax Rates Influence The Economy

Yesterday The Washington Free Beacon posted an article about the impact of corporate tax rates on entrepreneurship. The article notes that as the corporate tax rate increases, the number of start-up companies decreases.

The article reports:

Entrepreneurship is negatively impacted by higher corporate tax rates, according to a study from the Federal Reserve.

“While there are many actions governments may take to affect entrepreneurship, few are as important or contentiously debated as the setting of tax policy,” the paper explains. “Taxes are viewed by many as the primary lever elected officials have at their disposal to change the business environment, promote growth, and encourage innovation.”

The study looked at counties that had changes to their state corporate, personal, or sales tax rates and how entrepreneurial activity was affected compared with those counties that had no changes to tax rates. The study defines entrepreneurs and startups as those that are two years old or younger.

“We find that increases in corporate tax rates have a statistically and economically significant negative effect on employment among startup firms,” the study explains. “Specifically, for every one percentage point increase in the corporate tax rate employment in startup firms declines 3.7 percent.”

…”Tax liability reduces economic profits, restricting the set of potential entrepreneurs whose likely profits exceed entry costs,” the study explains. “Tax policy affects labor demand via the dependence of firm-level labor demand on other production or revenue factors.”

The study also points to previous research that finds self-employment is affected by how complex the tax code is. Corporate tax rates reduce research and development and new product development.

If this study is accurate, we are going to have substantial economic growth in America as the corporate tax cut begins to take effect. Like him or not, President Trump is a businessman, and a rather successful one. I suspect he was already aware of the relationship between corporate taxes and start-up companies.

Just for the record, I was talking to someone last night who has been a Trump supporter since he announced his candidacy. She said something to me that I think is very astute–“Trump had to be the candidate–we needed a mud wrestler to fight the Democrats. The other Republican candidates wouldn’t do it.” That is an amazing (and true) statement.

The Unintended Consequences Of ObamaCare

Breitbart is reporting today that the Federal Reserve Bank of New York is reporting that businesses in New York have reduced their number of employees due to ObamaCare.

The article reports:

Asked whether they were changing their health plans in response to Obamacare, three in five respondents — in both the manufacturing and service sector surveys — said they were. The most widely reported adjustments involved higher deductibles, increased co-pays, and higher out-of-pocket maximums for employees.

About 83 percent of firms indicated that they would be paying higher total healthcare premiums in 2017. As a result:

  1. 73 percent of firms were raising employee premiums;
  2. 65 percent were raising employee out-of-pocket expenses; and
  3. 67 percent were increasing employee co-pays.

Due to Obamacare, about 14 percent of manufacturers and 18 percent of service firms indicated that more employees are now being covered by health insurance; 2 percent of manufacturers and 8 percent of service firms said that fewer employees are now being covered.

When asked if they were making specific changes to certain fundamental business measures, owing to effects of the Obamacare, “roughly 17 percent of service sector firms and 21 percent of manufacturers said they were reducing the number of workers in response to” Obamacare. The vast majority of respondents in both surveys said they were not changing the proportion of part-time workers that are ineligible for Obamacare.

This is another example of the impact federal policies and regulations have on the economy. The American economy functions best when the free market is allowed to work–ObamaCare short circuits that process. We need a new administration in Washington that will lessen the burden the government places on Americans and American businesses. It is obvious that Hillary Clinton will be four more years of government burdens on Americans. At some point the economy will collapse under that burden. A vote for Hillary is a vote for the collapse of the American economy.

The Economic Recovery Is Still Struggling

Market Watch is reporting today that New York area manufacturing conditions fell rapidly in August.

The article reports:

The Empire State general business conditions index nose-dived to a reading of negative 14.9, from positive 3.9 in July, marking the worst level since April 2009, the New York Fed said. The index, on a scale where any positive number indicates improving conditions, was far worse than the positive 4.5 forecast in a MarketWatch-compiled economist poll.

The article includes the following chart:

NewYorkStateManufacturingConditions

The only good news in this is that the decline may cause the Federal Reserve to delay interest increases for a while.