Economy Archives - LIBERTY FIRST

Fraud Grips $112.8 Billion U.S. Food Stamp Program, $61.5 Million in Stolen Benefits Replaced

September 12, 2024/in Budget and Finance, DrRichSwier.com, Economy, Elections, Politics, Taxes /by DrRichSwier.com

By Judicial Watch

Fraud in the government’s food stamp program is so pervasive that the U.S. Department of Agriculture (USDA), the agency that administers it, launched a special system to facilitate the replacement of the welfare benefit when recipients claim it stolen. In the two years since the Biden administration created the program, the government has doled out a hefty $61.5 million to replace pilfered food stamps—rebranded Supplemental Nutrition Assistance Program (SNAP) by the Obama administration to eliminate stigma—in 127,290 cases. Keep in mind, this is in addition to the staggering $112.8 billion that Uncle Sam spends to provide 42.1 million with free groceries, according to the latest government figures.

The USDA’s SNAP Replacement of Stolen Benefits Dashboard reveals that 79% of claims were approved by the agency and that 339,269 fraudulent transactions were identified through approved stolen benefits claims. Recipients in every state in the nation have submitted claims and New York has by far the most food stamp fraud cases—50,678. Maryland is second with 33,509, followed by Illinois (16,369), Texas (11,633), Washington State (4,208), New Jersey (3,630), Arizona (3,541), North Carolina (3,434), Indiana (3,309) and New Mexico (3,027). Three states have reported over 2,000 cases and more than half a dozen have over 1,000. The federal government allows states to replace benefits stolen as far back as October 2022, according to the USDA dashboard.

“The United States Department of Agriculture (USDA) is aware of increased reports of Electronic Benefit Transfer (EBT) theft due to card skimming, cloning, and similar fraudulent methods,” the agency announced in January 2023, revealing that at the end of 2022 President Biden signed a measure that includes a provision for the replacement of stolen food stamp benefits with federal funds. The USDA cites the section of the law that requires it to issue guidance to state agencies and “promulgate regulations to protect and replace SNAP benefits stolen via card skimming, card cloning, and other similar fraudulent methods.” Other similar fraudulent methods may include, but are not limited to, scamming through deceitful phone calls or text messaging that mimics official state agency messaging and phishing. “A theft that resulted from any of these methods would be eligible for replacement,” according to the USDA.

Rather than so easily replacing the stolen benefit, perhaps the government should create a system to crack down on the rampant fraud. Besides saving American taxpayers tens of millions of dollars, it seems like a more efficient way to operate. After all, the nation’s bloated food stamp program has long been plagued by problems that have fleeced the system out of large sums. A few years ago, the USDA disclosed that it sees over a billion dollars annually in food stamp fraud. Many of the retailers authorized by the government to accept food stamps also engage in illegal practices, the agency has found. A few years ago, nearly 200 people were arrested in Florida for operating a sophisticated ring in which 22,000 fraudulent food stamp transactions totaling $3.7 million were recorded by a task force of local and federal authorities. In 2016 the feds busted the largest food stamp fraud operation in history, a $13 million scheme run by flea market retailers in the largely black and Hispanic areas of south Florida’s Miami-Dade County known as Opa-Locka and Hialeah.

The government has failed to mitigate the illicit activities that have long plagued the program and now it is doling out tens of millions of dollars to replace stolen benefits rather than implement a system to prevent it. Just a few weeks ago, a Kentucky news station reported that thieves have stolen more than $5 million worth of food stamps in the past year from families in Kentucky and Indiana. “Scammers are draining accounts linked to EBT cards,” used by the government to distribute benefits, the story says. In South Carolina a woman recently got busted for fraudulently receiving more than $28,000 in food stamp benefits. Another woman was also recently arrested in the state for fraud after taking over $12,000 in food stamps that she did not qualify for. In Delaware and Tennessee, the government recently replaced hundreds of thousands of dollars in stolen food stamps, according to local news reports. The list goes on and on.

EXCLUSIVE: Heritage Launches Personal Inflation Calculator Any American Can Use After Debate Night

September 12, 2024/in DrRichSwier.com, Economy, Elections, Politics, Regulation /by DrRichSwier.com

By The Daily Caller

The Heritage Foundation launched an inflation calculator Monday to help Americans calculate how much prices have risen on their personal expenses, the Daily Caller learned first.

“Myinflation.com,” created by the Heritage Foundation, first asks Americans to pick which subregion of the country they live in before entering their monthly expenses, according to a preview of the website shared with the Daily Caller. Americans can then enter a variety of monthly expenses including their rent, mortgage, car payments and health costs, and the calculator will tell them how much more they are spending under the Biden-Harris administration compared to the Trump administration.

“Why is the inflation calculator useful now? Because when you get this update from the government on the consumer price index, it’s an abstract number. Most people are seeing reports that inflation is coming down, and they’re not able to connect that to the cumulative change in prices that’s happened over the past four years,” Parker Sheppard, director of the center for data analysis at the Heritage Foundation, told the Caller.

“This is a tool that takes something that is in the abstract, it’s not as tangible when it’s in a percentage term, and it puts it in dollar figures, it lets people see something customized to exactly what they’re spending. It’s not the average bundle, which is what the CPI cost calculates. They can get something tailored specifically to their spending habits, instead of just how much extra it costs them to buy the same goods and services,” he added.

On the website, previewed by the Daily Caller, the Heritage Foundation explains that it created the tool to help Americans understand “just how much more the government has taken” from Americans through its reckless spending. The Heritage Foundation writes on its website that its users are seeing an increase in prices because “the government is spending and printing more money.”

The Heritage Foundation’s inflation calculator is going live the morning after the first presidential debate between Trump and Harris where economic policy — a top issue for voters — was touched on just once in the first 45 minutes of the debate.

More than a month into her presidential campaign, the vice president failed to unveil a full policy platform until Monday. Harris did discuss her economic platform ahead of the “issues” tab being added to her campaign website.

Harris touted her economic plan during her first and only sit-down interview with CNN’s Dana Bash.

“Well, there are a number of things. I will tell you first and foremost one of my highest priorities is to do what we can to support and strengthen the middle class,” Harris began.

“Day one, it’s gonna be about one, implementing my plan for what I call an opportunity economy. I’ve already laid out a number of proposals in that regard, which include what we’re gonna do to bring down the cost of everyday goods, what we’re gonna do to invest in America’s small businesses, what we’re gonna do to invest in families,” the vice president continued after being further pushed by Bash.

Bash then followed up by asking Harris why she hadn’t implemented any of the economic policies she has introduced, despite being in office for the last three years.

“Well, first of all, we had to recover as an economy, and we have done that,” the vice president said.

“I’m very proud of the work that we have done that has brought inflation down to less than 3%, the work that we have done to cap the cost of insulin at $35 a month for seniors. Donald Trump said he was going to do a number of things, including allowing Medicare to negotiate drug prices. Never happened. We did it,” she continued.

AUTHOR

Reagan Reese

White House correspondent. Follow Reagan on Twitter.

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38% Rise in Home Prices Leaves Families Stranded in Place

September 12, 2024/in Budget and Finance, DrRichSwier.com, Economy, Elections, Politics /by DrRichSwier.com

By Family Research Council

The average price of a single-family home has risen nearly 38% since President Joe Biden took office, according to the S&P Case-Shiller home price index. The sudden spike, along with rising interest rates, has acted as a giant emergency brake on homebuying, leaving many families stranded in places they did not expect to be long-term. It also drove a giant wedge between those who own a home and those who do not. But not all is hopeless.

First, the data. The Case-Shiller index for home prices rose 38% between January 2021 and June 2024. For comparison, the index rose 44% over a comparable, three-and-a-half-year period (January 2003 to June 2006) during the mid-2000s housing bubble. Interest rates have risen over the same period, with the average rate for a 30-year, fixed-rate mortgage rising by 127%, from 2.79% on January 14, 2021 to 6.35% on September 5, 2024 (after peaking at nearly 8% in November 2023).

These facts combine to make purchasing a new house costlier — and in many cases cost prohibitive — particularly for first-time homebuyers. According to data compiled by Harvard University’s Joint Center for Housing Studies, “For the low-downpayment loans commonly pursued by first-time buyers, the total monthly payment on the median-priced home is now $3,096 after taxes and insurance” (compared to a median monthly payment of slightly over $2,000 in January 2021). To afford the current monthly payment for a median-priced home “under common payment-to-income ratios” (with the payment equal to 31% of income), a family would need an annual household income of $119,800. The Harvard report adds that only one in seven American families who do not own a home can meet that threshold.

It may seem counterintuitive at first, but this dramatic increase in the cost of buying a new home does not translate into rising costs for all housing. For instance, families who already own a home are locked into a mortgage with a pre-determined principal and interest rate, which is not affected by these rising costs. However, these rising costs do affect their ability to move by making it more expensive to sell their house and buy a different one.

Rising home costs will also affect rental costs. Because it is more expensive to buy a home, some people who would have purchased a home will choose to rent instead. As a result, the demand for home rentals will be higher than it otherwise would be. And, when rental home demand increases, basic supply-and-demand stipulates that the price of rental homes will increase too. Thus, the rising costs of homes affects non-homeowners in two ways. Not only are many people priced out of buying their first home, but they will also see their rental costs rise as well.

These rising costs affect homeowners and non-homeowners in slightly different ways. People who already own a home benefit in the sense that their property value is increasing, although they lose flexibility if they have to move. Families may choose not to pursue a job opportunity in another city, for example, or have more children, due to the extra costs related to moving. Meanwhile, people who do not own a home suffer from rising costs whether they buy a home or not. Additionally, they also miss out on the opportunity for independence and wealth accumulation provided by home ownership. In a way, the rising costs of purchasing a home drives a further wedge between homeowners and renters.

In an indirect way, the current record-high home prices may be on the November ballot, but for now, families must take them as a life circumstance beyond their control. The sovereign Lord of the universe does not judge us based on what we cannot control, but based on how we respond to the trials he does control. So, in this far-from-ideal situation, how should Christians respond?

Non-homeowners can respond by pursuing godly community. As renters, they have more freedom to move, and they should use that freedom to locate themselves among God’s people. Those who are not married can join houses of likeminded men or women, where they can cultivate habits of daily discipleship, fellowship, and prayer, which God blessed in Acts 2:42-47. Those who are married, or who have children can choose to locate themselves close to a church community so that they can be an integral part of the church’s life — serving and fellowship at every opportunity.

Homeowners can respond by investing in their local church, especially through hospitality. Perhaps the economic conditions that prevent them from moving are God’s way of nudging them to go deeper in their current church community, building the deep discipling relationships (Matthew 28:19) that only come with time.

Christian homeowners should also use the homes God has given them to bless his people through showing hospitality, as the New Testament commands (Romans 12:13, Hebrews 13:2, 1 Peter 4:9). Perhaps they can house a visiting missionary or refugee. Perhaps they can invite another family over for a weeknight dinner or a Sunday afternoon meal. Perhaps they can host a Bible study.

Instead of viewing these activities as hassles or burdens, they should recognize that they are making investments in the kingdom of God and particularly in the souls with whom they share their own local church. Jesus concluded his parable of the dishonest manager, “Make friends for yourselves by means of unrighteous wealth, so that when it fails they may receive you into the eternal dwellings” (Luke 11:9).

Jesus continued, “One who is faithful in a very little is also faithful in much, and one who is dishonest in a very little is also dishonest in much” (Luke 11:10). So, whether you have much or little, whether you live in a paid-off mansion or have been frustrated in your first home purchase by the poor economy, use whatever you have to “seek first the kingdom of God and his righteousness, and all these things will be added to you” (Matthew 6:33).

AUTHOR

Joshua Arnold

Joshua Arnold is a senior writer at The Washington Stand.

The Washington Stand is Family Research Council’s outlet for news and commentary from a biblical worldview. The Washington Stand is based in Washington, D.C. and is published by FRC, whose mission is to advance faith, family, and freedom in public policy and the culture from a biblical worldview. We invite you to stand with us by partnering with FRC.

Let’s Talk Decolonization

September 12, 2024/in Economy, Education, Featured, Liberty, Politics, ThePricklyPear.org /by ThePricklyPear.org

By Bruce Bialosky

Estimated Reading Time: 4 minutes

The new cool kids are all into it. They banter the term around all the time. It is either “decolonization” or “postcolonization.” They like to tell us it concerns their favored terrorist group—Hamas—even though the last colonists there were the Brits. With everyone talking about it, I thought I would look at how decolonization is going.

It worked well for us, the Americans. Pretty well for the Canadians until Pierre Trudeau unleashed his devil child upon them. The Aussies and Kiwis are doing well. Hong Kong was doing great until the barbaric Chinese took it over. Then matters start going downhill from there.

Of course, the rest of the world was ruled by other countries at various levels. There were the Romans, the Greeks, the Mongols, the Turks, the Macedonians, the Ottomans, and a slew of others who were set on ruling the world, but they were not known as “colonists.” The Russians took over Eastern Europe for a while, but they called all those countries under their draconian oversight “satellites.”

Colonization seems to focus on the activities of European countries from the 16th century onward. It really focuses on any country where the native population is white. That is what the cool kids don’t seem to like – white people. We are used to having self-hating Jews. Now we also have self-hating white people.

I took a look at the countries that are considered to be colonized. They are for the most part in South America, then Asia and Africa. It is wherever European ships sailed and, by definition of the cool kids, took over an area from the ‘enlightened’ native populations and destroyed everything in their path by raping and pillaging the land. That is not exactly how it went, but don’t try and tell the cool kids that.

After doing my own investigation, I asked a series of smart, insightful people which countries were doing well post-colonization. We all agreed that the country that left their former colonies in the best shape was England. That is well defined by the countries identified above. It was a debate as to which country is the worst, Belgium or Holland. Certainly, the Congo is a perfect example of how well Belgium left things.

I asked them which countries are doing well. The list is short. We agreed Hong Kong was doing great until it was destroyed by the Communist Chinese. We agreed upon Singapore and Vietnam. Not a lot of other countries.

These countries have had anywhere from 60 to 100 years to rule themselves with their enlightened native populations. That is 3-5 generations. Most have gone downhill or directly down the toilet when left to their own means. For example, Venezuela was the #1 economy in South America and now is a failed state. Argentina elected a sane person, but he is still trying to get his hands around inflation that was running at over 250%. Argentina has had more than a few coups after Juan Peron did a number on a country that had a strong economy.

Jamaica is a former British colony that represents a middling status post-colonization. Because of tourism, the country’s residents do ok. There has been a large amount of immigration to Canada, the UK, and the U.S. There are and have been travel warnings for Americans who go outside their resorts. Not necessarily a place you want to live. That is the best you can say for many of these countries.

There are so many failed states amongst them they are too numerous to count. I carry in my pocket a 500,000,000 reserve note from Zimbabwe. Robert Mugabe did a fine job of destroying that country. They finally converted to using U.S. dollars as their primary currency, along with eleven other countries as well.

There is barely a country in Africa that is a thriving, safe democracy. An expert in the area stated part of the reason that Egypt is unwilling to help Israel along the Philadelphi corridor in Rafah, it too is nearly a failed state and needs the revenue being brought in from smuggling supplies to Hamas. Then there is Libya. The Middle East has Syria, Iraq, and Iran. Algeria appears to be a country that had a short colonial period and is currently a successful state.

India has made some strides and this last election showed signs of reestablishing their desire to be a democracy. The neighboring Pakistan and Bangladesh are disasters.

There are the current colonizers who are being ignored. Turkey has occupied Cyprus and Pakistan has occupied Kashmir. Then there is China which has colonized Mongolia and Tibet. But none of those countries are run by the dreaded white people.

The countries which were former colonies have had more than adequate time to establish themselves. Many have become autocracies or failed states. This is not a statement that they should revert to being colonies of European states. This is to say that these code words of “decolonization” and “post-colonization” are just excuses for their failures.

How long will the Left harbor that argument? The Left is constantly making excuses for the failings of these people instead of holding them to appropriate standards and blaming them for their own failings. And they will continue to blame it all on white people.

*****

This article was published by Flash Report and is reproduced with permission from the author.

Image Credit: Wikimedia Commons

TAKE ACTION

The Prickly Pear’s TAKE ACTION focus this year is to help achieve a winning 2024 national and state November 5th election with the removal of the Harris/Obama/Biden leftist executive branch disaster, win one U.S. Senate seat, maintain and win strong majorities in all Arizona state offices on the ballot and to insure that unrestricted abortion is not constitutionally embedded in our laws and culture.

Please click the TAKE ACTION link to learn to do’s and don’ts for voting in 2024. Our state and national elections are at great risk from the very aggressive and radical leftist Democrat operatives with documented rigging, mail-in voter fraud and illegals voting across the country (yes, with illegals voting across the country) in the last several election cycles.

Read Part 1 and Part 2 of The Prickly Pear essays entitled How NOT to Vote in the November 5, 2024 Election in Arizona to be well informed of the above issues and to vote in a way to ensure the most likely chance your vote will be counted and counted as you intend.

Please click the following link to learn more.

‘A New Way Forward’? Harris Campaign [Finally] Announces 2024 Policies

September 11, 2024/in Courts & Law, DrRichSwier.com, Economy, Elections, Environment, Healthcare, National Security, Politics, Regulation, Science, Taxes /by DrRichSwier.com

By Family Research Council

One day ahead of her debate with former President Donald Trump, Vice President Kamala Harris has unveiled a policy agenda that could compel Christian businesses to participate in abortion and LGBT events that violate biblical morality, sign a national abortion expansion bill, pack the Supreme Court, give amnesty to the entire illegal immigrant population of the United States, strip law-abiding U.S. citizens of their Second Amendment rights without due process, double-down on inflationary economic policies, continue criminal lawfare against Trump, and promote universal daycare.

Until Monday morning, the “issues” section of Kamala Harris’s campaign website did not exist 49 days after the Democratic Party coronated Harris without a primary. Harris has dubbed her policy plan “A New Way Forward” — the same name President George W. Bush gave to his 2007 surge in Iraq, intended to end terrorism against U.S. soldiers and transform Muslim Iraq into a pluralistic Western democracy.

Equity for the LGBTQ movement, bankruptcy for Christian businesses: The cornerstone of Harris’s LGBTQ policy, which she brands as promoting “civil rights,” would prevent Christian business people from living out their faith in the private sector and economically impoverish believers. After noting she began unlawfully officiating same-sex marriage in 2004 as California attorney general and “refused to defend” a marriage protection amendment democratically passed by California voters, Harris promises “to pass the Equality Act to enshrine anti-discrimination protections for LGBTQI+ Americans in health care, housing, education, and more into law.” The so-called Equality Act would add sexual preference and, in some versions, gender identity, to landmark civil rights legislation designed to protect racial minorities and women from discrimination. By raising homosexuality and transgenderism to the same legal status as race and religion, the Equality Act could force Christian doctors to perform gender-reassignment surgeries and require Christian business owners to take part in services that violate their religious beliefs — or go out of business. State and local statutes modeled after this bill have resulted in such lawfare prosecutions as the never-ending legal disputes of Masterpiece Cakeshop owner Jack Phillips.

Throughout the issues section, Harris contrasts her policy positions, not with the radically truncated 2024 Republican Party platform which Trump campaign operatives foisted on rank-and-file delegates at the Republican National Committee on July 8, but with “Trump’s Project 2025 Agenda.” The Trump campaign publicly opposed the project, which the Heritage Foundation subsequently shut down. Trump replaced GOP’s historic commitment to a Human Life Amendment, and Republican vice presidential candidate Senator J.D. Vance (R-Ohio) confirmed that Trump will veto any national pro-life protections that cross his desk during the next four years.

The “Project 2025 agenda will eliminate federal rules that protect LGBTQI+ Americans from discrimination,” says the website, referring to laws like the SAFE Act that prevent the predatory transgender industry from targeting minors for puberty blocks, cross-sex hormone injections, and life-altering surgeries.

A national abortion expansion act: The website continues the Harris campaign’s rebranding of abortion as “reproductive freedom,” vowing that, as president, “she will never allow a national abortion ban to become law. And when Congress passes a bill to restore reproductive freedom nationwide, she will sign it.” The Biden-Harris administration has endorsed the so-called “Women’s Health Protection” Act (WHPA), which would strike down more than 1,300 state pro-life protections including laws protecting children from late-term abortions (including some after the point of viability), repealing parental consent and notification laws, and repealing conscience protections for pro-life healers.

“If elected, Trump will ban abortion nationwide, restrict access to birth control, force states to report on women’s miscarriages and abortions, and jeopardize access to IVF,” it claims, although no law nor proposal would curtail IVF, and Trump controversially promised to force insurance plans, or U.S. taxpayers, to fund the procedure, which has resulted in unknown millions of abortions and abandoned embryos.

“He even called for punishment for women who have an abortion,” says the website — based on an off-the-cuff remark Trump reversed the day after he made it in a March 2016 interview with Chris Matthews, who resigned from MSNBC four years ago. Trump explained during the 2016 campaign, “I didn’t mean punishment for women like prison” but rather that women who have abortions “punish themselves.” Numerous surveys show women suffer psychologically, and often physically, after enduring an abortion.

The section apparently praises her own administration’s foray into compelling taxpayers to fund abortion. “Vice President Harris and Governor Walz believe we have a sacred obligation to care for our nation’s service members, veterans, [and] their families,” says the website. Last July, the Biden-Harris administration Pentagon spokesman, John Kirby, called paying for abortions a “foundational, sacred obligation of military leaders.”

Amnesty for millions of illegal immigrants: Harris promises to “secure our borders and fix our broken immigration system,” which her website ranks below promoting gun control. She “will bring back the bipartisan border security bill,” which she called “the strongest reform in decades.” Harris promises to reward tens of millions of illegal immigrants who broke U.S. immigration law with U.S. citizenship, calling her amnesty plan “an earned pathway to citizenship.” The Biden-Harris administration has presided over record-breaking levels of illegal immigration every year in office, not counting new legal pathways they have been established for immigrants from nations such as Haiti. Previous historic levels of illegal immigration came when candidates promised, or delivered, amnesty. This “is her attempt to make permanent what we have seen, which is lawlessness,” Rep. Laurel Lee (R-Fla.) told Fox Business on Tuesday morning.

The Democratic candidate blames the broken border on Donald Trump. “Trump fail to tackle violence in our communities or fix our broken immigration system — he will make us less safe,” the Harris website states. “He’ll advance his cruel immigration agenda which includes separating children from their parents,” a policy carried out by the Obama-Biden administration and continued by the Biden-Harris administration.

The fentanyl crisis: “This past year, the number of overdose deaths in the United States declined for the first time in five years,” the website boasts. But the Biden-Harris administration presided over record-breaking numbers of overdoses, largely driven by fentanyl crossing the Southern border from Mexico. The administration’s drug policy aimed to decriminalize marijuana and promoted so-called “harm reduction” policies, which distributed crack pipes to addicts as part of taxpayer-funded “smoking kits.”

Supreme Court packing: Harris supports a plan that would overhaul the U.S. Supreme Court by “requiring [j]ustices to comply with ethics rules that other federal judges are bound by and imposing term limits.” The recent term limits plan embraced by prominent Democrats would sideline the most conservative justices and transform the court from a lifetime appointment to one continually threatened by, and responding to, political pressure.

More gun control: Harris promises to “ban assault weapons and high-capacity magazines.” The Biden-Harris administration has applied the term “assault rifle” to America’s most popular rifle, the AR-15; California law also bans magazines that hold more than 10 rounds of ammunition. The vice president’s pledge to “require universal background checks” would require the government to pry into all sales, and potentially gifts, of guns between private individuals. She also vows to pass “red flag laws,” which unconstitutionally remove guns from the home of law-abiding citizens without due process, if their neighbors, criminals, or vengeful ex-boyfriends report them as mentally troubled. The laws would render those reported defenseless in their own homes.

The website notes, “As head of the first-ever White House Office of Gun Violence Prevention, she spearheaded policies to expand background checks and close the gun show loophole. Under her and President Biden’s leadership, violent crime is at a 50-year low, with the largest single-year drop in murders ever.” In fact, the U.S. homicide rate rose again in 2021 to 8.2 out of 100,00 according to the CDC. The homicide rate in 2022, the most recent year for which data are available, stood at 7.7, significantly higher than the 5.9 rate in 2018.

The website complains that Donald Trump “wants to arm teachers in our classrooms” in response to an ongoing string of school shootings.

Prosecuting Donald Trump? The Harris campaign website promises the Democratic presidential candidate will “fight to ensure that no former president has immunity for crimes committed while in the White House.” That comes in response to a Supreme Court ruling which granted presidents extremely limited immunity for actions carried out in his official capacity as president of the United States — not for private actions. Legal experts warn the threat of prosecution would criminalize political differences and turn the United States into a banana republic.

Nonetheless, the website claims President Trump will “bring the Department of Justice and the FBI under his direct control so he can give himself unchecked legal power and go after his opponents.” Similarly, at the first night of the Democratic National Convention, Michigan State Senator Mallory McMorrow (D) warned, “Under Project 2025, Donald Trump would be able to weaponize the Department of Justice to go after his political opponents.”

“Donald Trump is a convicted criminal who only cares about himself,” the website says.

Recycling lies about Donald Trump: The issues section also misleads about the two candidates’ biographies and policy positions. “Vice President Harris grew up in a middle[-]class home as the daughter of a working mom,” says the website. But Kamala Harris grew up in the famously left-wing city of Berkeley where her father, Donald J. Harris, was “a renowned Marxist professor” and her mother, Shyamala Gopalan, was a cancer researcher. The vice president also grew up in Montreal.

Donald Trump has “said he would let Russia ‘do whatever the hell they want’ to our NATO allies. And he calls soldiers who gave their lives in defense of American democracy ‘suckers’ and ‘losers,’” it says. Trump’s former national security adviser, John Bolton — a neoconservative who has persistently criticized Trump’s non-interventionist foreign policy — called reports that President Trump disparaged fallen U.S. soldiers “simply false.” The comments from Trump, a master of overstatement, about NATO came in response to a question from a foreign leader about whether the U.S. would defend a nation that steadfastly refused to meet its obligations under the treaty to spend a requisite amount of funds on its own national defense. For decades, Trump has criticized one-sided deals in which foreign nations freeload off U.S. taxpayers.

Demonizing Trump: “Someone as dangerous as Donald Trump should never again be allowed to serve as commander-in-chief,” says the website. “Top American military generals and national security officials — including those who worked for Trump — have warned that he is ‘dangerous’ and ‘unfit’ to lead, and now he is surrounded by ultra-loyalists who enable his worst impulses.” These remarks come despite a near-fatal assassination attempt against the former president in Butler, Pennsylvania, on July 13, which missed by a fraction of an inch, something the president has credited to divine intervention.

Civil rights: Kamala Harris commits herself to securing “$2 billion in funding for Offices of Civil Rights across the federal government,” which will supersize federal lawsuits against private employers who refuse to implement Woke policies on the basis of race, sexual preference, and gender identity.

Inflationary economics and price controls: Kamala Harris says that “guilding up the middle class will be a defining goal of her presidency.” Yet on her watch, inflation reached a 40-year high of 9.1% in 2022, lifting costs and squeezing families across the nation. Overall groceries have risen nearly 20% over four years. The median price of a new house has more than doubled since Joe Biden and Kamala Harris took office. Americans must spend an extra $13,000 a year under the Biden-Harris administration to have the same standard of living they enjoyed under the Trump administration, according to one expert analysis. The spike in prices, which critics dub Bidenflation, has reduced Americans’ savings levels by 3.2%. The website notes “[h]er tie-breaking vote on the Inflation Reduction Act,” which economists say carried a real price tag of $1.2 trillion and sparked inflation, in addition to piling more money onto the $35 trillion national debt. As the site also points out, “Vice President Harris cast the deciding vote on the” $1.9 trillion “American Rescue Plan.”

Harris has promised to implement national price controls on food and rent. She will implement the “first-ever federal ban on corporate price gouging on food and groceries,” says the website, although grocers have an extremely thin profit margin. She also promises national rent control. “Vice President Harris knows rent is too high and will sign legislation to outlaw new forms of price fixing by corporate landlords.” She claims she’ll build three million more rental units and “Vice President Harris will provide first-time homebuyers with up to $25,000 to help with their down payments, with more generous support for first-generation homeowners.” Economists agree the policy will simply raise the price of houses by $25,000 while price controls, which failed in the 1970s, will restrict supply.

“Trump would raise rents and add $1,200 a year to the typical American mortgage,” she claims without proof.

Harris’s campaign promises she “will take on Big Pharma,” although the Biden-Harris administration passed vaccination mandates that the White House claimed applied to two-thirds of all U.S. workers, including attempting to force the approximately 25 million people employed at a workplace with at least 100 employees to take the COVID-19 shot or be fired. They also dismissed 8,400 members of the U.S. armed forces who refused to take the shot. Researchers have subsequently linked the injection to an increased risk of myocarditis and excess deaths.

“Vice President Harris will protect Social Security and Medicare against relentless attacks from Donald Trump,” who has steadfastly opposed any reform of the entitlement programs. Social Security is scheduled to become insolvent in 2033. Medicare faces the same fate in 2036.

Environmental globalism: Meeting the “global challenge” of climate change “will require global cooperation,” and she is committed to continuing “the United States’ international climate leadership,” says the Harris campaign website. The U.S. will lead global compacts on fossil fuels. “[S]he will unite Americans to tackle the climate crisis as she builds on this historic work, advances environmental justice.” Harris, who promised she would “absolutely” end fracking in the 2020 Democratic primaries, claims this will result in “lowering household energy costs” and “record energy production.”

Kamala warns Trump will increase gasoline prices: “Trump asked Big Oil executives to give his campaign money so he could roll back regulations and cut taxes for Big Oil to boost their profits, and Trump’s plans would push gas prices up,” she asserts. The cost of a gallon of gasoline has increased from $2.33 when President Donald Trump left office in January 2021 to a record high of $5.02 in June 2022 under Biden-Harris, despite releasing nearly half of the Strategic Petroleum Reserve. The cost now sits at $3.62 a gallon.

“Trump’s economic plans would also trigger a recession by mid-2025,” she said, although some economists agree America is already in a recession. The U.S. experienced the textbook definition of a recession — two consecutive quarters of economic contraction — under the Biden-Harris administration in the first two quarters of 2022. But the administration has denied the recession took place, since the panel tasked with declaring a recession, the Business Cycle Dating Committee at the National Bureau of Economic Research, did not formally make such a pronouncement.

PRO Act/public sector unions: “She’ll sign landmark pro-union legislation, including the PRO Act to support workers who choose to organize and bargain and the Public Service Freedom to Negotiate Act to make the freedom for public service workers to form unions the law of the land.” The PRO Act would force millions of workers to pay union dues against their will, cripple freelance work, erase free speech and privacy rights, skew elections in favor of unionization, and radically increase the federal government’s intervention into everyday workplace disputes. President Franklin D. Roosevelt, who signed the 1935 Wagner Act codifying Americans’ right to union representation, believed public-sector unions should not exist and called militant labor tactics “unthinkable and intolerable.”

“She’ll fight to raise the minimum wage, end sub-minimum wages for tipped workers,” radically altering the landscape of tipped work.

Harris’s agenda will be paid for by “making millionaires and billionaires pay their fair share in taxes.” The top 1% of U.S. income earners pay 46% of all federal income taxes, while the bottom 50% pays 2% of taxes.

Manufacturing jobs: “Under the Biden-Harris Administration, more than 1.6 million manufacturing and construction jobs have been created,” Harris claims. But most of these are jobs destroyed during COVID-19 lockdowns coming back online. The Biden-Harris administration has in fact added 147,000 manufacturing jobs above the level in January 2020.

Universal preschool: “Vice President Harris will fight to ensure parents can afford high-quality child care and preschool for their children. … [E]nsuring hardworking families can afford high-quality child care, all while ensuring that care workers are paid a living wage and treated with the dignity and respect they deserve,” the website states. However, surveys consistently show most mothers would like to remain home with their own children, at least part of the time, during their child’s formative years.

Transferring student loan debt and medical costs to taxpayers: Harris will “continue working to end the unreasonable burden of student loan debt,” she promises. “As Vice President, she also announced that medical debt will be removed from credit reports, and helped cancel $7 billion of medical debt for 3 million Americans. As President, she’ll work with states to cancel medical debt for even more Americans.”

Promising not to raise taxes on most Americans, but … : Harris is also “committed to ensuring no one earning less than $400,000 a year will pay more in taxes.” But the Biden-Harris administration has already raised fees on the middle class and working poor by:

expanding the number of items that must be registered under the National Firearms Act, with a $200 fee for each item;
reinstating the Affordable Care Act’s individual mandate and $695-per-person penalty, which President Trump eliminated;
imposing a carbon and/or methane tax. One proposal would charge companies $1,800 per ton of methane they handle (not emit), with the cost rising 2% above inflation each year;
increasing corporate taxes, which pass on approximately one-third of increased costs to consumers by raising prices (and another third by reducing payroll costs/hours); and
hiking cigarette taxes, which fall disproportionately on the working class.

She also praises tax-and-spend policies, claiming that “when the government encourages investment, it leads to broad-based economic growth and creates jobs, which makes our economy stronger.” But Paul Mueller of the American Institute for Economic Research (AIER) described Harris’s economic interventionism as “extensive government involvement, huge amounts of spending,” and “a giveaway campaign.”

She also plans more Woke equity, pledging to “increase access to capital for small businesses and bring venture capital to parts of middle America that have for too long been overlooked … tripling the Small Business Administration’s lending to [b]lack-owned businesses, and more than doubling small-dollar lending to Latino and women-owned businesses.”

Harris also supports increasing taxpayer-funded subsidies for the Obamacare health care exchanges.

Foreign policy: Harris says she “will always stand up for American interests in the face of China’s threats.”

“Vice President Harris will always stand up for Israel’s right to defend itself,” the website avers. “She and President Biden are working to end the war in Gaza, such that Israel is secure, the hostages are released, the suffering in Gaza ends, and the Palestinian people can realize their right to dignity, security, freedom, and self-determination.”

The vice president’s website also notes her strong support for Ukraine. Under the Biden-Harris administration, U.S. taxpayers have spent more than $175 billion aiding Ukraine, despite its stalled war with Russia, the Zelensky government’s well-documented corruption, and persecution of the canonical Ukrainian Orthodox Church.

The website boasts that Kamala Harris has been “advising on tough decisions in the Oval Office and the Situation Room.” Harris bragged about being “the last person in the room” before Joe Biden decided on the details of the calamitous withdrawal from Afghanistan, which cost the lives of 13 U.S. service members and left an unknown number of Americans stranded behind the Taliban’s lines.

AUTHOR

Ben Johnson

Ben Johnson is senior reporter and editor at The Washington Stand.

RELATED PODCAST: The Deep State with Eric Teetsel

The Washington Stand is Family Research Council’s outlet for news and commentary from a biblical worldview. The Washington Stand is based in Washington, D.C. and is published by FRC, whose mission is to advance faith, family, and freedom in public policy and the culture from a biblical worldview. We invite you to stand with us by partnering with FRC.

U.S. Treasuries No Longer a Safe Haven

September 11, 2024/in Economy, Featured, Politics, ThePricklyPear.org /by ThePricklyPear.org

By Craig Eyermann

Estimated Reading Time: 4 minutes

Editors’ Note: We have on several occasions expressed similar fears that due to the excessive issuance of Treasuries, the price will tend to fall, causing interest rates to rise more than would otherwise be the case, even while normal experience would be for interest rates to decline when the economy slides towards recession. Oversupply may not stop the decline in rates due to recession, but it may well reduce the decline. Additionally, oversupply will tend to “crowd out” other private entities that need credit. Further, the use of bonds by financial advisors to hedge against recession, and to balance out equities in a diversified portfolio, may now be in jeopardy because the government budget is so far out of whack it is flooding the market with bonds. In short, the normal portfolio function of bonds, diversification, and safety, are eroded by government financial profligacy. In other countries during such a crisis, the government may resort to the use of the force of law to require institutions and individuals to purchase treasuries, to create artificial demand to fund the government. This spreads the hazard because requiring the market to buy bonds, forces the bad credit risk onto others, converting once solid “safe haven bonds” into certificates of confiscation. The other alternative would be for the Central Bank to print money out of thin air, and purchase bonds for their own account to fund the deficit. That creates currency depreciation or inflation. In the absence of any political opposition to modulate government spending, the only remaining discipline will be the markets. That is a recipe for financial chaos.

U.S. Treasuries have functioned as a safe haven for investors during global turmoil for decades. Here’s Investopedia describes their role in providing financial stability:

“Treasure bills (T-bills) are debt securities that are backed by the full faith and credit of the U.S. government and, hence, are considered safe havens even in tumultuous economic climates. T-bills are also seen as risk-free, as any principal invested is repaid by the government when the bill matures. Investors, therefore, tend to run to these securities during times of perceived economic chaos.”

The perception of U.S. government debt as the world’s premier safe-haven asset is changing. The CEOs of both U.S. and foreign financial institutions warn of the dangers they’ve seen develop in recent years as U.S. Treasuries have become riskier investments.

U.S. Treasuries No Longer Risk-Free

A new paper by Roberto Gomez-Cram, Howard Kung, and Hanno Lustig underscores that change. Presented at the U.S. Federal Reserve’s annual conference in Jackson Hole, Wyoming, in August 2024, it points to the U.S. government’s debt-financed spending response to the coronavirus pandemic as the cause of the change.

Central banks and governments need to ensure that bond markets function smoothly. Before the arrival of COVID, the U.S. had not witnessed large responses to fiscal shocks in Treasury markets in the past decades, including during the GFC. Based on extrapolation from recent U.S. experience, one might have expected Treasury yields to be insensitive to fiscal news when bond markets function well.

The U.S. Treasury market’s actual response to COVID was markedly different from its response during the GFC and more in line with the predictions of standard valuation models. Throughout COVID, U.S. Treasurys were marked down along with the sovereign bonds issued by the governments of other advanced economies, such as France, Germany, and the U.K. We provide direct high-frequency evidence that these U.S. Treasury yield increases were concentrated on days with significant fiscal news, the footprint of the risky debt regime. In a large class of standard asset pricing models, the valuation of the government’s IOUs is marked down when the economy is hit by unfunded spending increases.

In March of 2020, foreign investors did not flee to the safety of U.S. Treasurys. Instead, they sold long-dated U.S. Treasurys in a flight from maturity. The convenience yield on long-dated Treasurys declined throughout the COVID period. During COVID, U.S. Treasurys were not trading as the world’s safe asset of choice, but rather, Treasurys were trading much like the sovereign bonds issued by other mature economies. Towards the end of the sample, AAA corporates are priced as close substitutes for long-dated Treasurys.

In response to COVID, U.S. Treasury investors seem to have shifted to the risky debt model when pricing Treasurys. Policymakers, including central banks, should internalize this shift when assessing whether bond markets are functioning properly. In the risky debt regime, valuations will respond to government spending shocks, which may involve large yield changes in bond markets. In this environment, large-scale asset purchases by central banks in response to a large government spending increase have undesirable public finance implications. These purchases, which provide temporary price support, destroy value for taxpayers but subsidize bondholders. These purchases may also distort the incentives of governments and impair the price discovery in government bond markets. It is not inconceivable that governments in some mature economies have overestimated their true fiscal capacity as a result of these large-scale asset purchases.

That last point is highly significant. Even though the U.S. government’s debt-fueled spending response began as a national emergency under former President Trump, excessive spending continued under the Biden-Harris administration. It continued long after the emergency faded and continues today.

By continuing it, the Biden-Harris administration squandered the opportunity to refill the U.S. government’s credit reservoir to restore its risk-free status. They could have reduced spending to sustainable levels after the pandemic ended, but instead, they failed this basic test of fiscal responsibility.

The national debt in relation to the U.S. economy has now reached levels not seen since the end of World War 2. It may be helpful to consider how politicians of that time tackled this challenge. After the war, they adjusted their spending habits and stopped investing money in a war that had already ended. This decision ensured that the U.S. government’s credit reservoir would be replenished for future generations.

It’s a history lesson that today’s politicians either never learned or have chosen to ignore. Because they haven’t heeded the lesson, debt issued by the U.S. government has become riskier to the nation’s creditors. Because it has become riskier for those who lend money to the U.S. government, that same debt has become much more costly to U.S. taxpayers.

“If something cannot go on forever, it will stop.” It’s only a question of when and how painful it will be when it does.

*****

This article was published by The Beacon, a publication of the Independent Institute, and is reproduced with permission.

TAKE ACTION

The Prickly Pear’s TAKE ACTION focus this year is to help achieve a winning 2024 national and state November 5th election with the removal of the Harris/Obama/Biden leftist executive branch disaster, win one U.S. Senate seat, maintain and win strong majorities in all Arizona state offices on the ballot and to insure that unrestricted abortion is not constitutionally embedded in our laws and culture.

Please click the TAKE ACTION link to learn to do’s and don’ts for voting in 2024. Our state and national elections are at great risk from the very aggressive and radical leftist Democrat operatives with documented rigging, mail-in voter fraud and illegals voting across the country (yes, with illegals voting across the country) in the last several election cycles.

Read Part 1 and Part 2 of The Prickly Pear essays entitled How NOT to Vote in the November 5, 2024 Election in Arizona to be well informed of the above issues and to vote in a way to ensure the most likely chance your vote will be counted and counted as you intend.

Please click the following link to learn more.

Reports Warn Exponential Immigration Reshaping U.S. Labor Force

September 10, 2024/in DrRichSwier.com, Economy, Elections, Labor & Unions, Politics, Regulation /by DrRichSwier.com

By Family Research Council

Unprecedented levels of immigration are reshaping the foundation of the U.S. economy, the American labor force, according to a recent analysis. Writing for The Wall Street Journal on Wednesday, economics reporter Paul Kiernan stated, “Immigrants are swelling the population and changing the makeup of the U.S. labor force in ways that are likely to reverberate through the economy for decades.”

Kiernan explained that at least nine million immigrants have come to the U.S. since the end of 2020 and are still here — both legally and illegally. “That’s nearly as many as the number that came in the previous decade,” Kiernan wrote of the immigrants remaining in the U.S. Less than 30% of those entered and currently remain in the U.S. legally, Kiernan reported.

Noting the declining birth rate among U.S. citizens, Kiernan pointed out that the immigrants who have entered the U.S. over the past four years are “younger and more likely to be of working age than U.S.-born Americans.” He wrote, “Of foreigners who arrived since 2020, 78% are between the ages of 16 and 64, compared with 60% of those born in the U.S., according to the monthly census data.” The WSJ reporter continued, “Of recent immigrants age 16 or older, 68% — the participation rate — are either working or looking for a job, compared with 62% for U.S.-born Americans. In raw numbers, that likely amounts to more than five million people, equal to roughly 3% of the labor force.” Kiernan also anticipated that the rate of immigrants seeking and claiming jobs in the U.S. “is likely to climb further in coming years.”

While border states are, naturally, heavily impacted by immigration (especially illegal immigration), Kiernan observes that the top five “destination states” for illegal immigrants are Florida, Texas, California, New York, and New Jersey.

Prior reports have placed the numbers of immigrants in the U.S. workforce much higher than WSJ’s estimates. As The Washington Stand previously reported, a new study shows that a staggering 30 million immigrants — again, both legal and illegal — have entered the U.S. labor force just since 2022. While just over 22 million of those immigrants are in the U.S. legally, over eight million are working and living in the U.S. illegally.

Robert Law, the director of Regulatory Affairs and Policy for the Center for Immigration Studies (CIS), told TWS at the time, “The Biden-Harris administration’s border security and economic policies have significantly harmed the wages, economic opportunities, and security of the American people.” He explained that jobs being taken by immigrants “are not jobs Americans won’t do.” Instead, he suggested that Americans “are being sidelined by administration policies that put American workers last.”

Immigration (again, especially of the illegal variety) has been linked to skyrocketing violent crime and a worsening drug crisis, in addition to the suffering job market. Election integrity has also become a point of concern, as Republicans move to ensure that only U.S. citizens are permitted to vote. Numerous Democrat-led cities and states are expected to spend millions and, in some cases, billions of dollars on housing illegal immigrants and providing them with health care and other related benefits.

Americans are increasingly unhappy with the state of immigration in the U.S. under incumbent President Joe Biden and his deputy, Vice President Kamala Harris. For example, 84% of Americans ranked illegal immigration a “serious” issue, including 61% who ranked it “very serious.” In fact, immigration has consistently been ranked as the second-most-pressing issue facing voters ahead of November’s election, immediately behind inflation and the economy. Continuing reports, like Kiernan’s in WSJ, suggest that the two issues are closely related.

AUTHOR

S.A. McCarthy

S.A. McCarthy serves as a news writer at The Washington Stand.

The Washington Stand is Family Research Council’s outlet for news and commentary from a biblical worldview. The Washington Stand is based in Washington, D.C. and is published by FRC, whose mission is to advance faith, family, and freedom in public policy and the culture from a biblical worldview. We invite you to stand with us by partnering with FRC.

There Is More Than A Hint Of Yellow In The Leaves

September 10, 2024/in Economy, Featured, Politics, ThePricklyPear.org /by ThePricklyPear.org

By Neland Nobel

Estimated Reading Time: 6 minutes

One problem with writing an economic and market commentary is that it is a lot like writing a movie review after seeing only the first few scenes. There is more of the story to come, with complex twists and turns in the plot, but the reviewer must say something even though the ending is unknown. As a result, most reviews are wrong.

A dramatic example can be seen in recent headlines from the Wall Street Journal print edition. On September 3rd, the upper right front page article read: Investors’ Attitude On Stocks Get Ultra Bullish. The very next day, September 4th, in the same prominent spot, the headline ran: Stocks Sell Off On Fears Economy Is Cooling.

Wow! How things can change in a day! It is enough to give your entire portfolio whiplash.

But we don’t mean to be critical – we just acknowledged that none of us knows the end of the movie with any certainty.

Nevertheless, we all try to see the future because we have to revise our portfolios from time to time, and that is the very nature of economic commentary. However, just because we do not know everything does not mean we know nothing. Those of us who don’t want to be unburdened by what has been have economic reasoning, experience, and history to draw on. Being burdened by data and history is not a bad thing.

To pick up the thread of our last commentary, we suggested the bulk of the data was showing that the economy was cooling off, that stocks were vulnerable because of extremely high sentiment and over-valuation, and that September, in terms of seasonal performance, is the worst month of the year. If we can be permitted to quote ourselves from Let’s Revise Those Revisions:

“To follow up on that seasonal metaphor, we now think we have had enough cool nights the leaves are starting to turn. But like everyone else, we are looking at a lot of data, and trying to sense a trend. Are there more indicators going up than down? Are all data points equal, or are some more important than others? How do you weigh the data, knowing some is more important than others?

These questions are hard to answer, but we think things have tilted toward the idea that the economy is cooling off. However, much of this data is subject to revisions. This has particularly been the case with government-produced data lately.”

How the rest of the month will go is unknown, but as this is being written, we have not had a single upside day for the month, and we have declined 3.4% in the S&P 500. It has been the worst week of the year. It would seem that September is earning its reputation once again.

The continual deterioration in the employment data and subsequent revisions of past months are of greater concern. Both June and July jobs numbers were revised lower once again. Remarkable even for government numbers, 6 of the 7 last monthly jobs reports have been revised lower. Indeed, let’s revise the revisions.

According to the Kobeissi Letter, full-time employment dropped by one million in August, the 7th month in a row. Part-time employment rose for the 16th month in a row, and the number of people working at more than one job is growing. According to the latest Challenger Report, job cuts at US companies were up 193% in August. None of these trends are healthy.

We also suggested that at some point, the market would quit interpreting that “bad news is good news” and likely begin to regard bad news as…bad. That now seems to be the case because even though the weak numbers now justify a FED cut in interest rates, the reason rates may fall is not so much inflation is declining but that the economy is weakening. That is not a good story for forward earnings.

Further, the skew in the employment data is important. Donald Trump has been pilloried in the press because he suggested that most of the new jobs were going to illegal aliens. But, once again, he was correct. According to E.J. Antoni of the Heritage Foundation:

You have to give credit to Biden-Harris immigration policies. They allow foreigners not only to cancel out your votes, but they want them to take your jobs as well. Pass this data to a Democrat if you have the chance.

Also of concern is the number of job openings. A business must have a job opening before a job can be filled, and the trends don’t look promising.

Both the revised employment data and job openings support the FED in its change of direction regarding lowering interest rates. However, we do have some concerns that they might be behind the curve. That is to say, the economy was far weaker than they thought, and now they will move after employment is already imploding. It could be that bad data has not only misled the public but also the policymakers.

Now, we have the real risk of policy error once again. The Fed, already having blown multiple financial bubbles and causing the worst inflation in two generations, may have decided to cut too late. A recession will cause revenue to fall, endangering the ability to service bloated debt in almost all areas of society. This will put pressure on the Fed to once again crank up money creation to support government rescue efforts. We will start another round of intervention if the Treasury Bond market can take it.

Going into September, the public displays record bullishness with these impending rate cuts. Historically, once everyone gets on one side of the boat, the market becomes unbalanced and can capsize.

Judging public sentiment is difficult because of the problem of “what do you think versus what are you doing.” When both survey data (polls asking what do you think), and measures of investor action (what are you doing with your money), indicate the same condition, the market can have problems of vulnerability to bad news.

The American Association of Individual Investors constantly surveys the public, and until mid-September, its polling had been close to the highest bullish readings in the past two years.

However, as they say, the public can say they feel one way, but act in another. But, in this case, both survey and action data were together, a cautionary development.

This chart indicates the public is “all in” concerning the stock market. Not only do polls indicate excessive bullishness, but the public has also taken action and put a record portion of their household assets in equities.

Meanwhile, hedge funds have been huge sellers, and Warren Buffet has the largest cash hoard in Berkshire Hathaway’s history. Why is Buffet so cautious while the public is so bullish? Who do you think is correct?

This, in turn, raises several interesting questions: If everyone is already bullish and has placed their bets, where does the new money come from to drive stocks higher? Secondly, if stocks were to decline sharply, how would that make the public feel, and what influence would it have on consumer spending?

Our guess is it would be negative on both counts.

The public also holds an even more significant portion of household wealth in real estate, especially residential real estate.

Commercial real estate is already in serious trouble, but residential is in a kind of twilight hour. Prices remain very high and have given little ground to the downside. On the other hand, affordability is terrible, so the demand for homes is off sharply. Then why do not supply and demand get in gear, and prices decline to reflect the lack of demand?

It largely seems to be because the market is “frozen.” Millions of home buyers are financed with 3% mortgages, and they are disinclined to sell because they cannot afford to get into a new house at current higher real estate prices and interest rates. Hence, secondary supply is constrained, even though demand is soft. However, where people are not in those 3% mortgages (newly constructed homes), we are seeing discounts on newly constructed homes relative to existing homes.

Overall, however, the housing market is structurally out of balance, much like the stock market. Inflated like other assets by easy money policies and almost 20 years of ultra-low interest rates, housing prices are running way ahead of the wages needed to purchase a home. That divergence can’t last forever.

If stocks were to decline, as well as residential real estate, we think this would not only make consumers feel poorer, but they would also be poorer, and that could weaken one of the strongest pillars of the economy: consumer spending.

Consumer borrowing has already been at a record, and as we indicated before, rising default rates on credit cards and car loans hint that the consumer might be getting tapped out in terms of the ability to borrow to keep spending at a high rate.

There has already been a palpable shift within consumer spending towards necessities and away from discretionary purchases, another hint that the consumer, while still running hard, is beginning to get winded.

Insofar as stocks are concerned, the weakness so far has been minimal, and no real break in longer-term price trends has occurred. The system still seems awash in liquidity, with neither the Chicago Federal Reserve nor the Goldman Sachs Financial Conditions Index declining. Even the money supply seems to be starting to reverse once again to the upside.

The stock market seems to be in better shape than the underlying economy. Our best guess is that the economy is headed for autumn, and the leaves are now yellow. The big question remains: Will stocks hold up if the leaves turn red?

While the market is still having quite a good year, if you look at sector performance, you can see some shifts indicating economic softness and consumer exhaustion.

This analysis from Yahoo Finance shows better performance from defensive sectors (except big tech) such as utilities, communication services, and consumer defensive, as opposed to industrial, materials, and energy, which are sensitive to cyclical economic trends.

Would we be remiss if we did not note that while stocks are up 14% overall for the year as we write, gold prices are up 20% year to date?

We are not sure what that tells us, but interestingly, an inert metal is performing better than the market of the largest capitalistic country in the world. Perhaps gold is smelling that neither political party will cut spending, and if we nose into recession, excess spending will be piled upon excess as neither party will want to be blamed for suffering a recession and “doing nothing.”

Meanwhile, the movie will continue.

*****

Image credit: Pixabay

TAKE ACTION

The Prickly Pear’s TAKE ACTION focus this year is to help achieve a winning 2024 national and state November 5th election with the removal of the Harris/Obama/Biden leftist executive branch disaster, win one U.S. Senate seat, maintain and win strong majorities in all Arizona state offices on the ballot and to insure that unrestricted abortion is not constitutionally embedded in our laws and culture.

Please click the TAKE ACTION link to learn to do’s and don’ts for voting in 2024. Our state and national elections are at great risk from the very aggressive and radical leftist Democrat operatives with documented rigging, mail-in voter fraud and illegals voting across the country (yes, with illegals voting across the country) in the last several election cycles.

Read Part 1 and Part 2 of The Prickly Pear essays entitled How NOT to Vote in the November 5, 2024 Election in Arizona to be well informed of the above issues and to vote in a way to ensure the most likely chance your vote will be counted and counted as you intend.

Please click the following link to learn more.

The Economy: There Is More Than A Hint Of Yellow In The Leaves