Did you ever wonder how accents come about? It happens in every culture with every language. In some places, the variations are relatively minor, but, nevertheless, significant. In the city of London, for example, there are more dialects than there are in all of the continental United States. Did you know that there are places along the eastern shore of the US where natives sound like they are from 16th century England? Did you ever wonder why Canadians pronounce “about” like “aboot”? I do. And I always find explanations of these differences to be fascinating. Perhaps you will too. Click here.
There is no better way to ruin a perfectly capable mind than to subject it to a liberal arts education at a US university. Here’s a disturbingly hilarious example… a throng of woke Portland State University students that could not think their way out of a bag of snowflakes.
Buckle Up – It’s Going to Be a Long, Hard Ride
The Republicans are grousing about inflation. It’s higher than it’s been in 40 years, they point out. It’s hurting working-class and even middle-class Americans. And it’s all Biden’s fault.
The Biden administration originally denied the complaints about the rising consumer price index (CPI). They said it was temporary. The result of the supply-chain problem, which was clearing up. Then, when the rise persisted, they said it was nothing to worry about. We have good employment numbers. Wages are going up. The economy is healthy. Even their top fiscal and monetary appointees, Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell, discounted the early CPI data as a serious economic threat, just as they disputed the data that showed that the US had slid into a recession.
Republicans are implying that if they take control of the House and Senate in the mid-term elections, they will bring inflation down by reversing Democratic policies. That’s not true, Biden is saying. If the Republicans get control of Congress, inflation will go up!
If you’re younger than 50, you were just a kid the last time the US economy had multiple years of high inflation. It may be hard to imagine what a sustained period of double-digit CPI numbers, combined with a sluggish economy, feels like. But if you were working in the 1970s and early 80s, when US economy experienced an extended period of high (double-digit) inflation, you would be alarmed.
Right now, the CPI is at 8%, while wages, on average, have gone up only 3%. That leaves a 5% gap. Five percent is not good, but the reality is even worse. There was a time when the CPI was a reliable indicator. Now, it’s skewed. The calculation no longer includes the cost of food and energy. And food and energy have gone up considerably more than 8%. For the average American, for whom food and energy represent a significant portion of the family income, the effective inflation rate is more like 12% to 15%, depending on how you do the math. That means the gap – the actual loss of buying power – is more like 9% to 12%. In other words, double-digit inflation.
Those of us that were supporting families in the 1970s and early 80s remember the effect of double-digit inflation over several years. It’s very, very significant. If your income isn’t increasing rapidly, you can feel yourself getting poorer, almost by the week.
Consider this: Four years of 12% inflation means your purchasing power drops by more than half.
The ABCs of Inflation
Inflation is caused by deficit spending – i.e., governments spending money that they don’t have. They do this by some form of borrowing. The US does it by selling (and sometimes buying) Treasury bonds.
All responsible parents understand and teach their children that deficit spending is wrong. And children learn that they can’t have everything they want, just because they want it. Begging and pleading isn’t the right way to get it. They must earn it. Or, if they want to borrow it, they must be sure they can pay it back.
When it comes to government spending, many people seem to believe that this fundamental rule of economy (and ethics) does not apply. The politicians that vote for programs that require deficit spending, and the people that vote for those politicians, seem to believe that the same fundamental laws do not apply when it comes to the government. I’m sure some of them believe that what they are doing in ratcheting up US debt is for the greater good. If someone points out that they are spending money irresponsibly, they see such criticism as mean-spirited.
And that’s because most of them, along with most of the people that vote for them, haven’t the slightest understanding of what they are actually doing. Deficit spending and federal debt are abstractions to them. They tell themselves that what they are doing is good, that they are not interested in the theoretical warnings of the complainers. They are interested in the real world. And in helping real people by passing programs that will really help.
What they don’t know, because they don’t understand the ABCs of fiscal and monetary reality, is that the money they are spending is not real. It is IOU dollars, created out of thin air, that, one way or another, will one day be paid back.
In the meantime, they keep spending.
The programs that politicians spend money on depends on their political preferences. Historically, Democrats liked to spend money on social welfare programs. Republicans liked to spend it on warfare.
What’s happened in the last 20 years or so is that both parties have gradually widened their willingness to spend money. Democrats like war spending as much as or more than Republicans. And Republicans are happy to spend money on social programs so long as it gets them votes.
What We Should Expect
There are many similarities to what is happening now and what was happening in the 1970s prior to the bouts of double-digit inflation we had then.
For one thing, each of those inflationary periods was triggered by Mideast energy crises (OPEC and Iran). We have an energy crisis today.
Those energy crises were triggers. But they were not causal. The cause was an accumulation of federal debt. In 1981, the debt was about $1 trillion. That was enough back then. And $1 trillion 40 years ago might be, say, $10 trillion today. But the federal debt is now $31 trillion. In absolute terms, that is 31 times more. Even in relative terms, it’s greater by 300%.
How can anyone possibly think that the US can pull itself out of this enormous level of debt without either a sustained period of double-digit inflation or a sustained recession, or both?
Inflation is here and it is likely to get worse. It was caused not just by the Biden administration, but by the Obama and Trump administrations, as well. Spending money you don’t have, pols believe, is how you get and stay elected. When the pandemic came along, the spending skyrocketed.
The only way to keep the US economy from moving into double-digit inflation is by raising the cost of money at the federal level. By making money more expensive, the supply of it and the velocity of it is reduced. Less money in circulation means lower inflation.
Jerome Powell has been pushing back against inflation by raising the federal lending rate. It was basically zero when he took office. He’s raised it four times. It’s currently 3% to 3.4%. That is a lot better than zero, but it’s not nearly enough. To defeat inflation, he’d have to do what Paul Volcker did during Ronald Reagan’s administration. Volcker realized that the only way to beat inflation was to raise the federal lending rate to 20% in June of 1981. That broke inflation’s back. By 1983, the inflation rate was down to 3%.
I don’t think Powell has the courage to do what Volcker did. Nor do I think that the Biden administration, even with a Republican majority in Congress, will have the courage to push him to do it.
I think what we will see is some tough talk on raising rates and then a capitulation. The Fed, the administration, and the Congress will continue to spend money they don’t have, while telling their constituents that it’s the other party’s fault… and hope that somehow the time bomb of federal debt will not explode while they are still in office.
The Dumbbell Prize for Economics: Were They Serious?
I thought it was a joke. I thought my colleague was kidding me. I opened the morning newspaper. It was true!
Ben Bernanke had won the Nobel Prize for Economics!
This was the same guy that almost single-handedly initiated the ridiculously stupid government bailout of Wall Street after the 2008 stock market meltdown. This was the same guy that got on national TV on a Friday and said that unless Congress passed the bailout bill immediately, America would likely not have an economy left by Monday.
He was also the guy who, prior to that, had been saying the reported problems with sub-prime lending were nothing to worry about. He was the person that came up with the shibboleth of Quantitative Easing. And he was a mentor for Janet Yellen and James Powell who continued with the same foolish policies.
And he was the man who had the unmitigated gall to write and publish a book about his recklessness called The Courage to Act.
For some conversations about all of this, click here and here and here.
A shibboleth (SHIH-buh-leth) – from the Hebrew – is a custom, principle, or belief associated with a particular group of people, especially a longstanding one regarded as outmoded or no longer important. As I used it above, “[Ben Bernanke] was the person that came up with the shibboleth of Quantitative Easing.”
Take a Cleansing Breath. Now Take Another.
Click here to read a short essay from Scott Young on dealing with anxieties. These techniques won’t work for severe bouts of anxiety, but I’ve found that they do work for the moderate levels that most people deal with regularly. (The Buddhist principle is especially strong if you can master it.)
Something I’ve learned about writing: You can’t assume that friends and family members will want to read your books and essays. Some won’t read them at all. (K doesn’t read my non-fiction writing because she says she gets “enough of me” in person.) And then there are the friends and family members that read you but find fault with your writing. An example: This 1926 letter from Grace Hall Hemingway to her son after reading his latest, The Sun Also Rises…
Ernest,
It is a doubtful honor to produce one of the filthiest books of the year.
What is the matter? Have you ceased to be interested in loyalty, nobility, honor, and fineness in life? Surely you have other words in your vocabulary besides “damn” and “bitch” – Every page fills me with a sick loathing – if I should pick up a book by any other writer with such words in it, I should read no more – but pitch it in the fire.
Monster: The Jeffrey Dahmer Story
A 10-episode docudrama on Netflix
First episode: Sept. 21, 2022
Directed by Ryan Murphy
Starring Evan Peters, Niecy Nash, Molly Ringwald, and Richard Jenkins
I’ve always been curious about serial killers and mass murderers. Jack the Ripper. Charlie Manson. John Wayne Gacy. Jeffrey Dahmer.
My curiosity isn’t morbid. I have no interest in hearing about the bloody details. I’m just curious to know what so many people want to know about these people: Why?
Monster: the Jeffrey Dahmer Story attempts to answer that question. And although it doesn’t arrive at a clear or certain answer, it reveals all sorts of fascinating possibilities. It shows Dahmer in his development from an awkward child to a sensitive teenager to a quiet and lonely young man, and then to a serial killer who kept and sometimes ate his victims’ body parts.
Critical Reception
It’s gotten mixed reviews. The primary criticism has been that it’s exploitative.
I didn’t think so. I thought it did an earnest job of trying to answer the “why” question. That includes the many whys that relate to how Dahmer was able to get away with his repeated killings despite many leads given to the Milwaukee police.
Interesting
Netflix originally had the series tagged under its LGBTQ category but pulled the tag after receiving many complaints. As one person on TikTok wrote: “This is not the representation we are looking for.”
You can watch the trailer here.
And here is an Inside Edition interview with Dahmer.
The Evolution of Dance in Less Than 10 Minutes
Not Fred Astaire and Ginger Rogers, but pretty damn impressive…
Watch it here.
Do the Rich Pay Their “Fair” Share of Taxes?
AOC doesn’t think so. Neither does Bernie Sanders. Neither does Elizabeth Warren. And it’s not just left-leaning politicians. Ask ten Americans if the top 1% pay their “fair share” and nine of them will say, “No!”
Do you agree?
Do you know what percentage of all tax revenues the rich pay each year?
No?
Well, this may surprise you Here are the facts…
According to the IRS:
* The top 1% pay about 40% of all taxes.
* The top 10% pay about 70% of all taxes.
* The top 20% pay about 90% of all taxes.
* And more than half of Americans pay no taxes at all.
Here are two entertaining little video lessons on this issue.
Look Who’s Trading Stocks on “Inside Information”
From the WSJ:
Thousands of officials across the government’s executive branch reported owning or trading stocks that stood to rise or fall with decisions their agencies made, a Wall Street Journal investigation has found.
More than 2,600 officials at agencies from the Commerce Department to the Treasury Department, during both Republican and Democratic administrations, disclosed stock investments in companies while those same companies were lobbying their agencies for favorable policies. That amounts to more than one in five senior federal employees across 50 federal agencies reviewed by the Journal.
From Bonner Private Research:
These officials had what the SEC calls “inside information.” Because of their privileged positions in regulatory agencies, they had a better chance than the rest of us mortals of guessing which way the stocks would go. It is supposed to be illegal to trade on inside information. But there are gray areas. The regulators make the rules; and they’re careful to stay in the shade.
More Big Companies Leaving Chicago
Tyson Foods will relocate about 1,000 corporate positions from the Chicago area as well as South Dakota to its headquarters in Arkansas.
Chicago has had a number of corporate departures in the last two years, including Boeing, which is moving its headquarters to Arlington, VA, and Citadel Hedge Fund, which moved its offices to Miami.
In a speech to the Economic Club of Chicago last month, McDonald’s CEO Chris Kempczinski said he plans to keep the company’s headquarters in Chicago. But he admits that the pressure to move elsewhere is mounting.
“While it may wound our civic pride to hear it, there is a general sense out there that our city is in crisis,” Kempczinski said, adding that it is becoming more difficult for the company to recruit promising employees.