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Let’s Take an Honest Look at Our Secretary of the Treasury 

This is painful to watch.

Janet Yellen, who was appointed by the Biden administration to lead the Treasury Department, is responsible for “formulating and recommending domestic and international financial, economic, and tax policy, participating in the formulation of broad fiscal policies that have general significance for the economy, and managing the public debt.”

She has an impressive resume. She got a PhD in Economics from Yale University. She taught at Harvard. She served as a staff economist at the Federal Reserve, became head of the Federal Reserve Bank of San Francisco, and served in various capacities under the Clinton and Obama administrations. After a spell with the Brookings Institute, Biden invited her to head the Fed in 2020.

Since then, we’ve seen the US economy weaken in almost every important sector, while inflation rises to historical levels and the strength of the dollar dwindles to the point where it could very well be replaced.

That’s not entirely her fault. Nor is it entirely the fault of the old guy that appointed her to her office. The enfeeblement of the economy and the destruction of the dollar began half a century ago when Nixon disconnected the value of the dollar from the price of gold, which allowed the government to spend money it didn’t have to fight wars we couldn’t and didn’t win. Not just the proxy wars generated by the military-industrial complex, but the war on drugs and the war on poverty, which haven’t worked – at all – but devalued the US’s greatest economic advantage, the universal belief in the US dollar.

What bothers me about Yellen is how painful it is to watch her try to defend the futile and insanely expensive bad economic policies that have caused so much destruction. Despite her distinguished education and long years of experience, the poor woman is no longer capable of answering basic questions about economics. Let alone defend what the Treasury has been doing these past two years.

Click here for a clip that shows how very incompetent she is. (There are MANY similar clips. I’ve included a few in past issues.) How can anyone with a modicum of economic intelligence watch this poor old lady try to defend what the Treasury Department is doing and not feel sorry for her?

If you disagree, please write to me, and defend her any way you can. I’d love to believe that she knows what she is doing.

Update on the Digital Dollar

The greatest threat to freedom and democracy in the US is not domestic terrorism from the radical right. Nor is it woke-ism coming from the radical left. In my mind, the biggest and most serious threat is the coming of the digital dollar.

I’ve written about it many times. And the story continues.

Last week, South Dakota Governor Krisi Noem vetoed a bill that redefined currency and created rules for a Central Bank Digital Currency (CBDC) that would block all other digital currencies from being used in the state. When asked why her legislators would have passed such a bill, Noem responded that the bill had been constructed by lobbyists, and they likely did not read it.

What’s especially ominous: This isn’t an isolated case. Similar bills have appeared in 20 states.

Read more here.

Zuckerberg’s Corporate Poetry 

“Flatter is faster,” Mark Zuckerberg is claiming. That’s his way of putting a positive spin on Meta’s plan to cut 10,000+ jobs in the next month after cutting 11,000 jobs earlier this year.

What does this say about the future of Big Tech for the rest of 2023 and beyond? See what the editorial staff of The Hustlehas to say here.

Collectible Investment Secret

Middle Age Crisis + Wealth = Peak Values 

I’ve written a fair amount about investing in collectibles. But one thing I don’t think I ever mentioned was an ingenious strategy I learned from one of my favorite investment analysts: Steve Sjuggerud.

Many years ago, he pointed out that there is one area of collecting where future values are nearly guaranteed. Because things that are considered cool by teens and preteens often become even more desirable when they’re adults.

I’ve found this to be pretty much true. When I was in my 50s, for example, the top collectible cars were the 1950s Corvettes and Thunderbirds that I admired as a teenager. Ten years later, 1960s and 1970s vintage cars rose to the top of the bidding ladder. And today, sports cars from the 1980s are hot.

The same is true of many collectibles. Click here for an article from The Hustle about collectors that spend big bucks on Hot Wheels.

The Cost of Retiring Comfortably

If you have less than a million in your retirement account, but still dream of retiring without having to worry about running out of money, you might want to begin your planning by figuring out where you want to live. Click here for a survey of the most affordable places to retire in the States and worldwide.

 Why Are US Banks Collapsing? 

I was going to write something this week about Silicon Valley Bank and the subsequent bank failures. But then I came across this amusing explanation by my colleague and partner Sean MacIntyre. Click here to see what he says.

Were You in the Right Investments Last Year? 

In general, 2022 was not kind to investors. But some hard assets and collectible investments did well. Museum-quality art, for example, rose in price by an average of 29% over the course of 2022 – well above the stock market ROI and the US inflation rate (6.5%) added together! Click here to see all the categories that did well.

When the Truth Finally Comes Out 

This is amazing. Listen to what this woman is saying. She believes, actually believes, that the $1.7 billion written into the “Inflation Reduction Act” was deficit reduction, rather than tax increases! Click here.

Then: The Housing Bubble

Now: The Car Debt Bubble?

According to a report published recently by YahooFinance, Americans are borrowing more money to buy cars than ever before. What’s worse, they are often borrowing more than the cars are worth.

Does that sound familiar?

This is what happened with housing in the years leading up to the 2008 crash.

It’s not unusual for drivers to carry some negative equity. But dealers say that an increasing number of people are showing up at their lots up to $10,000 underwater, or “upside-down,” on their trade-ins. They’re buying at still-sky-high prices and rolling debt from one car to another. “As trade-in values begin to cool, each month more and more consumers will find themselves falling from positive to negative equity,” said Ivan Drury, director of insights at auto-market researcher Edmunds. “Unless American car shoppers break their habit of buying again too soon, we’ll see the negative equity tide continue to rise.”

Another Reason Florida Rules 

I often remind my friends from New York that living there puts a significantly greater tax burden on them than living in Florida, where we have no income tax. In response, they say, “But you have higher property taxes.”

But that’s not true. As you can see from data compiled by WalletHub, Florida ranks 24th in terms of “effective real estate tax rate” (at 0.86%), whereas New York’s property taxes are more than twice as high at 1.73%.

Click here.

The Supply Chain Is Mostly Fixed

But Cost of Shipping Is Still High 

The supply chain, a major headache during the pandemic economy, is now in much better shape. According to Bloomberg:

“Containers that took up to 120 days to ship between warehouses in China and the US during the pandemic now take about 14 days, and the spot price for shipping a container from China to the US has declined from a peak of about $20k to about $1.2k, roughly equivalent to pre-pandemic prices.”

So why is the cost of shipping still so high?

For one thing, the costs of goods shipped to the US from Europe are still three times what they were before the pandemic. For another thing, shipping prices are usually determined by long-term contracts, so many importers are locked into rates set in 2021 and 2022.

Also…

* The cost of storage and truck and train shipping within the US is still high.

* Warehouse vacancy rates are low, pushing up rents.

* The logistics sector has struggled to hire and retain employees, which has led to higher salaries.

* The price of diesel fuel is twice what it was in the summer of 2020.

Inflation and the Rise of Monopolies

Bill Bonner predicted the inflation we are experiencing now many times over the past year or two. His prognostication was based on basic economics: He watched how the Fed was trying to engineer the supply and demand of dollars.

It all happened pretty much as it should have happened,” he said in the Jan. 10 issue of Bonner Private Research. And then he noted that the people that support government overspending, including the government and the mainstream media, are not accepting responsibility for their machinations. They are pointing fingers elsewhere.

“They aim to distract your attention from what is right before your eyes,” he wrote. “They claim ‘capitalism failed’ or ‘corporate greed’ suddenly imposed itself or, for those with no ax to grind, simply that there were ‘supply chain interruptions.’”

As an example, Bill quoted an article in The Guardian by Robert Reich, the former US Labor Secretary, making the case that corporate monopolies are to blame. Here’s an excerpt:

“Worried about sky-high airline fares and lousy service? That’s largely because airlines have merged from 12 carriers in 1980 to four today.

“Concerned about drug prices? A handful of drug companies control the pharmaceutical industry.

“Upset about food costs? Four giants now control over 80% of meat processing, 66% of the pork market, and 54% of the poultry market.

“Worried about grocery prices? Albertsons bought Safeway and now Kroger is buying Albertsons. Combined, they would control almost 22% of the grocery market in 167 cities across the country.

“And so on. The evidence of corporate concentration is everywhere.

“Put the responsibility where it belongs – on big corporations with power to raise their prices.”

You can read Bill’s entire essay here.

Gold and Silver: Should You Be a Buyer?

I bought a bunch of gold in 2002. Back then, it was selling for about $400 an ounce. Today, an ounce will cost you more than four times that much, as it’s trading at roughly $1,800. That’s a gross profit of about 8% a year. And even if you subtract from that the average inflation rate during those years (about 2.5%), you’d still be making about 6% a year or 350% over 20 years. (I did those calculations quickly in my head. They may be wrong. But not by much.)

A profit of more than 300% over a 20-year period is good, but it’s not going to make you rich. My approach to gold, though, was never to get rich from it, but to use it as (1) a hedge against inflation, and (2) insurance against financial Armageddon. As an inflation hedge, it has already exceeded my expectations. (You can read one of the many essays I wrote about buying gold here.)

If you don’t own gold now, or think you might want to, click here to watch a short, entertaining video by Sean MacIntyre (who has developed a huge international following by expanding on and in some cases revising my ideas about wealth building) on his reasons for buying precious metals right now.

And click here to check out his website, DIY Wealth.