inflation is tax farming and debts and deficits are the road to dictatorship
is a road that leads away from state controlled money
With the market now expecting less than 2 rate cuts this year -- perhaps none at all until next year according to Bank of America -- what does that mean for the economy?Can it handle "higher for even longer" interest rates without slowing markedly?Or, even worse, something systemic breaking?And what impact will these higher rates likely have on stock, bonds and other asset prices?To find out, we're fortunate today to talk with money manager Michael Pento. president of Pento Portfolio Strategies.Michael is "not happy". He's very concerned that the crown jewel of our capitalist society, the middle class, is getting "destroyed". He sees nothing good coming from that.And looking ahead, he sees a disinflationary recession happening in the second half of 2024, to be followed in early to mid-2025 by an era of stagflation more extreme than we've ever experienced.
The core insights that define the Peak Prosperity way of seeing the world are set against real-world data in this episode. Energy, debt, wealth, currency, GDP, & the fiscal vandalism of Congress combine to assure that the future will consist of hard choices as we navigate self-inflicted predicaments.
The revelation that Argentina has done something the US government hasn’t done in more than two decades—run a budget surplus—seems like a newsworthy event. So why the silence?
After a full month in office, Argentina's President Javier Milei and the government was able to see a surplus in the budget at the end of January.
This week, to start off “Ask an Economist” for the year, I have a question from Stan K. about the national debt. I’m happy to report that after asking for questions in early January, I have received the most ever. I look forward to working through all I can. Here is Stan’s question:Peter, I often bemoan the mess we have as our national debt climbs and interest on the debt becomes one of our biggest mandatory expenses. However, I was pontificating on this budget-busting danger to my wife, and she asked, “Who do we pay interest to, and how do we pay it?” My answer was pathetic. Can you help me out?So we have a question about the ever-growing US #debt. Let’s look at who owns it and how it’s paid.
Peter, I often bemoan the mess we have as our national debt climbs and interest on the debt becomes one of our biggest mandatory expenses. However, I was pontificating on this budget-busting danger to my wife, and she asked, “Who do we pay interest to, and how do we pay it?” My answer was pathetic. Can you help me out?
So here’s what’s remarkable:Again, discretionary spending totaled $1.7 trillion last year– which includes US military expenditures.However, the other spending categories– mandatory spending (Social Security, Medicare, etc.) and interest on the debt– were so vast that the federal government still had an enormous deficit for the year.How enormous? $1.7 trillion enormous.Look at those numbers again: Discretionary spending for the year was $1.7 trillion. The fiscal deficit for the year was also $1.7 trillion.Conclusion? The government needed to eliminate ALL discretionary spending last year– including the military– in order to balance the budget.
Congress spent $7.5 billion on electric vehicle chargers two years ago. How many have been built? One!
Honestly this isn’t a particularly difficult concept to understand: if overspending is gradually (then suddenly) propelling your decline, then cut spending. Duh.Yet history shows that this almost NEVER happens. And it’s astonishing that people in power have consistently failed to understand this simple concept for more than 5,000 years.We’re witnessing the same thing today– the US is plagued by massive challenges of its own making. Or at least, the making of inept politicians.
