30.   When Dementia Replaces Meritocracy – Demand Destruction

The Federal Reserve (The Fed) just raised its Federal Funds Rate by 0.75% to a range of 2.25% to 2.50%.  The Fed’s goal is to destroy enough demand so that it is balanced with supply and prices fall.  Back from visiting family in Florida, we drove and benefited from the demand distribution for gasoline reflected in lower prices.  The data indicates that the demand for gasoline has reduced by almost 10%.  Lower demand, constant supply equals lower prices. 

While campaigning for the Presidency against Jimmy Carter, Ronald Reagan made this statement:

A Recession is when your neighbor loses his job.

A Depression is when you lose your job.

Recovery is when Jimmy Carter loses his job.

I would amend President Reagan’s comment that Recovery is when all the Democrats lose their jobs.

Obviously, no one in the Biden Administration has even a faint understanding of economics. Rather than using The Fed to raise interest rates to create a RECESSION to destroy demand, we Deplorables fare better if you solve inflation by reducing taxes to increase supply. But  the Democratic Socialists of America and Biden do not care about the Deplorables since we are …well… DEPLORABLE, roughly equivalent to being their “Serf.”

While away I listened to blogs and read about economic issues.  Here is a brief synopsis of what I learned and observed:

1. “Fossil Future” a little wordy but a superb book.  Get a copy and read it NOW!
   1. Did you realize that the same self-appointed climate gurus that in the 1970’s and 1980’s were predicting Global Cooling – The Return of the Ice Age are now earning their living by championing Global Warming?  Credibility? Nope. 
   1. The almost undiscernable increase in temperatures over the last 100 years was handled nicely by the use of fossil fuel (200+ years supply in the USA).
   1. Germany and Texas both made commitments to solar and wind for their energy, both have experienced soaring increases in electric prices and both were cold this winter and are enjoying the heat this summer because solar and wind ARE NOT RELIABLE like fossil fuels.
   1. Climate Change is a SCAM.  SCAM.  SCAM.
   1. As a totally spoiled American who likes to be warm in the winter and cool in the summer, drive my comfortable SUV to the store, where I have an almost endless choice of goods from which to choose – I want my fossil fuels.  Those of you that worry about climate change can use solar and wind for energy, walk or ride a bicycle, and eat insects.  Leave. Me. Alone!

• A commodity trader reported that in July over $20 Trillion in asset value was destroyed. He predicted that amount was just the beginning of the damage from this financial crisis which will ripple through the global economy over the next 12 -18 months. 

• Walmart reported that their revenues declined in the 2^nd Quarter as consumers shifted to buying food (and gas) away from general merchandize. Unit sales are a more important number than revenue because revenue reflects inflated price and units measure the impact.  General merchandise suppliers are among the ripple effects.

• Janet Yellen and other Democratic Socialists of America members who are supposed to be economist began a tour of the media to let us know that what we are experiencing is not a recession and they ae prepared to change the definition of a recession to prove it.

• Hunter Biden continues to provide entertainment with his laptop contents now available for viewing online. The U. S. Attorney in Delaware is reported to have empaneled a Grand Jury to review the evidence on Hunter Biden, but no report has been given.  Some commentators believe that Hunter Biden will plea bargain to income tax evasion and pay a fine.  This situation should be the equivalent of a neutron bomb.

• We drove to Florida and benefited from the demand destruction for gasoline reflected in lower prices.  The data indicates that the demand for gasoline has reduced by almost 10%.  Lower demand, constant supply equals lower prices. 

• We ate at a new Wendy’s, order and pay at a kiosk, only interact with the small staff when the order is ready. Demand destruction for first jobs.

• America’s electric grid depends on 40-year-old transformers at the end of their useful life with American manufacturing capacity so overwhelmed that the lead time has lengthened from 38 Weeks to now 38 MONTHS.  All Electric vehicles?   NOPE.

• Is the Biden Family profiting from our leaving massive minerals deposits in Afghanistan for the Chinese to mine, the aid we are sending to Ukraine, and the sale of oil to China from our Strategic Reserve?

1. Forget following Warren Buffet, watch Nancy Pelosi’s husband as he makes his investments.  Paul Pelosi just seems to always be in the right spot at the right time.

1. Will Rogers said America had the best politician money can buy.  Truman famously said that you could tell the crooked politicians because they get wealthy on a government salary. Secretary of State Hillary Clinton sold Russia 25% of our uranium deposits and miraculously received $100 Million contribution to her Clinton Foundation, but who else benefited from that sale.  Is this the fulfillment of Obama’s promise to “Transform America” – selling us to become a third world country for their profit?

1. Meanwhile, China’s economy which is so admired by the Democratic Socialists of America, continues to melt.
   1. Did you see the protests of Chinese unable to withdraw their money from banks?
   1. Did you read about the Chinese that stopped making payments on their unbuilt apartments because of the uncertainty of the construction schedule AND the huge decline in value of those units?
   1. Historically, imploding dictatorships are HYPER dangerous, pun intended.

While the financial markets expect the collapse in commodity prices to lead to inflation peaking this fall and decline to 4% by the end of this year, I believe that they are optimistic.  Those markets are also predicting that The Fed will begin reducing rates in April 2023.  They massive ripple effects coursing through the global economy are not yet predictable.   What is predictable, we will see layoffs this fall, and mortgage rates will have to reverse for the real estate market to recover.  Mortgage rates are only tangentially related to the Federal Funds Rate.

Yellen may want to change the definition of a RECESSION to meet the political needs of Biden and the Democratic Socialists of America but it started in January, and everyone will feel the pain this fall. A soft landing is doubtful with The Fed raising Federal Funds Rates in a Recession while public companies probably report poor to middling second quarter results is absolutely a predictor of a horrendous stock market this fall. 

Remember my description of heading into the Bermuda Triangle during a category 5 hurricane on a little sailboat with a senile captain?  I am an optimist. “This will be a memorable experience”.

Please pray:

1. That God exercises his control over our government at all levels.
2. For the “Forgotten 599” surviving Americans being held as political prisoners by Biden and the Demented Marxists in hell hole conditions in the DC Gulag.  
3. For honest elections because without them we are not free.
4. For the valiant Ukrainians.

Let’s Go Brandon!

“I want you to know, believed, that what has happened to me has actually helped to spread the gospel, so that it has become known throughout the whole imperial guard and to everyone else that my imprisonment is for Christ; and most of the brothers and sisters, having been made confident, dare to speak the word with greater boldness and without fear.”

(Philippians 1: 12-14)   New Revised Standard Version, Oxford University Press)

Stay healthy,

Ned 

July 27, 2022        

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