Dear Reader,
Is inflation nearly licked?
No, howls Freedom Financial News contributor Jeffrey Tucker:
- The newest inflation data appears and it is still awful, even worse than before. All told, the U.S. dollar’s purchasing power is down in official data by 22 cents over four years. That’s what we are being told, and that’s terrible enough. The reality is likely worse once you add in interest rates, shrinkflation, new fees, and housing insurance. That gets us closer to 40 cents and more.
40 cents — and more! The very angels and saints shriek in horror.
What is worse… Jeffrey fears an additional inflation menace haunts the horizon… like the return visit of a dreaded mother-in-law.
It is “baked into the cake,” as the phrase runs. The outgoing administration mixed in the bitter ingredients:
- There is some heavy risk of a second wave coming next year. On the current trajectory, that is where we are headed. The Fed has fed another $1.1 trillion in fake money into the system in the last 12 months. The Treasury has created new debt as never before, probably in hopes of ginning up the GDP prior to the election. The trick did not work but now the public is stuck with the bill of $35 trillion.
Trump Can’t Stop It — But He Can Reduce It
The incoming president will stand powerless before this second inflationary wave. It will wash over him — and you.
Yet Jeffrey argues he can lower the crest.
Thus the ten-foot wave may become the eight-foot wave, the six-foot wave, the five-foot wave.
To hack off the height, Jeffrey argues President Trump must immediately:
- End debt creation by dramatic spending cuts…
- Curb the actions of the central bank…
- Inspire economic growth through deregulation and agency elimination.
Let us tackle each of these proposals in the order presented…
Trump Likes to Spend
Firstly: Will President Trump end debt creation by dramatic spending cuts?
I am not half so convinced he will. The fellow’s initial reign is evidence he likes to spend money.
He may be less extravagant than Democrats. Yet his watch over the United States Treasury will likely prove… relaxed.
Secondly: Will he curb the actions of the central bank?
Mr. Powell insists he will not abandon his post within the Eccles Building.
He likewise insists that a President Trump will lack the authority to heave him out.
My legal advisors inform me the chairman is correct — though his case may lack the iron cladding many believe surrounds it.
Yet the Federal Reserve will largely retain its cherished but fictional independence from politics.
Regardless, President-elect Trump has previously confessed to being “a low-interest rate person.”
He will certainly not curb the actions of the central bank if it battens down interest rates.
The Deep State Is Too Deep
Thirdly: Will President Trump inspire economic growth through deregulation and agency elimination?
He may work through certain deregulations. He did it last time — and will likely again.
They will likely enhance economic performance, though around the margins.
Will he eliminate the federal agencies that infest the nation’s capital… like choking crabgrass in a garden?
Alas he will not. The federal apparatus is far too formidable.
I do not believe a President Trump will shutter one single agency.
I will munch each and every one of these words if mistaken — without salt.
Trump Needs to Follow Milei’s Blueprint!
Yet let us assume President Trump takes aboard each of Jeffrey’s proposals.
He will labor mightily to axe the federal budget, to tame the central bank, to make a ghost towns of the federal departments.
In Jeffrey’s telling, Argentina’s libertarian president Javier Milei has the blueprint in hand:
- You can have a look at how Javier Milei did it in Argentina. He took the problem of massive hyperinflation and converted it to low inflation in a year. His is a case study.
Yet is it?
You must first understand that the Argentinian system is not the American system. First the American system:
The founders of the American system erected a governmental apparatus so unwieldy, so inert, so plodding, it is exceedingly difficult to budge.
Thus it is exceedingly difficult for a president to “get things done.”
American Politics Is Designed to Occur Within the 40-Yard Lines
Assume an American football field, 100 yards in length.
American politics is designed to rage within 20 yards of midfield — between one 40-yard line and the other 40-yard line.
That is, neither Democrat nor Republican can advance past 10 yards of midfield.
This in many respects crowns the American political order.
It chains down the fanatics, power-ravenous and politically lustful among us.
And it mires men in a hurry — as the politically lustful often are — in heavy mud.
Now the Argentinian system…
An American President Could Never Get This Done
It lacks — to a much greater extent — the straitjackets that bind a president.
Thus this Milei fellow has been able to get things done.
In politics they are generally bad things. Yet in his case they are good things.
He has issued 15,000 pink-hued slips to the parasitic public sector.
He has transformed perennial budget deficits into surplus — Argentina’s first budget surplus in decades.
He has taken inflation, a gobsmacking 26% when he entered office last December, to 4%.
Handsome! Could an American president operating within the American system get it done?
He could not. The systematic inertia is overwhelmingly against him.
When a Strength Becomes a Weakness
When the nation runs to sane settings, this systemic inertia offers the republic superexcellent benefits.
It represents a central strength of the American system, a bulwarking pillar.
Yet what if the nation runs to lunatic settings, as it has for these past years — at least in my estimation?
Then that central strength transitions to a central weakness. It becomes not an asset but a liability.
That is because the very inertia the constitutional structure fosters… is then in service to lunacy.
Those who would restore sanity cannot cannot breach the opponent’s 40-yard line.
It is they who are mired in mud.
“We’re borrowing $10 billion each day to fund the federal government,” they moan.
“We’re already $36 trillion in debt and heading for a massive debt crisis if we don’t stop the madness. This can’t continue,” they add.
Yet they go nowhere because they are victims of constitutional inertia — the identical constitutional inertia that was heretofore a virtue, presently a vice.
“Extremism in Defense of Liberty Is no Vice”
In theory the American system is the superior system.
Yet in this instance I argue the less stable Argentinian system is the superior system. And the more stable American system is the inferior system.
Again, I say in this particular instance. Do not pack me off to the gallows on charges of treason!
Under normal circumstances I am with the American system.
Yet I do not believe normal circumstances presently prevail.
And the American system’s moderation is presently inadequate to requirements.
A properly directed extremism is instead the requirement of our times.
And as Mr. Goldwater thundered long ago:
“Extremism in defense of liberty is no vice.”
Regards,
Brian Maher
for Freedom Financial News
P.S. It happened in 2000… it happened in 2008… it happened in 2021… and now…
It looks like it’s happening again? What am I talking about?
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