Guardians Or Gladiators?

Almost a year and a half ago I published a short post titled: Following Orders.  I was musing about how a future Trump administration might deploy the military within the country's borders.  Fast forward to the present and we're learning more about this almost every day; and while I am famous for bad predictions that post from April of 2024 was seemingly prescient.

J. Scott Applewhite / AP

I've never served in the military; consequently I can only speak as a civilian.  What I think I know is that fundamentally there are significant differences between local law enforcement officers and army national guard soldiers.

Civilian law enforcement academies and technical colleges focus on things like criminal law, civil rights, de-escalation and community engagement.  Day-to-day law enforcement includes enforcing criminal law, traffic safety, conducting investigations and community policing.  Sheriff deputies and police officers are seen as front line guardians of law and order.  And, at least where I live, they are a familiar presence as a consequence of daily interaction with the local population.

National guard soldiers receive military training including things like combat readiness, tactical operations, discipline and a military occupational specialty.  Some military police units train for law enforcement, but their orientation is different from civilian policing.  Guard units are populated by citizen soldiers who have civilian jobs or perhaps attend school while training part-time and sharpening their readiness to act when called upon by their state governor or the President.   

Nevertheless, national guard troops do serve in temporary support roles.  This can include crowd and riot control, (civil unrest events), disaster response (hurricanes, floods, wildfires), infrastructure protection (power plants, airports, hospitals) and augmenting first responders when local resources are overwhelmed.

Mostly, the guard is our federal reserve force for wartime missions and overseas deployment.  They blow stuff-up, defeat opposing forces and achieve battlefield dominance.  Soldiers are war-fighters; modern day gladiators.  

Between you and me I think having armed troops on our main streets is unsustainable for the long term.  It is an expensive short-term fix.  Furthermore, it is poor optics; if it were to happen around here the tourists would stay home and businesses would be grumpy.  The former is fact the latter is opinion.

There has been chatter on social media including people suggesting that president Trump is seeking to accomplish a couple of things; namely the normalization of military deployments to conduct law enforcement.  Secondly, provoking some kook or nutjob to commit an act of political violence thereby escalating tensions by such means that he can invoke the insurrection act, declare martial law and suspend elections.  Sounds rather conspiratorial, eh?  Inexplicably, most of my previously self-identified libertarian acquaintances have gone silent on this subject so we can save a discussion of the Posse Comitatus Act for another day.  

I happen to believe that Donald Trump eventually gets around to attempting everything he says he wants to do.  And he has repeatedly said he would consider or invoke the Insurrection Act, including in public statements in June 2025 during his current presidency.

Meanwhile, Speaker Michael Johnson's home state of Louisiana, and New Orleans in particular, boast some of the the highest murder rates in the country.  One has to wonder why Governor Jeff Landry called-up and deployed Louisiana guard troops to Washington, DC; instead of Speaker Johnson's home district?  The correct answer is political theater; nevertheless, all of this can be combustible.  See paragraph eight (above) about the president shouting Fire! in an otherwise quiet theater.

The administration is populated with pliant sycophants who will unquestionably act on the president's orders.  Therefore, the execution of sketchy orders will fall to the next line of senior military officers.

It is gonna be interesting how this unfolds.....

Glamping

Recently I burned about eight gallons of diesel brushing-out 3.5 miles of trails, a six acre wildlife opening and the ancestral campsite.  Campsite, you ask?  Yup; in the early years it was there we camped.  Eventually we purchased a park model trailer home, The Villa, adjacent to Potawotomi State Park and commuted back and forth from there to here and back.  Yup; we lived in a trailer park too.  And then eventually built a house (second home) and finally moved here permanently.

Over the years the Missus and I have been acquainted (and married) we've done a great deal of camping.  We've camped across the breadth of Canada, south to the Gulf of Mexico, all of the southwestern US, most of Wisconsin and we even took a Jeep trip off-road across the rocky mountains.

With two homes, a tree farm to maintain and the creep of maturity and eventually retirement the camping itch doesn't need much of a scratch.  Nevertheless, from time to time and on special occasions  we'll still pitch a tent, and cook over a fire or a camp stove.  We've saved all the camping gear and have our own private campsite down by Silver Creek.

I can bake a campfire dutch oven pizza, the best pudgie pie on the planet and have special kind of s'mores recipe in case you're interested. 

Anyway, the ancestral campsite has been cleaned-up.  A rough-cut with the Rhino bush hog...

Followed by a trim with a weed whacker...   

The original picnic table from more than three decades ago has been returned to its proper place.  I even added a Leopold bench for good measure.

We don't have electrical or water hook-ups.  But we have clear dark skies at night, no bothersome  drunken neighbors keeping you up until 2 AM and all the free firewood you need to roast a wienie and keep your tootsies toasty.  We even have a shitter.  You have to bring your own roll; butt the view is spectacular.  Pun intended.

Think of it as the first iteration of glamping.

Raising a toast to fun times out-of-doors and around the campfire.

Getting It Wrong

More than seven years ago I advanced this assertion in a blog post.

Republican control of government has now produced a ten-year outlook likely to push publicly held national debt close to $30 trillion by 2028. Debt as a percentage of the economy would be the highest since 1946 and perhaps the highest ever recorded - depending on how much of the tax bill is extended. 

Holy Smokes!  I was clearly off the mark.  Biggly!

Last time I looked the federal debt is currently north of $36.2 trillion.

Makes you wonder what it will amount to by the time 2028 rolls-around..... 

Friday Music

This famous bluegrass instrumental written by Earl Scruggs in 1949 and was recorded by Scruggs and the Foggy Mountain Boys.  It's known for its fast-paced banjo picking and is widely considered a classic of American roots music.  I posted on this song earlier in February and somehow it popped-up in my YouTube channel feed.  So it's back 

This song helped define the sound of modern bluegrass. Its technical banjo style inspired countless musicians and is often used in banjo competitions and bluegrass jams.

Culturally it was featured prominently in the 1967 film Bonnie and Clyde, which reignited interest in bluegrass music.

Foggy Mountain Breakdown.....

компромат

It is fascinating to me how what goes around comes around.  Again and again.  I first blogged about Russian meddling as long ago as 2017.  And here, and here, and here and finally here.

When I started blogging further about the pro-Putin caucus, Marjorie Taylor Greene and other fringe GOP sympathizers of the Russian dictator it cost me a couple of relationships.  Those posts are all still out there and easy to find using the search tool (upper left corner) or the tags in the left margin.

Maybe there's something to it after-all.  A guy that knows more about it than I do is certainly speaking out....... 

Honestly, I should hope there's nothing to any of this.  But it sure makes you think...

The Cliff Notes for everyone watching these episodes. 

1. Nashego Cheloveka - Our Man In

2. Krot - Mole 

3. Verbovanniy - Recruited 

4. Rezident - Facade of Independence 

5. Nashego - One of Ours 

6. Vliyaniya - Agent of Influence 

7. Polezniy - Useful Idiot

Theater At The DOGE

I asked ChatGPT: 

How much budget savings so far from Musk's Department of Government Efficiency?

As of March 2, 2025, the Department of Government Efficiency (DOGE), let by Elon Musk, reported the cancellation of 128 contracts recently, resulting in approximately $60 million in savings.  Since Its inception, DOGE reports terminating over 3,000 wasteful contracts.

However, analyses by external organizations have raised questions about these reported savings.  An NPR investigation found discrepancies in DOGE's claimed savings, suggesting potential overstatements. 

Additionally, data from DOGE's "Wall of Receipts" indicates that nearly 40% of the cancelled contracts are expected to yield no actual savings. 

In specific instances, DOGE identified inefficiencies in software licensing.  For example, the General Services Administration (GSA) reportedly held 37,000 WinZip licenses for 13,000 employees, leading to a claimed $9.6 million in savings after addressing the surplus.

While DOGE reports significant contract cancellations and some specific savings, external evaluations suggest that the actual budgetary impact may be less substantial than claimed.

Despite these efforts, the reported savings represent a fraction of DOGE's ambitious goal to cut $2 trillion in federal spending by July 4, 2026. 

The notion that Elon Musk and his government efficiency apparatchiks can bring down the debt is a tall order.  To be clear, I take no issue with rooting-out waste fraud and abuse; just give the chainsaw schtick and lame theatrics a rest.  

At this particular moment in time our outstanding debt stands at $36 trillion (give or take).  Closing a handful of government agencies and laying-off government workers makes for great theater but it isn't gonna get the job done.  The savings are much, much too small to achieve the stated goal. Anybody who actually believes nibbling around the edges like this will fix the real problem is engaging in what I call magical wishful thinking.

You see, just like a household budget that has gotten out of control, fixing this problem is going to require hard work and making difficult choices.  

You're probably thinking - Like what?

Like raising taxes, cutting defense spending or reforming Social Security and Medicare.  Or all of the foregoing.  These are unpopular choices for good reason.  Nobody wants to do them.  They're like going to the theater to watch a crappy production.  Nobody wants to do that.  The people demand good theater.  Bread and circuses if you will.  I might be wrong, but I happen to wonder if the current collection of clowns places a higher priority on theater and spectacle than hard work.

So, are we going to continue to be witness to the slow roll reality TV performance or get serious about fixing the real problem for the next couple of generations.

Anyone care to make a friendly wager?

Is There Beer In Heaven?

One of the age-old existential of questions of countless generations of our forebears all the way back to the origins of fermented malt beverages has been:

Is there beer in heaven?

I'm here to offer evidence affirming its existence.  Depending-upon your belief traditions. 

The Vikings held firm to the belief that a goat dispensing endless beer awaited them in heaven.

It's true.  The belief anyway.

According to Norse mythology, the Vikings believed in a celestial goat named Heiðrún, who resided in Valhalla, the grand hall of fallen warriors. Heiðrún fed on the leaves of the sacred tree Læraðr, and from her udders flowed an endless supply of mead (a honey-based alcoholic drink), which sustained the warriors who had died in battle.

So, while it wasn't exactly beer, it was a never-ending supply of mead—pretty close! This endless feast and drink were part of the reward for warriors who fought bravely and earned a place in Valhalla.

The national Museum of Denmark describes current knowledge of Viking's pre-Chrisianity belief system as a patchwork quilt of information.  However, the two most most renowned sources on the old religion are the collection of poems on Norse gods and heroes in the Poetic (or Elder) Edda and the retelling of the Nordic myths in the Prose (or Younger) Edda.  The latter was written by Snorri Sturluson around the year 1220 AD.  Both describe Heiðrún, the goat in heaven.

Of note is the fact that is was Viking influence, during their rule over the Emerald Isle, that Christianity was introduced to the pagan Celts.  Which may explain why many of us refer to Guinness Stout as:  Mothers Milk.  But that is a story for another time.

____________________________________________________________________________

*That's what's so cool about the blog.  Come for the occasional politics and opinion; stay for the arcane....

DOGE Update

In the aftermath of the inauguration of Donald Trump we've witnessed the exiling of DOGE Bro Vivek Ramaswamy and Elon Musk's waffling on his promise of $2 trillion of government spending cuts.   

I have two DOGE updates:  Privacy and Theatrics.

Last week we learned that a federal judge halted access to the US Treasury's payment systems by Elon Musk's team of DOGE apparatchiks. The order came in response to a lawsuit filed by 19 state attorneys general accusing the president of failing to faithfully execute the nation's laws when he granted DOGE unfettered access to the federal payments system.

The White House had previously defended the DOGE's access as READ-ONLY, yet in the ruling the judge specifically invoked the Watergate Era Privacy Act of 1974, which states:  no agency shall disclose any record which is contained in a system of records by any means of communication to any person or to another agency.  

Let me begin by making abundantly clear I'm all about rooting out waste, fraud and abuse.  I embrace audits that adhere to Generally Accepted Accounting Principles. I believe in accountability. I place a high value on transparency. I hold close Reagan's admonition to Trust, But Verify.  Privacy is at the top of my list; which happens to be why I applaud the court ruling.

I would not voluntarily release my tax returns, charitable contributions, investment account and banking information, social security records, medicare details (including health records) or any other personal identifiers or privileged information to anyone without my prior written consent and assurance this information would be safeguarded.  

Rooting out fraud while simultaneously erecting appropriate firewalls to protect the integrity of a citizen's privileged personalty are not mutually exclusive. In my previous life my employer guarded this same information on behalf of their clients as if it were the Crown Jewels.  A security breach was always on the short list of of existential risks facing any financial services firm.  

To-wit, a couple of my MAGA pals think I'm nuts.  I'm overreacting.  Between you and me, for a couple of guys who howl at every opportunity about their impeccable conservative credentials; privacy ranks close to the bottom of priorities.

Go figure.  

Considering that Mr. Musk hasn't passed senate review or approval, has not received a security clearance, issued written ethics guidelines, or defined for anybody what he and his team intend to do with this data; naturally many of us have concerns.  Will they safeguard your identity?  Share it with whomever they please?  Retain it indefinitely?  Sell it?  Blackmail people with it? 

The question to you, dear readers, is the defense of personal information unreasonable?  

Would YOU voluntarily release the foregoing to Elon Musk without reservation?

Ponder that.

Meanwhile, DOGE has dismantled a Federal agency - USAID.  I've substituted a WIKI web link as the official .Gov website has been disappeared.  Meanwhile the name of the agency has been stricken from the building.  

Image - NBC

To be clear, the loss of USAID has no direct impact on my life so I don't have a dog in this fight.  Although I wonder if this signifies that we've thrown-in the towel on soft-power influence in response to stuff like Communist Red China's Belt and Road initiative, or North Korean and Soviet designs on African natural resources. Time will tell.

Meanwhile, I want to highlight the messaging power of what is known in political vernacular as a Play to the Base*  

Both Democrats and Republicans engage in these dramatic flourishes; and in this instance Elon Musk is championed for slaying the Great White Whale of foreign aid corruption.  Apologies for the Herman Melville metaphor but Trump is a master of this sort of theater.  

Consider this:

As crazy as it sounds opinion polling suggests that a plurality of Americans believe anywhere from 25 to 31 percent of the entire federal budget is foreign aid.  Wasteful fraud and abuse.  Every last damn dollar going to ungrateful heathens.  Naturally, that belief is fallacious because it is opinion and not fact.  US foreign aid (economic, nutrition, health and military) has historically hovered around 1% of the entire US budget; with USAID a small part of that total.  I've blogged about this before.

2023 aid managed by USAID totaled about $40 billion. You and I would likely agree that this sounds like a king's ransom to an average American; correct?  Yet in the grand scheme of our federal budget it is pocket change in the government's couch cushions.

If you unpack the numbers in the context of the entirety of the federal budget the savings amounts to 2% of Elon Musk's $2 trillion savings boast. 

Considering the context of erasing an entire agency; and assuming Washington never feeds another hungry Sub-Saharan child, vaccinates any heathens suffering an epidemic or offers any similar disaster aid these savings become basically permanent.  I take no issue that they are savings.  They are permanently exceedingly small.  

Even so, in the eyes of Trump supporters Musk is a Giant Killer.  

The melodrama of sweeping furloughs of slothful and ungrateful government workers, the erasure of an entire agency along with the trope of chiseling the name from the facade of the empty building is as close as you can get to modern-day angry Jesus giving the money changers the heave-ho from the temple.  

The theatrics are priceless.

So, let's agree this scalp in Musk's belt in only the first three weeks of the administration is yeoman's work. Or is it like the Battle of the Greasy Grass?  Spoiler Alert: The plains Indians took many scalps and still lost the war.

Ask yourself this:

Is the DOGE willing to hunt and scalp the prize 800 pound gorilla?

Or the administration to settle on collecting some small scalps for Reality TV* and forfeit the war?

Only time will tell.

Pro Tip Alert!  Be sure to stock-up on popcorn and adult beverages.  Both a Budget Reconciliation and the Debt Ceiling are in the on-deck circle.  I'm told it's gonna be easy peasy as Trump controls both Houses of Congress.

 

Free Speech

I was witness to a disturbing phenomena over the weekend and I don't believe I am the only person to have made this observation. Moreover, I am not surprised that it has come from the same small group of individuals who six months ago were getting-off on Face Book with vulgar, racist, sexual memes and hate speech focused towards Vice President Kamala Harris.

It took only about 24 hours for these same individuals to go over the top gleeful as Californians suffered the tragic misfortune of losing everything to wildfires.  

Homes, businesses and property lost. Families displaced. 

People still missing and unaccounted-for.  

Lives lost.

Thanks to an abundance of material supplied by Russian and Communist Chinese troll farms my recalcitrant acquaintances have somehow roped forestry policy, the LGBTQ community, pedophilia, diversity, equity and inclusion, a wild smelt, Hollywood personalities, Gavin Newsom, North Carolina and Ukraine all into one big wet dream of joyful, celebratory and triumphal mirth over the loss of life, destruction of neighborhoods and communities reduced to ash.

As a casual observer it is interesting to watch this social psychology at play in real time.

There's a great deal of unresolved grievance and hatred out there. Waiting only for the opportunity to be unleashed on social media from behind the warming glow of a device. Hard to know if it's a character flaw or a pathology. Strikingly, some of these individuals wear their 'Christianity' on their sleeve and remind me of it regularly.  

I wonder what Jesus would have to say about their flagrant expenditure of bandwidth to mock the dead and air their loathing and scorn for the people of Los Angeles?

I just don't get it. I'm grateful I'm not hardwired to be ecstatic and gratified over my fellow countryman's misfortunes.....

*Individual screenshots of Face Book posts, commentary and replies have not been reposted here for privacy reasons and because the content is just sick.

Doge - American Style

Doge - Venetian Italian for Duke - the highest official of the Republic of Venice.  Spanning the 8th to 18th centuries, more than a thousand years, the Doge was the sovereign ruler of the Venetian State.  

The palace of the Doge is famous for its flamboyant gothic architecture and its Great Council Chamber which houses possibly the largest oil on canvas painting in the world:  The Glory of Paradise by Jacopo Tintoretto.  As the primary residence of the Doge of Venice the palace was the physical manifestation of this supreme sovereign authority.

It is fitting that billionaire oligarchs Elon Musk and Vivek Ramaswamy have been appointed sovereigns of the incoming Trump administration's Department of Government Efficiency or DOGE.  Of course, lacking the authority of a real government department there is no supreme authority.  

Sigh. 

Trump's transition team tells us that Musk and Ramaswamy are going to solve our country's debt problem. The DOGE is going to reduce the government's power, slash its workforce and crack-down on waste, fraud and abuse.  The sovereign oligarca announced they intend to reduce the federal budget by nearly thirty percent ($2 trillion).  So far, the chatter has been largely about cuts without much bandwidth devoted to a single ducat of additional revenue or investment in efficiency.  

Sure, I know it's early in the game and the president elect has yet to be sworn into office.  As a consequence I am resigned to the notion that for the present I will be subject to random dictum from Ramaswamy and Musk highlighting: The Usual Bill Of Fare.  Pledging to battle waste, fraud and abuse in Washington is as old as the hills.  Having been trotted-out with incessant frequency as a campaign promise by both sides it has become tread worn.  This spent refrain has become wearily uninspired.  It is tiresome.

Where to begin?  Try to stay with me as we take a deeper dive in the numbers. 

I've taken a run at this stuff before and it all comes down to money coming in (revenue) and money going out (expenses).  Nuanced by what is non-discretionary versus discretionary.  With a dose of old-fashioned politics thrown-in for good measure. 

The revenue side of the ledger includes a couple of large contributions; namely individual income taxes (about $2.2 trillion) and payroll taxes (about $1.6 trillion).  Smaller are corporate income taxes (about $420 billion) and various duties and tariffs, sales, estate and excise taxes (roughly $228 billion).  For the 2023 fiscal year money-in totaled $4.4 trillion+.

The president-elect has promised to reduce individual and corporate income taxes by at least $5 trillion over 10 years; reducing the money coming-in.  He has also promised substantial new tariffs on imports; although no estimates have been revealed for these tax increases.

Social Security and Medicare would be difficult to cut as Trump has promised he would not.  Nevertheless, both programs are living on borrowed time.  Without additional revenues and changes to the retirement formula, the Social Security and Medicare trust funds are already under stress from an aging population.  They will run out of money in 2033 and 2036 respectively.  This means that current retirees will experience a significant cut to their benefits anyway.  Trump's promise to end taxes on Social Security would accelerate the arrival of these cuts.

On the expense side of the ledger the three largest non-discretionary expenditures include the fore-mentioned Social Security and Medicare, federal civilian and military retirement and veteran benefits.  Total non-discretionary spending for 2023 was $3.8 trillion. 

There is an additional $659 billion of net interest (give or take) on the outstanding national debt.  It stands alone; but added to the non-discretionary component of the federal budget gets us to a grand total of $4.5 trillion.

What's left?  Discretionary spending of $1.7 trillion.  Included in this category is defense and roughly $9 trillion in non-defense spending.

Non-discretionary and discretionary explained

Non-discretionary programs are deemed mandatory spending which means funding doesn't require passage of an annual appropriation by Congress.  By example: if the DOGE Bros want to reduce Social Security, Medicare, federal retirement benefits (military and civilian) Congress would have to pass legislation reducing or defunding these benefits.  

There is net interest on the national debt -  almost $700 billion.  The credit-worthiness of our nation hinges on our promise to pay our debts.  I don't believe the DOGE Bros would recommend defaulting on the debt or devaluing our currency putting their own wealth at great peril.

On the discretionary side of the spending ledger the DOGE Illuminati have tweeted about unsupported billions upon billions of defense payments that cannot be tracked or audited. I'll not argue there isn't waste, fraud and abuse or other similar leakage in the defense budget; but not enough to reduce the federal budget by 30 percent.  I suppose Musk and Ramaswamy might recommend that Congress kill the F-35 program.  Alas, there is that nagging matter of Congress, national security and jobs. 

What's left? 

That leaves a grab-bag of leftovers the DOGE can submit to Congress and the President for elimination and defunding.  In the grab-bag is found Assistance to Individuals (namely nutritional and healthcare programs), transfers to states (Medicaid coverage for poor people, education, roads, bridges, highways, ports, airports and other infrastructure), National Parks, the National Weather Service, arts funding (public broadcasting); you get the drift.  

Of course, in the grand scheme of things, this grab-bag of leftovers doesn't even come close to scratching the surface of reducing the federal budget by thirty percent.  And here's the catch; a considerable portion of the grab-bag is decidedly popular with much of the public.  Defunding it would result in a cascade of serious budget shortfalls for the states leaving all the governors and the people very grumpy.  

The challenge for Trump and the DOGE is that a 10,000 foot view of the discretionary side of the federal budget reveals that it is just two things - military and defense; including a vast health and social insurance program that comes with it; and everything else.  Compared to defense, the rest of the discretionary budget is much more transparent because average Americans are witness almost on a daily basis to weather forecasting, highways, air traffic control, public broadcasting, national parks and monuments.  They cost relatively little money in a ginormous federal budget and are generally liked.

I readily admit I struggle with coming-across as slightly snarky about quirky oligarchs like Musk and Ramaswamy; they're billionaires after-all.  Who among us actually believe they are sincerely empathetic to the needs and wants of ordinary Americans?  How many of you think they relish the attention of the Trump reality show?   These juxtapositions mean they have to work harder at candor and authenticity if they want to be taken seriously and actually add value to the incoming administration.

If the DOGE only looks at cutting the budget their task may become virtually impossible as it would result in a significant disruption of services average Americans have come to expect from government.  The DOGE must explore creative initiatives that require investment in efficiencies and alternative sources of revenue and think big.  They need to go after the big money to make a historic splash. 

I'll let you in on a secret:  They need to shift that thing we refer to as an 800 pound gorilla.  They need to look to Social Security and Medicare - the root cause of our budget woes.  The subject politicians are so loathe to speak-of that they tip toe and shrink from it like timid sissies.   

I am not being snarky - if Elon and Vivek put their thinking caps on and put their minds to meaningful reform of both of these programs with a view to securing their future for the next couple of generations it would be earthshaking and enshrine their boss in history.  Who knows, I might even become a believer.

To be clear this would be a heavy lift.  Politically-fraught too.  The last president to pull it off was Ronald Reagan.

I wish them well as President-elect Trump will be a lame duck president; with effectively only a couple of years to implement meaningful change.   Which may partially explain why only a few days ago the richest man in the world is now walking-back his boast of $2 trillion budget cuts.    

There is enough meat on this bone there is a high probability of another couple-three blog posts to do it justice.  And since it is very early in the game there is ample time for bonafide policy to evolve and unfold.  Detailed policy which will improve your and my prosperity and general lot in life.  And perhaps make the world a safer place.

Of course, There is time for additional hedging and moving of goal posts; so stay tuned.

Cheers!

Inflation By Any Other Name

This subject has come-up here from time-to-time and I have tried my darnedest to remain circumspect, intellectually honest, good-humored and resist any snarky impulses to poke fun of individuals who seemingly believe that presidents posses cryptic powers to turn inflation on, and off, like a switch.  When it comes to lazy economic thinking the struggle is real.  Thankfully, understanding inflation is not rocket science.  If you have a basic grasp of the interplay between excess liquidity (M2) and demand economics it is not very complicated.  But I digress.

Inflation figured significantly in both the run-up and results of last month's presidential election.  In his interview with Kristen Welker several weeks ago president-elect Trump said: I won on two things; I won on the border and I won on groceries.  And at the RNC convention of last summer Trump declared he would:  End the devastating inflation crisis immediately.  Trump took credit for low inflation in his first term of office; he might take the blame for price inflation in his second term.  Time will tell.

As an old guy I am mildly bemused at the notion that younger voters have no institutional memory of inflation, soaring energy costs and the accompanying astronomical interest rates, of the late 1970s and early 1980s.  By those hardcore economic standards today's historically low inflation, low energy costs and interest rates are the modern equivalent of lotus eating.  Nevertheless, the president-elect has promised to bring inflation down and if he doesn't the voters might become restive. He's certainly got his work cut out for him as there's not much a chief executive can do to immediately influence forces at play in an economy as large and complex as ours. 

Complicating this already challenging task is the potential interplay of tariffs and immigration policies. Consider this.

Tariffs are a tax.  If I own an import-export business and import an item subject to a tariff or duty I have to pay the US Treasury the tax due upon receipt.  The country of origin does not pay the tax - the importer does.  To cover the tax I'll mark-up the price of the imported item when it lands with a distributor.  As a consumer purchases the item from a retailer it is that buyer who ultimately pays the mark-up.  Consequently, tariffs can contribute to inflation as the price of retail goods rise. Trump's challenge is the use of tariffs as a negotiating tactic or to surgically target specific imported goods.  It's a high wire balancing act.  

Almost two million undocumented workers are integrated into our food supply chain.  Another 30% of construction workers are immigrant labor - documented or not.  Immigrant labor is a significant contributor to what we pay for everything from fruits and vegetables at the grocery to a replacement roof.

My hope is that the Trump administration finesses this stuff.  Get too aggressive on immigration and tariffs and prices could rise.  Fail at one or the other and you tread at your own peril with an economy-stalling bout of deflation.  If only there was a magic switch in the White House bunker.

Trump naturally supports the sweeping reform of government regulation.  Furthermore, efforts to re-shore manufacturing to our hemisphere implies efficiencies, retraining a labor force and other productivity gains.  This shrinks inflation pressures but takes time to trickle down in a network economy.  Because 70% of our economy is driven by consumer spending these gains would be modest at best.  

Last, but not least, there is: drill, baby, drill.  Trump has promised to increase domestic energy production by lifting environmental restrictions and fast-tracking permitting.  It isn't clear to me precisely how this will dramatically reduce inflation and shrink the price of my groceries; nor has the former president elaborated.

Transportation costs already benefit from lower energy pricing because domestic energy production has been at record levels for years.  Several weeks ago I filled-up the Honda with regular unleaded and paid less than $2.50 a gallon.  Prices fell further over the busy Christmas Holiday travel season.  Go figure.

I own shares of energy and related companies and in a world where CEOs answer to shareholders; further retail price reductions will be challenged by sustaining record profitability, dividends and share prices.   Besides, oil is a fungible commodity, traded in dollars.  Accordingly, global markets play an outsized role in pricing.  My sense is that lower energy costs are largely baked-into the cake so we'll have to see how this plays-out.  What I know for sure is government doesn't drill for oil and gas.  (Like I said, the struggle is real.)

In closing, inflation is relatively easy to explain; it is far more difficult to bend to your political will.  It is possible that the in-coming president is beginning to wrestle with boastful promises made during his campaign.  As I said to a pal several months ago:  I'm looking forward to detailed policy which will improve my prosperity and general lot in life.

Meanwhile, all of our major appliances have been replaced, a new water heater installed, a new car for me, new car for Jill and a contract for a replacement metal roof on the house in 2025.  If tariffs materialize I think we may have dodged the major impact of any Trump tax increases.  Only time will tell....

Edit To Add:

Got home around noon following an overnight road trip and topped-off the tank of the Missus' new Honda.  Local pricing for regular unleaded:  $2.479....

Laissez Les Bons Temps Rouler

Popular sentiment about the economy is both a curious and fickle phenomenon.  Over the last couple of years consumer confidence did not necessarily reflect the underlying strength of the US economy.  I've blogged about it from time to time as I've scratched my noggin over perceptions of what is real versus perceived.  As a recovering financial guy I periodically puzzled-over this disconnect.  Perhaps that is exactly the point - perceptions in and of themselves are naturally fickle.  Which is why they are nothing more than perceptions.  Don't over analyze it; what is perceived is frequently not founded in reality.

Now we learn that popular sentiment over the economy has flipped.  A majority of consumers (among Republicans anyway) now perceive that the good times are about to roll.

Last week, the New York Fed's monthly consumer survey revealed that an increasing number of us now share the expectation that our financial situation is likely to improve in the coming year.  Remarkably, this optimism has reached its highest level since the period of time immediately preceding the COVID shit show of 2020. 

This is further bolstered by the University of Michigan measure of US Consumer Sentiment indicating that it increased for the fifth consecutive month, the highest level since April.

Some may suggest this this is a consequence of the reelection of Donald Trump.  I am unconvinced as this has been percolating for the better part of 2024; but I'd not disregard the possibility of confirmation bias.  I am certain that the president-elect will take credit for the strong economy he will inherit. The only Trump Effect I can discern is found in reading the University of Michigan data.  Current conditions have been led by a surge in the purchasing of durable goods - a consequence of the perception that purchases of durables today would enable a buyer to avoid price increases in the future.  Which takes us to that nagging matter of inflation.

To be certain the economy remains healthy; the labor market is stable, consumer spending is robust and growth has been steady.  The core consumer price index (excludes volatile energy and food prices) has grown at an annual rate of 3.3% year-over-year; stubbornly remaining above the Fed's target rate of 2%.  

Domestic retailers are warning that proposed tariffs would result in higher prices to US consumers.  The president-elect himself has said that he can't guarantee anything when it comes to the impact of tariffs on Americans at the checkout.  This, along with immigration restrictions, may contribute to our ongoing inflation challenges.

So, stay-tuned.  None of this would be so consequential except that 70% of the US economy is consumer spending.  The remaining 30% is government spending, manufacturing and everything else.  So maybe sentiment counts for something after all.

Don't Forecast The Election

Last week, and before I left for South Dakota for a vacation and escape from the election nonsense, an email from a neighbor showed-up asking for me to make sense of an October Market Recap he had received from his financial guy.  This was a lay-up for me and I notified my pal that I would be happy to oblige - after I had returned from my ringneck-chasing getaway.  

I emailed him last evening as my last task before going to bed bone-tired.  What follows is a distillation of what I shared:

Neighbor...

What you received from Mr. So And So, CFP® is a rather detailed recap of the investment market's out-performance for YTD 2024.  It is nicely summarized and annotated with supporting details.

Contrary to some of the political rhetoric we've been subjected-to in the run-up to the election is the fact that the US economy is on a tear in most all of the sectors that matter.  Inflation has returned to normal and I paid $2.77 last week at the Brussels BP for a tank of unleaded regular.  You needn't look any further beyond the same observations and additional stats your guy provided.  None of that data is imaginary and the markets reflect it.  You, myself and others similarly situated in the 'ownership class' (retired owners of stocks, bonds and real estate with little if any debt) benefit greatly from an economic cycle such as this.  Emancipated from raising and educating our children our focus turns-back to children, grandchildren and great-grandchildren - but without the demands of a day job.

Getting back to the markets, and pointing out something your financial guy did not address, is an interesting implication for tomorrow's election.  When the S&P 500 Index rises in the final three months before the election the incumbent party typically remains in office.  Conversely, a drop in the index has historically indicated that the opposition will claim victory.

In 12 out of the 15 presidential elections since 1926 the ruling party has benefited from a strong stock market performance in the three months leading up to the election and went on to win.  That is an 83% streak.  

While a streak such as this would signal a Harris win; a streak is nothing more than a streak.  Streaks can be broken and I happen to believe that this election is too close to call.  Even the betting markets are evenly divided tonite.

If I was still in the day job, and was communicating with my clients, I would be telling them something on this order:  'It is important to be mindful that the outcome of the election (whether it suits your personal politics or not) is not a reason to react emotionally.  That invites investment mistakes.  If you don't like the outcome of this election, there is a high probability you will be pleased with the mid-term elections in 2026.  This is because the party that loses the race for the presidency this year will likely win the House in two years putting a halt to the new President's legislative agenda.  That's just the way things happen to play-out most of the time. '

I went on the explain that polling suggests that neither party will hold a super-majority.  In other words there will be divided government much as the Founders intended.  This will require compromise.

So, as we watch the returns tonite we should remain mindful that our Constitution has survived 235 years.  This will not be the last election and if the people dislike the policies they get; they'll get around to changing them eventually.   Blah, blah, blah.

I closed with an admonition on a subject (I have blogged about many times) - that being the federal debt and deficit.  The budgets under both Trump and Biden have manifested unprecedented deficits.  Given the reality of record high employment and our country not being at war this aberration absolutely requires attention in the years ahead.

What I did not share is my skepticism over either candidate rising to this task.  So time will tell.

All I gotta say is it has been a terrific game to watch for the last 16 weeks.  Sudden Death Overtime?  Who knows?

Sometimes elections, investment markets and football, are a roll of the dice.

See you all on the flip side....

The Taco Revolution

Photo - Gerald Gaxiola

 

 

 

I've blogged about this once or twice before.

 

The members of Creedence Clearwater Revival dining at Taco Bell in San Luis Obispo, California on August 2, 1968. Their first album, titled Creedence Clearwater Revival, had been out just a little over two months after debuting on May 28th.

 

 

Fact Checking

We have an inflation crisis that is making life unaffordable, ravaging the incomes of working and low-income families, and crushing, just simply crushing, our people like never before.

- Donald Trump

The monthly inflation rate as measured by the consumer price index (CPI) soared to a high of 9 percent in June of 2022.  The annualized rate has dropped considerably since then  with the year-over-year rate last month of 3 percent.

Former president Trump would lead you to believe that President Biden is solely responsible for the recent rise in prices.  Of course I'm old enough to to have lived with inflation and have even blogged about it from time-to-time.  I purchased my first house in the early 1980s when inflation was roaring-along at double digits and a 30-year fixed-rate mortgage would set you back 14.5 %.  But I digress.  

As a recovering financial guy I know a few things about this subject.  First, inflation usually (but not always) rises quickly and falls slowly.  Second, we live in a market economy and therefore inflation rises and falls as a consequence of market forces and not by a president flipping a switch.

The recent bout of inflation has its roots in the COVID pandemic.  Lock downs caused pent-up consumer demand to spike as the economy eventually recovered from the Trump recession of his last year in office.  This was further aggravated by global supply chains disrupted by the pandemic.  Add-in the the government largess (expansion of the money supply or M-2) that began with stimulus spending under Trump that continued in the early years of Biden's term of office. 

Excess liquidity (money supply) + ravenous consumers (demand) + busted supply chain (product supply)  = increased prices (inflation).  

A simple supply and demand equation.  Economics 101.

It was a perfect storm of events the likes of which we haven't seen before; with responsibility shared by both presidents.  Corporate greed is the cherry on top.

Because this was a global phenomenon I would submit that Old Uncle Joe is incapable of influencing global economics on this scale.

I won't bore you any further; if you'd like to learn more on the subject simply type 'inflation' in the search box in the upper-left corner of the blog and a bunch of posts on the subject will pop-up for your late night reading pleasure.

Meanwhile, Donald Trump is playing fast and loose with the facts.

Fact Checking

We have more liquid gold under our feet than any other country by far.  We are a nation that has the opportunity to make an absolute fortune with its energy.

- Donald Trump

Not true.  This lie is easily disputed.

If you visit the Energy Information Administration, at 44 billion barrels of proven oil reserves we rank 10th.  Venezuela, Saudi Arabia, Iran, Canada and Iraq rank (in that order) in the top five.

As a recovering financial advisor I happen to follow this sector closely and in a shameless plug for the blog encourage you to search for posts in the subject of energy markets.  Go to the Labels on the left margin of the homepage and click on Energy Markets.  Or use the search tool in the upper left corner for subject matter.

Cheers! 

Trailmaster

I've blogged about this before.

More of the same.

Brushing-out the trails with the Rhino bush hog is that it is dusty, stinky and loud.  There is the roar of the diesel motor, the clanging and clattering of the blades and and gear box on the mower.  And the stink of diesel exhaust.  A curious phenomenon that comes with brushing-out trails is that the deer will emerge from nowhere and stand at a polite distance and watch me before moving-on.  

 From the trail camera trapline there were these photos.  Me mowing out the field of view on camera #3 and then immediately after I exited the scene a doe and her fawn checking it out.

Go figure...