At a press briefing last week, Karoline Leavitt is asked about the U.S. Dollar hitting multi-year lows.
A weaker dollar makes U.S. products more affordable abroad, increasing demand for exports.
Not answering the question is further evidence she doesn't understand currencies.
President Trump's reciprocal tariffs are calculated by a simple formula boiled-down to dividing the trade deficit the US runs with a given country divided by the value of US imports, divided by half, with a minimum tariff of 10%. That’s long division, folks.
As I waxed both philosophically and technically yesterday, it s a hopelessly flawed calculation that doesn't account for specific trade barriers such as actual tariffs, digital services taxes, value-added taxes or monetary policy. Furthermore, the value of services are omitted from the Trump calculation. Only the trade deficit in goods is measured. Avocados are quantified while the intellectual capital and contributions of a software engineer is not. Financial services, tourism, education and such count for nothing. Considering that our GDP (total economy) is 68 to 70 percent services this omission has left the economic community scratching their collective heads.
This formula concludes that until imports and exports between the US and every country balance out, all of the countries with whom we trade will face tariffs. The president completely ignores the idea that some countries are the only place a specific commodity can be obtained or that other countries might actually be better at manufacturing specific things or that importing certain products simply benefits Americans and improves our standard of living.
This afternoon the President blinked. I suppose more sober advisors finally got thru to Trump and convinced him of the folly of this economic shit show and how it might self-immolate the economy, benefit Communist Red China, vaporize everyone's retirement plans and make the citizenry sufficiently grumpy they would take out their collective ire on the GOP beginning with the midterm elections.
And just like Khrushchev; Trump blinked. The president reversed course on his tariffs and with the exception of China most of our trading partners would see relief. Canada and Mexico? We're waiting on clarification.
Of course, it's only for 90 days so who knows what happens before or after. That's anybody's guess when the master of chaos is calling the shots.
Diane Swonk, the chief economist at KPMG and one of the many business
economists who spent many hours calculating the impact of Trump’s
maximalist tariff plan that went into effect at midnight only to have
the 90-day pause on them announced today, didn’t mince words voicing her
frustration.
This is nuts. Damage done. Market relief is a head fake, unless the
administration makes a major course correction. Uncertainty is its own tax on the economy.
Time will tell.....
From the FB cesspool of lazy economic thought there is this click bait making the rounds of the most fervent of my MAGA pals.....
Her unrealized TAX isn’t only applicable to your home. It’s applicable to any asset you own.
Car
Guns
Furniture
Jewelry
Art
Pensions
Stocks
Land and one of the biggest ones of them all 401K’s!
This precious nugget (likely the work of a Russian or Chinese Troll Farm) is hilarious. Thanks for bringing a grin to the face of this recovering financial guy.
It is important to note that, as always, major tax proposals like this face significant hurdles to becoming law. Even if Harris becomes President of the United States, any major tax changes that might impact entrepreneurship and venture capitalism would require congressional approval. Considering the deep divide in Congress the likelihood of a controversial proposal such as a tax on unrealized gains has an exceedingly low probability of passing into law.
So, aside from the fact that capital gains tax treatment does not apply to pensions, 401ks, IRAs and other retirement plans this presupposes the following:
Kamala Harris wins the Presidency.
The democrats win the House.
The democrats win the Senate.
The proposed legislation passes the House and Senate without any modification or mark-ups.
And President Harris signs it into law.
So, before my Face Book friends pee their pants over this; this is what it looks-like. (Edited for brevity):
The eclipse has come and gone and I live to tell the tale.
Someone notify Marjorie Taylor Greene that eclipse events are predictable. And where was she during COVID? That was a friggn' plague. Sheesh. Some days I think the House Freedom Caucus consists of cowards led by morons. But I digress.
Here's a couple of pics from an unrepentant blogger has survived both earthquake and eclipse.
God is sending America strong signs to tell us to repent. Earthquakes and eclipses and many more things to come. I pray that our country listens.
- Marjorie Taylor Greene
Under pressure from Senate Republicans, Florida Man and Alabama senator, Tommy Tuberville abruptly agreed to drop his objections to eleven remaining four star officer promotions.
Following almost a year of blocking military promotions over Pentagon policy ensuring service members could receive time off and travel expense reimbursement to seek abortion or other reproductive health services in another location Tuberville performed an about face.
I don't know if this is further evidence that you shouldn't take hostages you aren't prepared to shoot or poetic justice for forcing the US military to fight his culture war. Either way, coach Tuberville is a dick.
Last week we learned that Florida resident and GOP senator for Alabama, Tommy "Coach" Tuberville had lifted most of his holds on military promotions. Alas, since then we learn that the persistent holds on the top positions - Joint Chiefs of Staff and several theater commands - has resulted in a domino effect through the chain of command.
Think of it like a bad hangover coming on the heels of the Coach's ten month binge of political theatrics.
Putin continues his relentless efforts to annihilate Ukraine, Hamas continues to put innocent Palestinian civilians between themselves in their effort to annihilate Israel. US forces in Iraq and Syria face military threats on a daily basis. Carrier battle groups have been deployed in reasonably short order. The world is a dangerous place.
Tuberville's abuse of power is nothing new to American politics. Nevertheless, his jerking around of military leadership has every possibility of impeding military operations and can be problematic to our security interests given the context of the previous paragraph.
Tuberville is entitled to take a stance on the abortion issue but being a dick about the military chain of command to score political points is out of line. Just my opinion. But if it walks and talks like a dick and looks like a dick; a dick is a dick. Coach is a dick.
I'm sure this will get sorted-out over time; the military can handle a Florida panhandle dick.
Meanwhile if you're interested in a short but good read; Politico scored an exclusive on the drama behind the closed-door meeting where coach got tackled.
Florida resident and Alabama senator, Tommy Tuberville, announced today that he is ending his months-long blockade of hundreds of military promotions.
Roughly ten nominations for 4-star generals and officers will remain on hold.
This announcement represents an about-face from the senator who for ten months had blocked senior military promotions over a Pentagon policy that offers time off and travel reimbursement for service members seeking abortions or fertility care.
Tuberville's behavior is evidence of flaws and vulnerabilities in our institutions where one individual can put a stop to hundreds of critical national security positions.
Tuberville is entitled to his views on abortion yet I struggle to see a connection to filling key defense and security positions.
I suppose that makes him just a garden variety dick.
Fresh on the heels of her vaping, groping, crotch grabbing and general bad behavior that got her thrown out of a Denver theater, Representative Lauren Boebert (R-CO) has been outed by the Fact-Checkers over at The Washington Post over a wacky claim about payments to undocumented immigrants - which also happens to be almost a couple of decades old and irrelevant to the US. According to Boebert:
Biden is giving each illegal family $2,200 per month plus a free plane ticket and free medical care. If you come to this country illegally, you get everything handed to you on a silver platter. If you're a struggling American citizen, you get nothing. You actually just subsidize this foolishness.
Of course all of this is made-up. Under US law, documented migrants who have made a valid and successful claim to have fled persecution or war receive a one-time payment of $2,375, of which $1,275 may be used for critical direct assistance such as rent, food, clothing and furnishings. That's it. If you are undocumented you get nothing.
As it turns out, variations of this hoax have been circulating on social media for more than seventeen years; originating with immigrant policy in Canada.
Alas, this is what passes for intelligentsia in the GOP nowadays. I suppose if you are a little bit slutty, being a little bit nutty gets you more clicks and a thumbs-up amongst the performative politics crowd.
These are observations made by Peter Zeihan on the blockade that Alabama Senator Tommy "Coach" Tuberville has made on armed services promotions. I've been following this as it is fascinating to me that a single US Senator can single-handedly block promotions within the ranks of the US military establishment.
Obstructionism is hardly new to the political scene in Washington. And while Tuberville is entitled to his opinion on abortion I'm struggling to see a connection to filling key defense and security positions. The system is hopelessly flawed when one individual can bring the filling of critical national security positions to a grinding halt.
Zeihan claims that under normal circumstances if you learned that high-ranking military personnel were losing security clearances and access to critical information, you'd probably expect to hear some sound rationale. Unfortunately, that's not the case because the current greatest threat to our national security is orchestrated by Tuberville over abortion policy.
Senator Tommy Tuberville has placed a unilateral hold on nominations and confirmations of military officials because he doesn't like the Biden administration's current policy of allowing service members to travel for abortion services. Consequently, the affected military personnel cannot access the classified information necessary for strategic planning.
Abusing power to manipulate outcomes is nothing new for American politics; however, political deadlocks that impede military operations are detrimental and problematic for the country's security interests. Given the context of the Ukraine War and rising tensions with China does this pose a potential risk? Is is something that as Tuberville characterizes it, no big deal? Or is it a perfectly acceptable not to jerk military leadership and their families around for political theater?
Does Zeihan have a valid point?
And, BTW, Alabama Senator Tuberville lives in Florida. Apparently that's not a big deal for the people of Alabama. I have to wonder how us Cheeseheads would feel about one of our senators living in Chicago or Rockford....
In case you've ever wondered about the source of my frustration; nowadays, this is what passes for GOP intelligentsia....
Meanwhile in Washington the standoff between Sen. Tommy Tuberville (R-AL) and the Biden administration continues. The Alabama senator is single-handedly blockading more than 300 general and flag officer nominations for all branches of the armed services over the Pentagon's policy of paying for the travel expenses for service members to receive abortion and other reproductive services.
Last time I looked it seemed that those in the service don't get to pick where their command says they will be posted. Moreover, one-fifth of our armed services members are women. And with abortion and reproductive healthcare now determined by the respective states the pentagon policy is an accommodation for troops unable to receive such services in a state that prohibits them. If I had to hazard a guess, the pentagon would also pay for travel for other specialized medical care unavailable where a service member is posted.
Oh well, now the troops have to fight a culture war to satisfy a lone senator's appetite for performative politics.
I wonder if the blockade is also impacting school enrollment for the dependent children of military families? Or job applications for civilian spouses? Housing applications and moving plans? Planned and pending retirements? Promotions and career advancement too? Readiness?
Anyway, the senate beat it out of town last month without resolving any of this and isn't supposed to return to work until after Labor Day. The blockade continues.
Just another reason for the former football coach to tear things down and burn them up.
Of course, that is his prerogative; nevertheless, this is evidence of flaws and vulnerabilities in our institutions where one individual can put a stop to hundreds of critical national security positions. Tuberville is entitled to his views on abortion yet I struggle to see a connection to filling key defense and security positions.
As an occasional and casual fan of country music I'm having a chuckle over all the valuable bandwidth consumed by the feigned outrage over Jason Aldean's new song. I include outrage from both sides of the divide. Umbrage over the song and outrage in response to Aldean and his defenders perceived victimization.
Is this serious?
If you don't care for the song, don't torture yourself listening to it. And precisely where and how does a song inspire victimization?
Frankly, as far as country songs go this one isn't particularly inspiring and in my view quite formulaic. I was speculating this morning if it was composed by a focus group and not a serious country artist. A song to provoke feigned outrage among a divided populace. Adroitly-playing the victimhood card. My, oh, my. Just like performative politics nowadays.
Imagine that; insulted victims to boost downloads instead of talent and an aspirational message. Nope. That's just too conspiratorial.
Anyway, it's an interesting social experiment to observe people being led about by the nose over a very average piece of music. Alas, country music nowadays is mostly unexceptional. There are standouts, of course; but on a historical scale, most current artists are too dilute to hold a place in history.
This is the Gold Standard of country music.....
Meanwhile, required to vacate the position after four years, Gen. David Berger stepped down as US Marine Corps commandant this week. The Marine Corps will be without a Senate-confirmed leader for the first time in more than a hundred years as a consequence of Sen. Tommy Tuberville (R-AL).
Gen. Eric Smith has been nominated to fill the position, but will serve in an acting capacity as his confirmation has been held-up by the junior senator's pledge to hold-up all senior military confirmations and promotions that require Senate consent until such time as a Biden rule allowing travel reimbursement for service members traveling across state lines seeking abortions and related care is rescinded.
Senator Tuberville's obstructionism has blocked 250 nominations and effectively jammed-up some planned retirements in the ranks.
This could also jam-up the nomination of Air Force Gen. CQ Brown to replace Gen. Mark Milley who steps down as chairman of the Joint Chiefs of Staff in September of this year.
Tuberville's actions have unsurprisingly been a source of frustration to White House and defense officials and drawn the ire of of the national security community and members of his own party. Senate minority leader Mitch McConnell had this to say a couple of months ago: No, I do not support putting a hold on Military nominations.
This arm chair general has ascertained from reliable sources that none of this has impacted military readiness in a meaningful fashion. Nevertheless, this is evidence of flaws and vulnerabilities in our institutions where one individual can put a stop to hundreds of critical national security positions. Tuberville is entitled to his views on abortion yet I struggle to see a connection to filling key defense and security positions.
Obstructionism is not new to the political landscape in Washington.
Watch him double-down on white nationalists in the military at the 7:40 mark. The Senator from Alabama is an interesting dude.....
the belief, theory, or doctrine that white people are inherently superior to people from all other racial and ethnic groups, and that in order to preserve their white, European, and Christian cultural identities, they need or deserve a segregated geographical area, preferential treatment, and special legal protections.
Sure, you're probably thinking I'm going to launch into another rant or diatribe about the 800 pound gorilla sitting in our respective sitting rooms. No rant this morning. Just a few factual observations; the first of which is that Trump and now Biden have avoided addressing the primary cause of our budget woes.
When I tapped-out this post a couple of days ago It was basically impossible to read, view or listen to any media outlet without a reminder about the debt ceiling debate.
To be clear, this is a scary subject inasmuch as while our country has sufficient income to pay the interest on our debt (the bondholders) we also have a $1.5 trillion shortfall in 2023 to pay for all of the previous spending authorized by all the previous congresses and signed into law by all of the previous presidents. From a purely technical perspective this isn't about a budget - this is about paying for the spending that we're already on the hook for.
That said, there is now a parallel discussion about the budget; which is a positive development. Appropriations is where this discussion belongs; the debt ceiling is about paying for past obligations. Yet make no mistake, unless the ceiling is raised we will have insufficient funds to pay for all of our lawful obligations including Social Security, Medicare and Medicaid.
Between you and me I don't believe there will be a default. Anyone holding an IOU (government bond) will collect their interest on time and congress and the president will agree on some sort of scheme to address discretionary spending. There is a high probability congress will convene some sort of Blue Ribbon Committee to study a weight loss plan for the 800 pound gorilla. Of course I am notoriously famous for my bad predictions and while Kevin McCarthy is legislating he is bedeviled by a small number of crackpot members of his caucus who love outrageous tweets, reckless and inflammatory rhetoric and generally performative politics. Just like the congressional nutjobs who extol the virtuousness of Vladimir Putin, they're cuckoo. Why is it that some people elected to congress spout such outrageous foolishness? Is this a mechanism to fund raise? Or a means to draw attention on cable programming? Suck all the oxygen from the room? Childish attention-getting behavior? It's stupid, I'll never understand it and I digress.
We have a debt limit problem inasmuch as we continually borrow to make ends meet. And the fundamental driver of our spending has been the growth of Social Security, Medicare and Medicaid. Insufficiently funded, this leads to borrowing. This is the 800 pound gorilla. Does it strike you as strange that neither Trump or Biden could be bothered to acknowledge this? You know who has talked about it? Governor DeSantis. But I digress.
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If you do the math the issue in our living room is we are presently borrowing to pay for an 800 pound gorilla today that could grow to a 1200 pound gorilla in the years to come. Creating a King Kong is not sustainable.
So, instead of fabricating a crisis and potential self-inflicted wound over paying for stuff that all of the foregoing congresses and presidents have passed into law we need to be holding a serious discussion about how we reform the largest programs in the budget. Truthfully, the very best opportunity to reform our entitlement programs is when we enjoy rare periods of divided government. Like right now.
No amount of shrinking the IRS, defunding the FBI, or clawing-back of COVID relief funds is going to plug a $1.5 trillion shortfall. This is not rocket science. This is simple math.
While a handful of coconut congressional troublemakers might delight in gleefully blowing-up the economy, tanking the stock market, spiking our future borrowing costs and destroying everyone's carefully-built retirement plan with a default; I'm going to keep my eye on any serious zookeepers in congress and maybe a president who might take a stab at taming the growth of the gorilla and keep this country on a steady path of economic growth. Yes, virtually every indicator supports the notion that the economy is presently doing quite well. Let's stipulate that too much debt can kill the economy. But that is another discussion for another day.
This blogger isn't going to hold his breath over entitlement reform. As it doesn't stand a chance of happening until after the 2024 election and we know who's in-charge of congress and the white house.
Until then, it appears that we've got bullshit culture wars to fight. So, grab a cold bottle of Bud Light to assuage any festering election denial and my serious-bad predictions.
Whistling past the grave yard.
Save your pennies; the dollars will follow
A favorite saying of my grandfather - a thrifty guy who barely squeaked by the catastrophe of the Great Depression.
Today I want to speak briefly, by means of words and charts, about budgeting, a distracting bump in the road and the gorilla in our living room.
In 2022 two major federal programs accounted for 49 percent of all of our spending.
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| Source: Office of Management and Budget, 09.27.22 |
Beginning this year spending for these programs will exceed that portion of the budget that accounts for everything else. Folks, these budget items are the proverbial 800 pound budget gorilla.
On a daily basis I am amused by members of congress talking about balancing the budget. They make it sound easy. It is so simple that if we stopped aiding Ukraine, cut the Supplemental Nutrition Assistance Program, or denied the FBI a new building or put an end to the practice of earmarks in budget agreements all of our financial worries would be resolved.
Nonsense. All of it.
The sum of all of this wouldn't amount to a hill of beans in the grand scheme of the federal budget.
It's chump change.
A handful of forward-looking and seemingly suicidal souls have dared to broach the subject of reforming entitlement spending; albeit inelegantly and without nuance. They have been castigated, browbeaten and cowed by members their own parties as a consequence. This interests me as I think they are on to something. A subject deserving of serious discussion about taxation and spending.
Our Come To Jesus Moment is recognition and acceptance of the brutal truth that our federal budget is simply not sustainable in its current form. Expenditures exceed revenues and the difference is financed. If spending was high and borrowing low the consequence would be prohibitively high taxes.
The root of the problem is excessive government spending and insufficient revenue.
This is not a new problem. Going all the way back to our country's infancy we had a debt problem. Our war of rebellion against British rule resulted in a large debt load. We had the same problem after the Second World War. Our current problem is different in that it is not a consequence of war expenditures. It is indeed a fairly recent phenomenon - a consequence of the federal response to the economic downturns of the 2008 financial crisis the the 2020 pandemic crisis.
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| Source: Congressional Budget Office, 10.04.22 |
Let's put this in perspective in a way that is easy to grasp. Imagine a median-income American family conducting its financial affairs like the US government.
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| Source: Congressional Budget Office, 01.14.22 |
Change of subject. Kevin McCarthy's caucus is home to a handful of nihilists who most days want to just blow shit up and burn it down. Their style of politics is not about governing. It is not forward thinking. None of it is enlightened thought. For them it is about performance, false indignation and sometimes bat-shit craziness like talk of secession. This level of performative outrage is highly correlated with clicks and cable news coverage. Which naturally leads to useless drama such as playing chicken with the debt limit. As someone who has a normal, thoughtful Congressman as my representative I struggle with any tolerance for bat-shittery.
Nevertheless, in my world of normality I know that in the unlikely event the debt ceiling isn't raised the US Treasury would still have sufficient revenue to cover payments to Social Security, Medicare, Medicaid and government bonds as they came due. Everything else would have to be dramatically cut so as to prioritize these payments. I take no comfort from this as it doesn't quantify the associated damage this would cause to the global financial markets and our economy. When you tolerate bat shit crazy you might just get what you ask for.
I do not believe we'll go down that path for reasons previously stated here. The previous paragraph is a worse-case scenario.
Reflecting on The Washington drama I've come around to entertaining the notion of the debt ceiling subject being a bright shiny object; a distraction. I'm not totally convinced of this, yet might it be simply a bump in the road? The road that takes us on our travels to the bigger problem embedded in the budget picture?
Ultimately we need to focus on the problem that overspending our budget has gotten us into. That's a big, important deal worthy of critical thought, serious discussion and creative solutions. Nihilism is a waste of valuable bandwidth.
Your head likely hurts so I'll stop here. Rant and ramble over for now. More about the 800 pound gorilla to follow.....
The over-expansive monetary policy and flooding of the economy with liquidity in 2020 under the Former Guy and continuing with the largess under the rule of the Current Guy it should come as no surprise the surge in inflation that we have been witness-too.
There is a combination of good and bad news with regard to the United States' near economic future. Which would you like first? Good news or bad news? Good news you say? I agree - eat dessert first.
The good news is that the Fed would appear to be putting the brakes on inflation. Not a full stop - rather a slowing of growth and a retreat in a handful of sectors. The bad news is that there is a very real possibility that this will come at the cost of a recession. Is this an absolute certainty? Nope. But it is a probability. Compounding this is the specter of a fight over the debt ceiling.
In 2022 the Fed spurred interest rates four times in increments of 75 basis points. And they did it again at the beginning of this month - which is kinda a big deal inasmuch as this old man hasn't seen that since the early 1980s.
Coincidentally, the Fed reduced market liquidity at the breathtaking pace of $95 billion a month by choosing NOT to rollover its portfolio of maturing Treasury securities. The swing from loosey-goosey Covid policy to the belt-tightening of the last year is quite unprecedented.
A handful of forward-looking economic indicators suggest that housing costs (accounting for 40% of the CPI) are now falling. No surprise there - mortgage rates today are double what they were at their historic lows in 2022. Additionally, wage inflation has softened to 4.5% and the Purchasing Managers Indices imply the economy is at the possible threshold of a recession.
The country is reporting blow-out job growth with unemployment at its lowest level since 1969. If you want a job in America you can probably get one.
Conclusion: the tea leaves are mixed. Under ordinary circumstances a recession might be mild or avoided altogether in the form of a soft landing. Unfortunately, the circumstances are neither ordinary nor fortuitous. The nihilists (a minority of Kevin McCarthy's caucus) still seem bent-upon blowing shit up and burning it to the ground. This is hardly good faith bargaining or governing by means of responsible forward-looking budgeting.
Sigh.
The last time this happened in 2011, vulnerable financial markets were rattled by the mere prospect that our government would default on its obligations which led to a downgrading of Treasury Bonds by the ratings agencies as it became clearer that we might not be a reliable borrower.
Do I think there will be a default?
First-off, this blogger had to turn-in his crystal ball when he retired from the day job. But my reading of the tea leaves suggests that there will be an agreement at the last minute of the last hour. There will be an abundance of drama - followed by an agreement. It will likely take the form of caps on discretionary spending, the formation of a commission or committee that will propose entitlement reforms along with rules for any proposals to come to the floor for a vote.
Or I could also be full of it. Or just pulling your leg for fun.
You're probably scratching your head and wondering. To which my answer would be this:
McCarthy's caucus is singularly focused on one thing and one thing only:
Restoring the Former Guy to the White House
I think they understand that if they reach for another bridge too far a default would instantaneously result in a collapse of the global currency markets, throw the US economy into a deep recession, further cascading into a shit show of economic nonsense. As their nest eggs evaporate retirees would revolt at the ballot box, Trump would be thumped in 2024, McCarthy would lose the house, the Dems would increase their hold on the Senate and Old Uncle Joe would have to don his crazy aviation glasses to avoid the glare of victory.
Or maybe they don't understand this.
If it were me, I wouldn't want to die on that hill. But nobody listens to me anyway.
Bottom line is Kevin is talking. Biden is talking. Which is good. There will be an agreement and I don't think the debt ceiling will be breached. Some forward-looking budget restraint would be a good thing. Nevertheless, there will be theatrics. Strap-on your harness and buckle-up. As the days lengthen, spring is going to be awash in drama.
Stay-tuned......
If I had to hazard a guess the voters of Georgia Congressional District 14 place a higher value on performative politics than forward-looking governance. I thank my lucky stars that I live in the normal Wisconsin Congressional District 8 with the very normal Republican Congressman Mike Gallagher.
Old Uncle Joe baited these jerk-offs like a bunch of rubes last night.
Way to keep it classy GOP.....
Nope. No conspiracy here. None of the bizarre bigoted rantings of Marjorie Taylor Greene, or Paul Gosar, or Lauren Boebert, or Madison Cawthorn. Or all of the other scary shit some people are gorging-upon in their echo chamber.
Killing good ideas can harm your future....
Nope. This is not Marxist, totalitarianism, wokeness, defunding the police, vaccine mandates, socialism, masking, lying about stealing elections, or all of the other scary shit some people are gorging-upon in their echo chamber.
Killing good ideas can harm your future....
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