You are a free subscriber to Me and the Money Printer. To upgrade to paid and receive the daily Capital Wave Report - which features our Red-Green market signals, subscribe here. Answers to Bernie Sanders' Questions on CNN...The CNN Town Hall last night was a rerun with the same bad ideas.
Dear Fellow Traveler, Sen. Bernie Sanders asked some pointed questions about America’s problems last night during a CNN Town Hall meeting… Honestly, they’re worth addressing. But Bernie, being Bernie, has the diagnosis half-right and the prescription completely wrong. I pay attention to Sanders because he has a major fan base, he’s clearly passionate, and he actually wants to change things… This was his rant last night…
I’m happy to tell him why… Let’s go through his list… And let’s start with his opening premise… “Are we really the richest country in the world?”He always starts with this… “We’re the richest country in the world…” Okay… by what measure? Total GDP? Sure, we’re number one there... But per capita? We’re behind Luxembourg, Singapore, Ireland, Qatar, and Switzerland. We’ve collapsed in economic freedom over the last 20 years… If you adjust for cost of living, we drop even further. We openly lie about inflation and the cost of living… even if we have the real data. More importantly, what does “rich” mean when the median American can’t afford a $500 emergency? When 40% of the country couldn’t handle being unemployed for a single month? Or when Americans’ housing costs consume 50% of income in major cities? We’re rich in financial assets inflated by extremely loose monetary policy... We’re rich in stock market valuations divorced from underlying productivity. We’re rich in debt that our grandchildren will have to pay back. We gutted our manufacturing sector because of our dollar reserve status… and we continue to allow the ongoing feudalistic rise of companies like Amazon and Apple… But are we rich in actual purchasing power and living standards for ordinary people? That’s debatable. The “richest country” talking point is misleading because it counts asset bubbles as wealth and ignores the distribution effects of monetary policy. Also, having your debt levels surpass your GDP doesn’t make you rich. It makes you irresponsible… Our money is broken… that’s not being rich… and that’s actually where most of the problems start with Sanders’ rant… “Why don’t we guarantee healthcare to all people?”That’s easy… Because we’ve created the worst possible system… We don’t guarantee it… We do something worse… Mandate it… So, who cares about cost or efficiency? We have a crony, corporatist nightmare that combines all the inefficiencies of government control with all the price gouging of monopolies. Healthcare lobbyists wrote the Affordable Healthcare Act (Obamacare)… and had mandates that FORCED Americans to have specific coverage. What company doesn’t want the government to mandate its product? And what happens when you do this? Well… UnitedHealth Group Inc (UNH) went up 20x at one point from the day that this law passed…
What’s funny is we don’t have free market healthcare OR socialized healthcare. We have corporatized healthcare where insurance companies and hospital systems use government regulations to eliminate competition and jack up prices. It’s the basis of a captured regulatory market where government control is the driving factor… Bernie’s solution? It’s more government control, which would just make the current disaster bigger and, like in many nations with these options, lead to rationed care. These bureaucrats don’t want to provide efficient single-payer systems with more options to their constituents either… The best example is Switzerland, where personal liability insurance is owned by everyone (which is a godsend to stop lawsuits), and they have additional private insurance blankets that people can buy… Sanders’ “Medicare for All” plan eliminates private supplemental policies… Which is so stupid it hurts… “Why no paid family leave?”Because we’ve made it prohibitively expensive to hire people in the first place. Every mandate you pile onto employment makes it more costly to create jobs. America’s small businesses can’t afford to hire someone and then pay them to not work for months. You want paid leave? Make it easier and cheaper to start businesses so there’s genuine competition for workers. When unemployment is 2% and companies are fighting over talent, paid leave happens naturally. When it costs $50,000 in regulatory compliance to hire your first employee, you get fewer jobs and worse benefits. I don’t know why this is so hard to understand… “Why is minimum wage $7.25?”Because minimum wage laws price low-skill workers out of the job market entirely. The real minimum wage is always zero - unemployment. When you mandate that every job must pay $15/hour, you eliminate every job that only produces $12/hour of value… even if you think that people deserve a “living wage…” Those entry-level positions Bernie wants to eliminate? They’re how people learn skills and work habits (I stress the latter). Destroying them condemns people to permanent unemployment or welfare dependency. I’m not saying it’s fair… but the reason people can’t afford groceries and housing isn’t just linked to wages. It’s linked to MONETARY POLICY… “Why do we have 800,000 homeless people?”Because cities with the most “compassionate” policies have the worst homeless problems. San Francisco spends $100,000 per homeless person annually, and the problem gets worse. People at NGOs are making $250,000 a year in California to “fix” the homeless crisis… And by fix… I mean leave it exactly where it is… because there’s no money in “solving homelessness.” There’s money in “trying” to solve it… and “talking about solving it…” and blaming other people for it… A lot of money… Seattle, Portland, and Los Angeles are all run by people who agree with Bernie, and all are complete disasters. You also can’t solve homelessness by making it more comfortable to be homeless. You solve it by making it easier to build housing (eliminate zoning restrictions) and to get jobs (eliminate occupational licensing requirements). As always… they’re money in the problems… It’s just the broken window fallacy… “Why don’t we address climate change?”Because Bernie’s crowd opposes every solution that would actually work. Nuclear power? No. Natural gas as a bridge fuel? No. Carbon pricing that would make renewables competitive? No. Streamlined permitting for clean energy projects? No. They want to fight climate change by eliminating fossil fuels immediately, banning nuclear power, preventing new transmission lines, and maintaining environmental review processes that take 10 years to approve a solar farm. Pay attention to what just happened in Hamburg, Germany… This place is going to sound like a Talking Heads song pretty soon… “Why we have oligarchs on top who have more and more power every day”The oligarchs have more power because the government has more power. Every regulation, every mandate, every “reform” increases the return on lobbying and political connections. Big corporations love big government because they can afford compliance costs that crush their smaller competitors. Amazon supports $15 minimum wage because it eliminates competition from small retailers. Big banks support financial regulations because they eliminate competition from community banks. The oligarchs Bernie complains about are the same ones funding the politicians pushing his policies. Goldman Sachs executives become Treasury secretaries under both parties. Silicon Valley billionaires fund both campaigns and benefit from both administrations. Again… there’s money in all of this… The Real ProblemBernie’s questions point to real problems, but he misdiagnoses the cause. These aren’t problems caused by “too much capitalism” - they’re problems caused by whatever the hell we want to call our system that includes non-stop regulatory capture, and government power being auctioned off to the highest bidder. The solution isn’t more government control… It’s breaking up the cozy relationship between big business and big government that creates these problems in the first place. Want cheaper healthcare? Eliminate the regulatory barriers that prevent competition. Want better wages? Make it easier to start businesses and create jobs. Want affordable housing? Eliminate the zoning restrictions that prevent building. Want less oligarch power? Reduce the government power they’re buying. But then there’s the real underlying driver of our issues… The thing NO ONE on that stage addressed yet again… Most of these problems trace back to the money printer. When the Federal Reserve creates trillions of dollars, where does that money go first? To asset owners - the oligarchs Bernie complains about. Asset price inflation makes housing unaffordable for workers while making real estate investors rich. Stock market bubbles benefit the wealthy while destroying savings. Easy money lets zombie corporations survive without adapting or improving. Bernie wants to treat symptoms while ignoring the disease. The disease is a monetary system that systematically transfers wealth from workers to asset owners through inflation and financial engineering… And the people who do it just keep getting away with it… Bernie asks good questions but offers terrible answers. Yes, America has serious problems. No, giving more power to the same government that created these problems won’t solve them. The oligarchs love politicians like Bernie because he directs anger toward “capitalism” instead of toward the specific government policies that created oligarchy in the first place. (Also… where exactly is the capitalism again?) Real solutions require admitting that good intentions aren’t enough and that government power corrupts, regardless of who wields it. As always.. this is not a rant… Stay positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
|
Subscribe to:
Post Comments (Atom)
0 Response to "Answers to Bernie Sanders' Questions on CNN..."
Post a Comment