{"id":21119,"date":"2024-10-03T09:27:08","date_gmt":"2024-10-03T16:27:08","guid":{"rendered":"http:\/\/politicalhat.com\/?p=21119"},"modified":"2024-10-03T09:27:08","modified_gmt":"2024-10-03T16:27:08","slug":"quick-takes-the-coming-economic-doom-in-slow-motion-looming-closer-worse-than-you-think","status":"publish","type":"post","link":"https:\/\/impeachreno.org\/politicalhat\/2024\/10\/03\/quick-takes-the-coming-economic-doom-in-slow-motion-looming-closer-worse-than-you-think\/","title":{"rendered":"Quick Takes \u2013 The Coming Economic Doom: In Slow Motion; Looming Closer; Worse Than You Think"},"content":{"rendered":"<p style=\"text-align: justify;\">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Another &#8220;quick takes&#8221; on items where there is too little to say to make a complete article, but is still important enough to comment on.<\/p>\n<p style=\"text-align: justify;\">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The focus this time: Whichever party controls the White House when it comes will suffer for it.<\/p>\n<p style=\"text-align: justify;\">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First, a little ironic mood music:<\/p>\n<p style=\"text-align: center;\"><iframe loading=\"lazy\" width=\"560\" height=\"315\" src=\"https:\/\/www.youtube.com\/embed\/UJOjTNuuEVw?si=gyYJq4dI97_Oohgi\" title=\"YouTube video player\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p style=\"text-align: justify;\">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Carrying on\u2026<\/p>\n<p style=\"text-align: center;\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-21120\" src=\"https:\/\/impeachreno.org\/politicalhat\/wp-content\/uploads\/2024\/09\/doom.jpg\" alt=\"\" width=\"256\" height=\"256\" \/><\/p>\n<p style=\"text-align: justify;\">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Can\u2019t exactly create economic prosperity with tax money when there <a href=\"https:\/\/www.powerlineblog.com\/archives\/2024\/09\/economic-collapse-in-slow-motion.php\" target=\"_blank\" rel=\"noopener\">isn\u2019t much there left to tax<\/a>, like in Minneapolis.<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cCommercial real estate bears a disproportionate share of the city\u2019s fiscal burden. As those values decline dramatically, the short-term fix will be increasing residential property taxes. That will reduce residential real estate values, and drive more upper-income residents out of the city. Which could turn into a financial death spiral.<\/p>\n<p style=\"text-align: justify;\">\u201cWhy are Minneapolis\u2019s problems so acute? Because of crime. Formerly a low-crime city, the George Floyd riots and accompanying attacks on law enforcement have caused a dramatic increase in the rate of serious crime. That has caused businesses, as well as individuals, to avoid the city. With leases continuing to expire, there is no reason to think the downward trends have bottomed out.<\/p>\n<p style=\"text-align: justify;\">\u201cThe City of Minneapolis, meanwhile, is exploring ways of redeveloping George Floyd Square in a manner that will, in the mayor\u2019s words, \u2018honor the life of George Floyd, and point toward a more equitable future.\u2018\u201d\u2019 Somehow, I don\u2019t think that is the focus that the city needs if it is to recover economically.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: center;\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-5371\" src=\"https:\/\/impeachreno.org\/politicalhat\/wp-content\/uploads\/2014\/03\/eag_line.gif\" alt=\"\" width=\"500\" height=\"37\" srcset=\"https:\/\/impeachreno.org\/politicalhat\/wp-content\/uploads\/2014\/03\/eag_line.gif 500w, https:\/\/impeachreno.org\/politicalhat\/wp-content\/uploads\/2014\/03\/eag_line-300x22.gif 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/p>\n<p style=\"text-align: justify;\"><!--more-->&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;But <a href=\"https:\/\/www.nationalreview.com\/corner\/the-looming-collapse-of-federal-entitlement-programs\/\" target=\"_blank\" rel=\"noopener\">out of sight; out of mind<\/a>.<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cFew politicians in either major party are willing to admit this, but our big federal entitlement programs are rapidly running out of money. What happens then?<\/p>\n<p style=\"text-align: justify;\">\u201c\u2026<\/p>\n<p style=\"text-align: justify;\">\u201cMany Americans will say: We\u2019ve been hearing scary things about the national debt for decades and we\u2019re still doing pretty well, aren\u2019t we?<\/p>\n<p style=\"text-align: justify;\">\u201c\u2026<\/p>\n<p style=\"text-align: justify;\">\u201cThe economy suffers enough from federal regulation, but imagine the mayhem if the government actually owns lots of business shares. Our political leaders will need to take their heads out of the sand before it\u2019s too late.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;That\u2019s be socialism\u2014a position that increasingly both parties would love to impose on those icky corporations.<\/p>\n<p style=\"text-align: center;\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-5371\" src=\"https:\/\/impeachreno.org\/politicalhat\/wp-content\/uploads\/2014\/03\/eag_line.gif\" alt=\"\" width=\"500\" height=\"37\" srcset=\"https:\/\/impeachreno.org\/politicalhat\/wp-content\/uploads\/2014\/03\/eag_line.gif 500w, https:\/\/impeachreno.org\/politicalhat\/wp-content\/uploads\/2014\/03\/eag_line-300x22.gif 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/p>\n<p style=\"text-align: justify;\">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Both national and corporate debt are creating a <a href=\"https:\/\/www.aier.org\/article\/entitlement-collapse-is-worse-than-it-looks\/\" target=\"_blank\" rel=\"noopener\">perfect storm<\/a>\u2026<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cBoth trust funds are filled with special issue bonds that are liabilities to the Treasury. Since the Treasury has no surplus upon which to draw, when these bonds are presented for redemption, Treasury must issue additional debt to retire them. But this is what would have happened if program benefit payouts exceeded tax collections in a system with no trust fund, so the trust fund might as well not even exist. The trust fund is filled with worthless paper, so emptying it out will have no effect.<\/p>\n<p style=\"text-align: justify;\">\u201cThe true problem is the accumulation of ever more federal debt to provide revenue to allow the trust fund to redeem its claims on the Treasury. As total baby boomer benefits payments mount, the Treasury has had to issue bonds at an accelerating rate. This is why it only took 260 days to go from a national debt of $34 to $35 trillion a few weeks ago.<\/p>\n<p style=\"text-align: justify;\">\u201cIn the absence of significant reform, growing shortfalls will have to be covered by evermore newly issued debt or monetized debt. In either case, the effect on long term interest rates will be the same: they will rise from either increased demand in the credit market arising from additional federal borrowing or, if the Fed decides to monetize these new debt instruments, decreased supply in the credit market arising from creditors requiring a premium for expected inflation.<\/p>\n<p style=\"text-align: justify;\">\u201cThis latter effect arises because creditors will only buy a bond if its price is low enough to ensure a return that is high enough to protect the real purchasing power of their investment. This phenomenon is what economists call the Fisher effect.<\/p>\n<p style=\"text-align: justify;\">\u201cMany firms have taken on high levels of debt because very low interest rates made the cost of carrying debt artificially low. This allowed many firms to spend money on dubious things like DEI training for employees and initiatives aimed at drawing approval from ideologically driven investors.<\/p>\n<p style=\"text-align: justify;\">\u201c\u2026<\/p>\n<p style=\"text-align: justify;\">\u201cWhat voters should be worried about is that failure to address the entitlement problem might work the Fed into the kind of untenable debt situation that Japan had (and has), which in turn may induce the Fed to take drastic action to keep the economy out of a deep and prolonged recession.<\/p>\n<p style=\"text-align: justify;\">\u201cIn the event of a recession triggered by increasing interest rates from continued deficit spending, the Fed may ask for Congressional approval to purchase private equities in an effort to avert the collapse of an entire generation\u2019s 401Ks from widespread firm bankruptcies due to their inability to cover debt payments. This is hardly unprecedented. The Bank of Japan began purchasing stocks in 2010 and is now the largest owner of Japanese stocks in the world. This undoubtedly contributed to Japan\u2019s stock-market plunge a few weeks ago since the bank is now trying to sell those assets.<\/p>\n<p style=\"text-align: justify;\">\u201cVoters need to understand that by not pressuring politicians to deal with entitlements now, we might end up with a substantial amount of the means of American production being owned by the government. This will harm our free-market society incalculably because, slowly but surely over time, it will rob the economy of its entrepreneurial zeal and strong property rights. It will make ESG and woke capitalism look like child\u2019s play, delivering to central planners what they were unable to achieve in America on the battlefield or at the ballot box.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TTFN.<\/p>\n<p><meta name=\"twitter:card\" align=\"center\" content=\"summary\" \/><meta name=\"twitter:site\" content=\"@PoliticHatBlog\" \/><meta name=\"twitter:creator\" content=\"@ThePoliticalHat\" \/><meta name=\"twitter:title\" content=\"The Coming Economic Doom: In Slow Motion; Looming Closer; Worse Than You Think\"\/><meta name=\"twitter:description\" content=\"The focus this time: Whichever party controls the White House when it comes will suffer for it.\" \/><meta name=\"twitter:image\" content=\"https:\/\/impeachreno.org\/politicalhat\/wp-content\/uploads\/2024\/09\/doom.jpg\" \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Another &#8220;quick takes&#8221; on items where there is too little to say to make a complete article, but is still important enough to comment on. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The focus this time: Whichever party controls the White House when it comes will suffer &hellip; <a href=\"https:\/\/impeachreno.org\/politicalhat\/2024\/10\/03\/quick-takes-the-coming-economic-doom-in-slow-motion-looming-closer-worse-than-you-think\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":21120,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,1],"tags":[65,59,24,42,69,48],"class_list":["post-21119","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-progressives","category-uncategorized","tag-doom","tag-economy","tag-leviathan","tag-mood-music","tag-quick-takes","tag-social-justice"],"_links":{"self":[{"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/posts\/21119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/comments?post=21119"}],"version-history":[{"count":1,"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/posts\/21119\/revisions"}],"predecessor-version":[{"id":21121,"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/posts\/21119\/revisions\/21121"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/media\/21120"}],"wp:attachment":[{"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/media?parent=21119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/categories?post=21119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/impeachreno.org\/politicalhat\/wp-json\/wp\/v2\/tags?post=21119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}