Happy Days Are Here Again But For How Long?
CBS reports:
“Heading into 2025 Americans are more hopeful than discouraged…than they were heading into 2024.
…. Among those who say they’re generally hopeful about 2025, their top reason is that Donald Trump will be president.
…. To those who say things are bad, it’s much the same story…inflation and prices are driving that sentiment.”
FDR defeated Herbert Hoover, singing, “Happy days are here again…”
Hoover’s policies didn’t cause the Great Depression, they made things worse. 12 years of FDR’s New Deal, including currency devaluation, didn’t produce happy days….
Pundits waving red flags!
David Stockman proclaims:
“The MAGA folks are…in for a rude awakening. …. Donald Trump has been taking to the public stage…promising a new ‘golden age’ of American prosperity…but nearly the opposite is just around the corner. What’s actually coming down the pike is the UniParty’s revenge— a financial and economic shitshow that is likely to dwarf all that has gone before.”
George Friedman shares a more moderate perspective:
“American society and the American economy have a rhythm. Every fifty years or so, they go through a painful and wrenching crisis, and in those times, it often feels as if the economy were collapsing, and American society with it.
Policies that had worked for the previous fifty years stop working, causing significant harm instead.
…. The political elite insists that there is nothing wrong that couldn’t be solved by more of the same. A large segment of the public, in great pain, disagrees. ….
The new political culture is treated with contempt by the old political elite, who expect to return to power shortly when the public comes to its senses.
But only a radically new approach can solve the underlying economic problem. The problem is solved over time, and a new common sense is put into place, and America flourishes – until it is time for the next economic and social crisis and the next cycle.”
If my model is correct, we are facing roughly another four years of this disjuncture between economic and social reality on the one hand and the political system on the other. …. It is the 2028 election that will matter, in the same way that 1980 and 1932 did. We must remember this is cyclical, not existential.”
While the public overwhelmingly supports a return to common sense, fixing a broken economy was the primary driver behind Trump getting elected.
Trump’s team contends they have 24 months to get things fixed, with the political elite and legacy media itching to brand him the next Herbert Hoover. Quite a challenge!
Debt Galore!
Consumers
Armstrong Economics explains:
“Credit card defaults in the US skyrocketed by 50% in the past year. …. The cost of living has simply surpassed manageable levels for the majority of households.
Americans are feeling the impact of inflation and compounding interest. …. Credit card debt hit a record high in September 2024. …. The Fed also reported that household debt reached a high of $17.94 trillion. …. Household…debt is simply out of control.
…. The average APR was 24.43%. …. Countless households have fallen into a snowball situation where they simply accumulate more debt in a failed attempt to pay off the old.”
Businesses
Wolf Street reports:
“Office CMBS (Commercial Mortgage-Backed Securities) Delinquency Rate Spikes to 9.4%….
“Survive till 2025” is the motto in CRE (Commercial Real Estate) now, but that might not work either.
The office sector of commercial real estate has been in a depression for about two years….
Landlords…are having trouble collecting enough in rent to even pay the interest on their loans,…many of them have stopped…and delinquencies continue to spike.
The delinquency rate has doubled since June 2023 (4.5%).
…. The prescription was: Survive till 2025, when interest rates would be, they hope, far lower than they were.
But rate cuts will do nothing to address the structural issues that office CRE faces. The landlord of a nearly empty older office tower isn’t going to be able to make the interest payment even at a lower rate when the tower is largely vacant.
…. A nightmare for lenders and CMBS holders.”
Banks.
Banks hold almost $2 trillion in debt. As interest rates rise, the market value of their holdings declines. Inadequate reserves have already caused major bank failures.
Unlike the 1920’s, depositors have not been hurt (so far). The troubled banks have been gobbled up, making the “too big to fail” banks even bigger. Since 2008, politicians used tax dollars to bail them out and are unwilling to reinstate Glass-Steagall, separating casino-banks from traditional banking.
|
Special Offer ONLY for Miller On The Money Readers! As you know, I’ve mentioned Richard Maybury’s Early Warning Report often, and I’ve been a reader for many years. Richard’s world outlook is unique, and his letter provides great education you will not find elsewhere! For a limited time, he is offering Miller on The Money readers a phenomenal deal. Click here right now to subscribe for just $99. This saves you $201 OFF the regular subscription price! You’ll immediately be emailed the current issue and 4 FREE Special Reports. I encourage you to click here and take advantage of his special offer while you still can. |
Government (us, the taxpayers).
Politicos also jumped in for cheap money, borrowing and spending at unprecedented levels. Since 2000, national debt jumped from $5.7 trillion to over $36 trillion. Interest on the national debt exceeds the defense budget and will soon surpass social security
The US can’t meet its obligations without more borrowed money. Raising the debt ceiling is akin to borrowing from one credit card to make minimum monthly payments on others, while total debt and interest costs skyrocket.
Armstrong Economics explains, US bonds used to be “As Good As Gold.”
“The first three Liberty bonds…sold to fund World War I, were retired during the 1920s. …. The terms of the bonds included a Ponzi Scheme that allowed the bondholder to swap them for newer bonds, with superior terms, most of the debt from the (earlier)…Liberty bonds had been rolled over into this fourth issue.
…. The Fourth Liberty Bond specified: ‘The principal and interest hereof are payable in United States gold coin of the present standard of value.’
This was the typical ‘gold clause’ found in most sovereign bonds. …. Generally, it was intended to guarantee that bondholders would not suffer from a currency devaluation – not inflation since even a gold standard does not prevent inflation.
The US defaulted on these bonds thanks to Roosevelt. The US Treasury called in this Fourth Liberty Bond…. However, the US defaulted on this term by refusing to redeem the bond in gold. They also ignored the dollar devaluation imposed by Roosevelt, which changed the dollar’s gold value from $20.67 to $35.
…. The 21 million bondholders lost 139 million troy ounces of gold, which caused the loss in international value terms to be approximately 70% of the bond’s principal.”
Using today’s gold price (around $2,700/oz.), Roosevelt unilaterally, by executive order, screwed bondholders; patriotic, hardworking citizens doing their civic duty by helping finance WWI, out of approximately $375 billion in buying power.
Roosevelt’s New Deal economic theories failed.
Investopedia explains, “The 1929 crash lasted until 1932, resulting in the Great Depression, a time in which stocks lost nearly 90% of their value. The Dow didn’t recover its pre-crash value until November 1954.” 1929-1954 isn’t a quick recovery!
Today the world holds nearly $37 trillion in US debt, proudly backed by the “full faith and credits of the United States.” That’s a secret code, meaning, “paper documents backed by politicians promises.”
The Great Enabler!
Remember grey-haired Janet Yellen, the Fed Chair who became Treasury Secretary? She reassured the world in 2017:
“Would I say there will never, ever be another financial crisis? You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be.”
Zerohedge reports, “Janet Yellen “Sorry” After Presiding Over $15 Trillion Increase In US Debt.”
Ms. Yellen served as Fed Chair and then-Treasury Secretary.
“Yellen has personally presided over a gargantuan $15.2 trillion increase in US debt, or about 42% of all US debt ever issued! No one other government official can make even a remotely similar claim.”
…. Yellen expressed regret over failing to make more progress in narrowing the fiscal deficit during her tenure.
“I am concerned about fiscal sustainability and I am sorry that we haven’t made more progress. …. I believe that the deficit needs to be brought down especially now that we’re in an environment of higher interest rates.”
Ms. Yellen, that’s a blinding flash of the obvious! The Fed’s easy money policy was the great enabler for a public and private spending binge. She knew exactly what she was doing. Now she says, “Oops, I’m sorry,” leaving a worldwide mess while she and her billionaire banker friends sail off into the sunset on their private yachts.
What can be done?
Government, consumers, and businesses have hit the wall. When current income barely covers interest costs, you cannot survive very long.
The government faces tough choices:
- Cut defense spending, at a time when the world is in chaos.
- Default on social promises; Social Security, Medicare, welfare, etc.
- Default on the bonds, paying creditors pennies on their dollar.
- Inflate the currency, devalue the dollar, while creditors lose billions in purchasing power.
While Friedman may be right, “this is cyclical, not existential;” fixing past sins will be gut-wrenching. Fasten your seat belts. The congressional dinosaurs (poster children for term limits) will fight the changes; time for them to go.
Next week we discuss who is most vulnerable and what remedies must be taken…we will get through this.
Stay tuned….
|
Help keep us online! I love it when readers thank me for “telling it like it is” for providing content they won’t find in the mainstream media. I’ve been sent to Facebook purgatory a few times – they didn’t approve. Free speech isn’t appreciated in all circles. When I started Miller On The Money, I vowed to keep our newsletter FREE! I’ve kept my promise – our weekly letter is an expensive hobby. Donations are our primary source of financial support, and what keeps us going. We don’t peddle your name to anyone. I’ve turned down proposals from advertisers, feeling their offerings were inappropriate for our readers. Readers pitching in to help offset our cost are much appreciated. It’s strictly voluntary – no pressure – no hassle! If you want to help, click the DONATE button below. You do not have to sign up for PayPal to use your credit card. And thank you all! |
On The Lighter Side…
Last week the country had extreme cold weather. Jo and I were married in Fort Myers. Our first Christmas we had snow and ice. We had huge icicles hanging from a gutter.
That was almost 40 years ago. I’m sure a lot of Florida natives have never experienced snow, and certainly not icicles hanging down from the roof.
I moved south to get away from winter; telling friends, “If God meant for me to be cold, I’d have more fur!” Our AZ forecast shows things warming up soon.
Last week we saw a whirlwind of activity with the inauguration. I’m probably old-fashioned, but I celebrate America’s “peaceful transformation of power” which separates us from many nations in the world.
My grandmother said, “For those who won, things never turn out as good as you hope. For those who lost, things never turn out as bad as you fear.”
Depending on which news outlet you watch, you saw people rejoicing or people in great despair – with the media fanning the flames. Get a grip! Since 2001 we’ve witnessed a power transfer 5 times, and four years from now it will happen again, as we pass 250 years as a free nation.
Quote Of The Week…
“You will never know how much it has cost my generation to preserve YOUR freedom.
I hope you will make good use of it.”
— John Adams
And Finally…
Jo found some patriotic puns for our enjoyment:
- What did the colonists wear to the Boston Tea Party?
Tea-shirts.
- If you cross a patriot and a dog with curly hair, what do you get?
A Yankee Poodle.
- What ghost haunted King George III?
The spirit of ’76.
- What do our flag and a sad candy cane have in common?
They’re both red, white and blue.
- What protest by a group of dogs occurred in 1772?
The Boston Flea Party.
- What did a patriot put on his dry skin?
Revo-lotion!
- Did you hear the one about the Liberty Bell?
Yeah, it cracked me up too!
- Which colonists told the most jokes?
Punsylvanians!
- What is red, white, blue and green?
A seasick Uncle Sam.
- What are the most patriotic flowers?
Yankee Doodle Dandylions.
And my favorite:
- What was the wildest battle of the Revolutionary War?
The Battle of Bonkers Hill.
Until next time…
Dennis Miller
“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken
Affiliate Link Disclosure – This post contains affiliate links. If you make a purchase after clicking these links, we will earn a commission that goes to help keep Miller on the Money running. Thank you for your support!