OK, Now What?
Election week I was mentally exhausted, tired of the political rhetoric, screaming, name-calling, lies, hypocrisy, maddening robo calls and text messages. I needed a breather, not wanting to get caught up some hanging-chad frenzy holding the entire country hostage. Much to my surprise, the election was called fairly quickly.
I’m ready, refreshed, and turning my attention toward figuring what it means for all of us.
Reality…
I was surprised when many far-left name-calling commentators concluded Americans were fed up and wanted a change; their party should be paying more attention to the electorate.
As the Kingston Trio echoed, “Oh, when will they ever learn?”
I harbor no illusions – politics will triumph. Shortly after Garbage Truck One arrives at the White House, Trump will own the nation’s economic mess. Expect the media to do a complete about-face, screaming about inflation and how bad things are.
While Trump is being given the opportunity to right the ship, he faces big obstacles. Many in the DC establishment would prefer another Great Depression, brand Trump as Herbert Hoover, and rule for decades like FDR.
Congressman Jack Kemp and Senator Connie Mack removed any doubt for me that the politicos want their opponent to fail miserably, even if it causes the citizens to suffer.
One pundit predicted that President Trump faces challenges getting RFK Jr. approved for his cabinet. He’s expected to demand data from the food and drug companies, while implementing changes affecting their bottom line. They will be leaning on senators, threatening to remove their financial support, if they vote for confirmation.
Banking reform will meet similar resistance. I feel no pity for politicos facing a three-fold dilemma:
- What is right for their constituents?
- What does their party want?
- What is best for their personal pocketbook?
Big business skirts the law and bribes politicos to do their bidding. The public is fed up; things have to change. I expect media chaos to fan the flames.
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What can we do?
After the election, I contacted Chuck Butler, editor of The Daily Pfennig to help sort things out. What should we expect and how to keep our readers protected? Chuck has some great ideas; more than enough for a two-part interview. Change is coming with much screaming along the way.
DENNIS: Chuck, as always, thanks for your time. Our readers love your insights.
Chuck, I’m going to bundle a couple questions….
Trump touted extending his tax cuts and programs like cutting taxes on Social Security, overtime and tips. What are the chances of that getting done?
Some pundits said, “If we get the economy going, we can grow our way out of debt.” Reagan and Trump cut taxes, without corresponding spending cuts, and the deficit skyrocketed. Jack Kemp told me the Democrats were scared that “supply-side economics” would work and made sure there were huge deficits. Will it be different this time?
CHUCK: Dennis, regardless of the cause (political or poor economic theory) both Reagan and Trump added heavily to the deficit after their cuts. As long as the % of government spending is higher than GDP, we are NOT growing our way out of debt.
As a practical matter, when you look at entitlements and interest expense which are likely to remain, there isn’t much left that is discretionary but the military budget.
As to growing our way out of debt, after we tick off all the countries we hit with tariffs, the world will probably go into a deep depression. That’s what happened after the Smoot & Hawley Tariffs long ago. I always refer to what’s happened historically, because, it’s bound to reoccur – Or, at least be at the scene of the crime….
DENNIS: Let’s look at this spending graph:
In 2019 Federal spending was just under $5 trillion. In 2023 it jumped to $6.5 trillion, a 30% increase in five years.
Musk and Ramaswamy now head up the “Department of Government Efficiency.” Government efficiency is an oxymoron for sure.
Milei took a chainsaw to Argentina’s government. Would a combination of spending cuts and freezing spending levels get things turned around?
CHUCK: Spending cuts? Really? Maybe they might get some small cuts through, but major cuts will meet the lobbyists, and D.C. lifers, protecting their turf like a Mama Bear protects her cub… Sure, major cuts and freezing spending will help, but I’m from Missouri, show me!
DENNIS: The biggest discretionary spending is the military. USA Facts runs the numbers:
“In 2023, the US military spent approximately $820.3 billion, or roughly 13.3% of the entire federal budget for that fiscal year. In March 2023, the Department of Defense (DoD) requested $842.0 billion for 2024 — a 2.6% increase.”
I’m confident there’s a lot of “inefficiency” in the military. The military failed its audit for the 7th straight year. They are unable to account for where that money went.
Even if they cut 20%, it would be $165 billion, they have a long way to go to bring down trillion-dollar deficits.
If they stop the automatic budget increases and freeze spending it would help. Do you think that is even possible?
CHUCK: Possible? Sure. Dennis, please understand that is NOT in the best interest of Congress, they don’t like to be held accountable. Open Secrets reported, “Defense contractors spent $70 million lobbying ahead of annual defense budget bill.” That buys a lot of votes.
They may pass some meaningful reform, kicking and screaming along the way – but – Remember the Dodd-Frank Bill (also meaningful reform), which was supposed to put a stop to derivatives? Wall Street, like the defense industry, spends millions lobbying Congress. Soon after, congress quietly repealed the most meaningful provisions. It’s one thing to pass a bill with hoopla, but quite another to make it stick. As you said, will congress do what is right for their constituents, or their pocketbook?
It will be interesting to see what Musk and Ramaswamy are able to accomplish; perhaps providing great entertainment but, they have to show me to make me a believer.
DENNIS: Former colleague Nick Giambruno explains:
“No matter what the Fed calls it, the only way they can try to control interest costs is to inflate the money supply.
…. Since 2020, the US money supply has skyrocketed by 37%, an incredible change in such a short period.
If your after-tax wealth has not increased by 37% since 2020. …. You are losing ground and on the road to serfdom.”
Chuck, as you look at your crystal ball, what do you see happening with inflation over the next few years?
CHUCK: I see inflation rising again… Money Supply equals inflation, period… end of discussion… My economics professor taught me many years ago – price increases are not inflation; they are a symptom of inflation.
After Trump gets all his tariffs though, the cost of things in the U.S. will increase. As Nick described, the Fed has no choice but to open the spigots of Money Supply…
DENNIS: Let’s talk about the US dollar’s role as reserve currency. At a BRICS conference in Russia, members were looking for alternatives to the US dollar. Bill Bonner explains:
“Delegates from thirty-nine different countries, representing most of the world’s population, held a historic get-together; the western media didn’t find it worth mentioning.
…. Over the last two years, foreign-based dollars – trillions of them – lost about 20% of their value. Their owners must be looking for alternatives.”
Bonner quotes the Financial Times:
“What is at stake here is not just the erosion of the dollar’s dominant role but also a gradual change in the operation of the global system… an increasing number of little pipes are being built to go around this [dollar] core; and a growing number of countries are interested and increasingly involved.
…. As it develops deeper roots, this risks materially fragmenting the global system and eroding the international influence of the dollar and the US financial system.”
Chuck, the world has much to lose by rapidly collapsing the dollar. While a basket of currencies, and the “little pipes growing around the dollar” end up at the same place, do you see this playing out slowly?
CHUCK: Yes, Dennis, for years I’ve warned my Daily Pfennig readers how the U.S. was messing up their responsibility as the world’s reserve currency. The BRICS plan to de-dollarize will take several years to come to an end… We will see signs that it’s coming, giving people an opportunity to leave the currency, should they choose to do so.
The ever-growing debt will be the reason that this whole scenario begins. The U.S. has blown it, spending like you know who…. They’ve meddled in other countries’ wars where they had no business, they showed the world that they could freeze a country’s (Russia) assets and lock them out of SWIFT…. The countries of the world are all saying, “If the U.S. does that to Russia, they wouldn’t care if they did it to us?”
Remember the old Voltaire quote, “Paper money eventually returns to its intrinsic value, zero.” Our government is just facilitating the process.
Dennis here. Post-election polling indicated 70% of Americans felt the country was on the wrong track. That’s “governing against the will of the majority.” Whether Trump can fix it remains to be seen. Let’s not get caught in the political crossfire!
Next week we discuss specifics on how we can protect ourselves as this mess sorts itself out….
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On The Lighter Side…
I hope everyone had a great Thanksgiving. It is always a good time to count our blessings and realize we have many things to be thankful for.
The Friday before Thanksgiving I went to the cancer center to get my latest test results. My oncologist, grinning from ear to ear, proclaimed, “Cancer-free, your best scan ever!” That’s two in a row. He continued, “Go enjoy your family and the holidays.” Yeah, I felt a couple tears on my cheeks.
The following day I flew back to Indiana for the holidays. We had 14 for Thanksgiving, and are looking forward to Christmas.
I also want to thank all the wonderful readers who continually offer support and encouragement, it is much appreciated. So much to be thankful for….
Enjoyed my time off and I am glad to be back in the saddle, lots of good stuff coming up!
Quote(s) Of The Week…
Couldn’t decide which one this week so here are my two finalists…
“Reflect on your present blessings, of which every man has many; not on your past misfortunes, of which all men have some.”
— (unknown)
“The secret of happiness is to count your blessings while others are adding up their troubles.”
— William Penn
And Finally…
Friend Mike M. shares some Jimmy Buffett wisdom for our enjoyment:
- “Take naps like they’re happy hour.” Don’t let anyone shame you for nodding off. Naps are nature’s way of giving you a little slice of paradise.
- “Remember: sand in your shoes is better than snow in your driveway.” If retirement hasn’t taught you to be a snowbird yet, well, what’re you waitin’ for?
- “When in doubt, flip-flop it out.” Ditch the fancy shoes. Life’s too short for anything that’s not comfortable.
- “You’re only as old as the friends you call to bail you out.” Keep a few rowdy buddies around. Who says mischief has an age limit?
- “Forget the beach body. Just make sure your hat has a good brim.” Cover up, sunscreen up, and enjoy the beach—life’s better with a good tan and no sunburn.
- “If you can’t change it, paint it a wild color.” Bored with the porch? Paint it turquoise. Who says a little color can’t fix the soul?
And my favorite:
- “Splurge on the good guacamole, your kids can fight over the will.” Why save all the fun for later? Enjoy it now. Life’s short, guac is extra, so live a little.
Until next time…
Dennis Miller
“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken
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