Important Economic Trends During Anarchy – Week 25

2020 – Something Big is Afoot.  Are You Prepared?          

Education is Always Expensive:

The end of a calendar year is a great time to reflect on what happened the previous 12 months.  My reflection about 2020 led me to a list that is quite different than previous years.  A very long list, here are just a few of the items:

  1. How much I missed being with my church family.
  2. How much I missed my trip to see Spring Training baseball games.
  3. How much I missed going to the beach, the family activities there, etc.
  4. How much I hate to wear my Xi Mask.
  5. How irritating it is to have to deal with a mask, hearing aids, and glasses because they are competing for the limited real estate located behind my ears.
  6. How nine months can feel like five years.
  7. How capitalism has already created many new products to deal with the Wuhan Virus, UV antivirus products, etc.
  8. Working remotely has forced me to improve my time management.
  9. Working remotely has forced me to learn a lot of new technology.
  10. How to meet with clients and potential clients via teleconference and conference calls.
  11. What it feels like to be one of 10 people working in an 80,000 square foot office building.
  12. How odd it is to see TV pictures of empty streets in major American cities like New York during the workday.
  13. How much the Antifa black shirts resemble the Brownshirts in Germany in the 1930’s.
  14. A renewed appreciation for the brilliance of our Founding Fathers.

Looking at my entire list, I realized they all go under the heading of “Education”.  The consistent attribute of Education is that it is always expensive.  Never free.  That was true in 2020.  Hopefully, in 2021 some of these new talents and experiences will pay dividends.  There are others I hope to discard.

A recurring blessing is Christmas.  Even though this year Christmas was quite different, the constant was the affirmation that God is in control and only in retrospect do we understand His way.  In the continuum of history, there have been and always will be men and women who think they are in control because they have achieved some specific position of power or level of wealth.  Typically, they worship those two gods, power and money.  It never ends well when humans deceive themselves into believing they are god.  Read 2 Kings and it will sound familiar.

This year it seemed like I was living in a spy thriller novel.  Totally Surreal.  We did witness some miracles like Operation Warp Speed getting vaccines developed and distributed in less than one year. But then there were occurrences like the Christmas Day Nashville explosion billed as a terrorist attack by a terrorist concerned about human life but then died in the explosion?  One video I watched slowed the event down and the initial explosion clearly came OUT of the AT&T data center (the building across the street), not the RV.  Every picture I have seen of the aftermath of a vehicle bomb, there is a crater, not in Nashville.  The report that the FAA closed the air space above Nashville is curious.  Just another weird event or a significant event per a plan that we Clingers, Deplorables, and Chumps do not yet understand?

I understand economics so let us switch to six data points I have witnessed over my career:

  1. Definition – Mercantile State (MS) – A country whose government creates and owns the means of production on a scale that allows it to gain a monopoly in the production of goods because it can destroy capitalistic companies in other countries by producing goods at a loss until the MS is the only producer.
  2. Comparative Advantage – An economic theory that each country should focus on producing those goods that they are best suited to produce and acquire the goods produced by other countries that are better suited to produce the other goods because the unit price will be lower.
  3. Failure of Comparative Advantage – This economic theory fails when applied without regard that the cultural and moral values of the “other country” are different than your country such as when they create a Mercantile State that wants to dominate the world. In that event the theory of Comparative Advantage is null and an enemy is strengthened.
  4. For the last 30 years I have watched an estimated 55,000 to 60,000 American factories close and be shipped to China. That cost an estimated 15 MILLION middle class jobs.  Presidents, both Republican and Democrat, have calmed the concerns of the USA middle class that was being wiped out by saying it was best for everyone to engage the Chinese economically.  Those Americans striving for blue collar middle class were told to be happy with $15 per hour jobs and no benefits because they would be able to buy cheap things at Walmart.
  5. As a result, Americans have been negatively affected because the lack of middle-class employment opportunities have led to a massive increase in welfare, drug abuse, etc. Trump is the first President to champion we middle class Americans the other consider Clingers, Deplorables, and Chumps because we were not members of the Global Elite.
  6. There is something seriously wrong when Congress passes a Virus Relief Bill that is almost 6,000 pages long (it would take me longer than a couple of hours to read that many pages, but that was the time between the distribution of the proposed act and the vote on it), includes $900 Billion America does not have, and sends $600 Billion to foreign countries, raises congressional salaries by over $50,000 per year, and sends Americans $600 per person. Clingers, Deplorables, Chumps indeed.

Meantime. the USA economy is a massive bubble – stocks, bonds, and real estate.  Trump’s obvious plan is the only positive way forward is rapid economic growth to increase the GDP and thereby increase the tax receipts to service the national debt without raising the tax rates.  The alternative that is the campaign platform of Biden which includes increased tax rates and government regulations plus continued massive increases in our national debt from unproductive government spending which is a prescription for economic disaster.   Therefore, the level of risk to our economy is increasing.

The worst-case scenario for our economy is that all of those bubbles burst at once.  I rate that as the highest probability under Biden.  The Fed is already doing 50% more QE than they did in The Great Recession and interest rates are already too low.  That means there is no calvary to send to rescue the Clingers, Deplorables, Chumps.  Any recession will have to burn itself out.

In business conversations I am hearing fear on the part of some sellers and caution on the part of some buyers.  Those are also reflected in the global movement of capital which always seeks the best combination of financial return and safety.  Currently global capital is leaving the USA resulting in the yield of the 10-year Treasury approaching 1%.  The U. S. Dollar continues to fall against most currencies.  When global currency traders figure out that the Chinese Yuan is Fool’s Gold, that will be another crisis but currently China is benefiting from capital fleeing the USA.

We continue to share with our clients the following scenario for a Biden – Harris Administration:

  1. Until June 2021, the USA economy is already baked – challenges this spring but good.
  2. However, nine to twelve months after the passage of the first Biden platform item is a Recession. Assuming Biden Harris begin passing their agenda in the second quarter of 2021, the recession will hit the second quarter of 2022.
  3. The more items on the Biden- Harris platform that become law, the worse that recession:
  4. Since the Fed is tapped out, the greatest probability is the Recession will be SEVERE. You need to think about a Depression that will last years.
  5. THE BEST STRATEGY – Sell in the Bubble and Buy in the Recession.

Commercial land is in flux.  Industrial land will soften under Biden since there will be little re-shoring of our industries back to the USA as folks like Hunter Biden profit from selling our remaining industries to China. The amount of cash sitting on the sidelines is at a record $5.9 Trillion because in an insured bank account the principle is preserved.  It as a “Reflection of Fear.”  Increased fear is a negative for economic growth.

“Beware of false prophets, who come to you in sheep’s clothing but inwardly are ravenous wolves.”

(Matthew 7:15   New Revised Standard Version, Oxford University Press)

History indicates that a great piece of land remains The Best investment long term.  Capitalism builds wealth, socialism consumes it in self destruction.  I serve an awesome God.  Pray for the Patriots, the establishment of honest elections in the USA and globally.

Stay healthy,


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