Capitalist Fool -

Economy

# They Actually Did It!

June 8, 2023 Eric

## The Debt Ceiling Did Not Collapse on Our Heads

After months of screwing around rather than dealing with the problem, Congress and the President came to an agreement on the debt ceiling.

It really seemed like all parties involved wanted to ram the good ship USA into an iceberg.

We are now safe from this nonsense until 2025. No election year fake debt ceiling crisis.

Maybe politics can be set aside and I can start writing about the economy without all the BS. Wishful thinking.

Upcoming topics include the FED, GDP, government spending, the budget, and our glorious entitlements.

I say glorious entitlements because they are both glorious and earned entitlements. We pay into the programs and we have a right to the benefits. There is a contract between us and US (in the role of the government).

There will be some unavoidable politics in the budget portion of the program. It will be interesting to see what programs and services will be slashed. Watch them dance.

I wonder if the entitlement known as Congressional pensions will get chopped. How much will the Congressional budget be cut? #EndCongressionalPensions

Choices, choices, choices.

Does anyone really believe that government debt is the biggest problem facing America?

Discuss.

Economy

# Debt Ceiling Lunacy

May 16, 2023 Eric

The general stupidity of the officials in Washington is overwhelming.

The debt ceiling problem has been known since the last debt ceiling increase.

The deficit spending problem has been known since it started over 20 years ago.

The spending problem has continued no matter which party had control of the White House, House of Representatives, or Senate.

The debt ceiling needs to be increased to cover appropriations that received bipartisan support.

The debt ceiling must be increased. This is an urgent necessity.

Any choice not to increase it is pure economic stupidity.

Deficit Spending

Yes, getting some control over spending is a fine idea.

However, it is not an urgent necessity. The problem should be addressed as it should have been every year, during budget negotiations.

Where is The Budget?

Creating the Federal budget is literally Congress’s biggest job. Everybody knows this but the budget is never finalized until after the start of the fiscal year.

The government keeps sliding along on continuing resolutions. Why?

Because there is no accountability for a job not done. We can’t immediately fire them for poor performance.

We could stop their paychecks but that would probably require bipartisan legislation. Fat chance.

Spending Cuts

Republicans in the House have been patting themselves on the back for weeks over a strangely named bill that provides a guideline for drastic budgetary cuts. The problem is that there are very few specifics on which programs and services are set to diminish.

This is another bill that has no chance of becoming law.

The House loves to pass bills that have no chance of becoming law. Gives them an excuse to stick in their collective thumb and pull out a plum for the cameras.

What would happen if they stopped the time-wasting sideshows and did their jobs? Maybe something difficult like passing a budget before the beginning of the next fiscal year. What if they were not allowed to go on summer hiatus if there was no budget?

Where are the Taxes?

Current talks only include spending cuts. Why?

If overspending is the greatest threat to our economy, why is there no discussion of raising taxes?

Tax brackets for the rich could be bumped up immediately to raise deficit reducing revenue.

Here’s an effective negotiating stance, a dollar for dollar match between spending cuts and immediate tax increases.

Are these so-called conservatives really committed or is it just political bullshit?

Congressional Budget Cuts

I wonder how much the Congressional budget gets slashed under the spending reduction plan. It is definitely an area of the budget riddled with waste.

I move for the Congressional pension plan to be first on the chopping block. Why encourage them?

Final Thoughts

So much lunacy to cover and so little time.

A reminder to readers. I don’t support either political party. The Republicans just happen to be more wrong this time. Give Democrats the opportunity and they will eagerly sink to the occasion!

Uncategorized

# A Well FED Economy

March 23, 2023 Eric

A thank-you to Jerome Powell and our friends at the Federal Reserve for staying the course by raising the Fed Funds rate by a meager 0.25%.

The appropriate amount to show their seriousness regarding inflation and to not be too worried about the failure of two banks because of alleged mismanagement.

A relatively insignificant 0.25%, about 5% of the total increase over the past year.

The 0.25% might cause some bank securities holding to drop in value by 1 or 2%. No big deal.

Banks do not realize those losses until they sell securities.

The Fed is now allowing banks needing liquidity to collateralize loans with securities at 100% of face value. This allows banks to continue holding securities until their maturity date. Which is the exact strategy banks are supposed to do with their base capital.

So, they fight inflation, and do little damage to banks.

A double win for the Fed.

### Inflation vs. Unemployment

Time for a flash visualization poll.

Close your eyes and imagine instantly polling 100 million working class Americans.

One question.

“Would you rather have 5% inflation and a job or 2% inflation and no job?”

I bet you see a vast majority picking the first option.

Well, Federal Reserve governors, these are the people you work for. There is no acceptable increase in unemployment to fight inflation.

Fortunately, it all does not need to happen at once. As long as inflation is trending down, the Fed can slow its roll.

The consensus estimate does not see the 2% inflation goal being met for 2 to 3 years, so why push it?

No need to lower rates yet, just maybe stop and take a deep breath. Chant om for a few weeks.

Slide through May and take action again in June.

Have your May announcement start with the phrase, “In the interest of working class Americans…”

### Final Thoughts

There is a bias in reporting toward looking for the next recession. The scale is tipping so heavily in that direction, that maybe we will have one. But wouldn’t it be more useful to build on what is good?

Federal Reserve

# All FED Up

March 21, 2023 Eric

After weeks of speculation, the Federal Reserve has a meeting this week and will announce another rate hike.

There will be another rate hike as inflation is coming down, but it is nowhere close to the 2% goal.

It will be a slight increase of 0.25%, just enough to show they are still in the anti-inflation game. A slight increase will do little to harm the economy. The Fed has done at least 75% of the maximum increase needed in this cycle.

A minuscule bump will not kill the job market. The Fed does not need to worry until the jobs and employment statistics show two or three months of weakening.

A tiny advance does no harm to the banking system. The majority of the decrease in asset values has already occurred. Plus, banks can borrow against 100% of assets’ face value, causing no need to book a loss when raising liquidity.

All is as good as it usually is.

“It’s always something.”

ALL FED UP

Being all fed up has little to do with the Federal Reserve.

It is a visceral reaction to the overwhelming use of adjectives in financial journalism to make things seem worse than they are. Clickbait enhanced partisanship to gain eyeballs and sell more ads.

Listening to the rhetoric of either party is like having a little bit of vomit show up in the back of my throat.

Information

# Let’s Get This Party Started

March 2, 2023 Eric

Just in starter mode for the new site. I should have everything organized before the end of June.

The Capitalist Fool intends to provide you with reliable information on investments and personal finance without selling you anything.

Just good, high-quality information that you can use.

Sign up for updates or follow us on social sites, and we will inform you when we have it together. (form should be up soon.)

Federal Reserve

# Latest FED Moves: Why Comment?

July 7, 2016 Eric

The chain of articles about the FED never got off the ground as the FED is not doing much.

No matter what the latest news, until the base interest rates hit 2%, economic disaster lurks in every shadow.

Seeking Alpha

# Herbalife: One More Time Through the Muck

October 25, 2015 Eric

Maybe it was October Horror Season that possessed me to write about Herbalife again.

The full article is over at Seeking Alpha: Herbalife What Matters

You can easily ignore the company section. Herbalife commenters tend to go emotional crazy in at a head spinning around level. You would have to spend to much time sifting through 200+ comments to find the 10 or so that make any sense.

I am not even going to expand on the article here beyond a brief summation of my opinion of Herbalife ( HLF) .

1. Not a company that interests me as an investment. Though call options are tempting.
2. None of their products interest me.
3. The business opportunity does not interest me.
4. I don’t love MLM but I don’t think Herbalife is a scam.
5. I don’t believe that the FTC will take any action against the company.

The battle of the hedge fund titans does remind me the the time has come to put a stake through the heart of the carried interest tax loophole.

Seeking Alpha

# Lending Club Post LC

October 14, 2015 Eric

Going to start writing more for Seeking Alpha and will post snippets here with a link over to SA for the full article.

Lending Club is Ready to Beat the Market

#### Summary

- Now that the hype is gone, Lending Club in poised for growth.
- $11 billion in loan origination and growing fast.
- Marketing for borrowers could use some improvement but will not hinder profitability.

Read the full article at Seeking Alpha

Information

# Savers Got Screwed

October 14, 2015 Eric

Couldn’t bring myself to comment after the last Fed meeting. It is so sad to see high level economists fail.

As long as they support a borrowing culture that screws savers, there can be no solid economic recovery. It will all be built on quicksand. In danger of toppling at the slightest ripple.

Take care of savers and a strong foundation will be built for a longer and steadier expansion.

Federal Reserve

# Raise Our Interest Rates

September 17, 2015 Eric

Please Janet,

RAISE OUR INTEREST RATES!!!!!

These low interest rates are getting ridiculous. Massive subsidization of borrowers at the expense of savers. It has to stop.

A slow steady increase from ZERO to a rate that comes close to matching inflation would be a good for the economy and should not have a negative impact on the economy. Any business enterprise that can’t stand the increased interest rate was not viable to begin with.

OHHH!!! The market will PLUMMET!!

Look back at Quantitative Easing. QE was phased out slowly over a number of months. Despite the gloom and doom predicted for stock prices, the end of QE lead to market increases.

Why? Because the government was backing off from the artificial manipulation of the market. QE had stabilized the monetary markets and done its job. Time to go.

The same is now true of artificially low interest rates. Time to go.

Excess borrowing and avarice on the part of borrowers and lenders lead to the crash. Savers got left holding the bag.

The time has come for savers to get their fair share. The economy won’t die.

Sure the stock market won’t skyrocket but is there any reason to expect it to rise more than 5%?

Sure mortgage rates will go up and probably slow down home price appreciation. Is there any reason to expect increases of more than 5% per annum?

Slightly higher interest rates would bring back a sense of normalcy and strengthen the economy.

Speculative profit in the next quarter won’t be as great. Long-term, ten year profit, should be greater and stability assured. Stability leads to peace of mind.

Peace of mind leads to profit.