As the coronavirus-induced economic lockdowns have tightened across the US, we’ve seen the emergence of a government-inspired fantasy – the myth of the nonessential business.Government officials across the country have forced the closure of these so-called non-essential businesses while allowing “essential” enterprises to soldier on. Politicians and bureaucrats have developed arbitrary criteria to determine which businesses are and are not essential.I say arbitrary because there is really no objective way to make such a determination.In the first place, every business is essential to the owners and employees who depend on it for their livelihood. Try telling the owner of a “non-essential” craft shop that her business is non-essential when her mortgage comes due.As I wrote last week, theRead More »
Articles by Michael Maharrey
Last week, Congress passed a $2 trillion stimulus bill in an effort to offset the economic impacts of the coronavirus. Most people have focused on the $1,200 checks to Americans and bailouts for industries hard-hit by the economic shutdown. But the 883-page bill does a lot more than that, including empowering the Federal Reserve to hand out billions of dollars in complete secrecy.The stimulus bill authorizes the Fed to create $454 billion out of thin air and loan it out. The provision gives the central bankers complete autonomy when it comes to deciding who gets the money.Not more than the sum of $454,000,000,000…shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve SystemRead More »
According to Owen Ullmann in an op-ed published by , there are some unsung “heroes” in the battle against the coronavirus pandemic – the brave and courageous bankers at the Federal Reserve.I think Ulmann misspelled “villains.”Ulmann writes that the Fed “has taken extraordinary steps to prevent the global economy from crashing into irreversible catastrophe as business around the world grinds to a virtual halt.”This is like praising the arsonist for trying to put out the fire he set by throwing more gasoline on it.The Fed certainly has taken extraordinary steps. Just a few days ago, it announced QE infinity. It committed to buy an “unlimited” amount of US Treasury bonds and mortgage-backed securities. It also announced a new program to buy corporate bonds for the first time ever.InRead More »
We now have QE to infinity and beyond.On March 23, the Federal Reserve announced it will purchase an “unlimited” amount of US Treasuries and mortgage-backed securities. The called the move “unprecedented” and said that it goes “much further than what the central bank did in the 2008-2009 crisis.”Back then, the Fed injected nearly $4 trillion into the financial system over several years. Analysts say the Fed’s effort now could dwarf that in a matter of weeks.”The Fed also announced it will buy certain corporate bonds for the first time in history.Gold skyrocketed on the news of this unprecedented monetary stimulus, but stock markets were less impressed. Despite the Fed announcement, the Dow Jones dropped 582 points.When you strip away all of the technicalities, the Federal Reserve willRead More »
Last Thursday, we embarked on a journey through the Southeast for business purposes and to check up on our kids who live in Kentucky. In case you were wondering, it is as crazy out there as you might imagine if you’re sequestered in your home following events through the news or social media.Don’t worry; we practiced social distancing…mostly. And there was a lot of hand-washing.Honestly, it was a bit surreal seeing empty store shelves and watching restaurants shut down. As I have discussed, this whole thing is going to have significant economic ramifications, on top of the health issues. But there were also quite a few funny things out there. And sometimes, you just need to sit back and laugh at the absurdity.First, let’s talk about masks. There are varying opinions on the effectivenessRead More »
Many people have likened the battle against coronavirus to a war and invoked imagery of the US fighting World War II. President Trump has even deemed himself a “wartime president.”The president told reporters at a White House briefing that fighting the virus would require a sacrificial national effort just like it took to defeat the Axis in the Second World War.Every generation of Americans has been called to make shared sacrifices for the good of the nation. To this day, nobody has ever seen like it, what they were able to do during World War II. Now it’s our time. We must sacrifice together, because we are all in this together, and we will come through together. It’s the invisible enemy. That’s always the toughest enemy, the invisible enemy.”But listening to all the rhetoric comingRead More »
On Sunday evening, the Federal Reserve announced additional extraordinary emergency measures in an attempt to keep at least some of the air in the bubble economy. But in fact, the Fed has been engaged in extraordinary emergency monetary policy for over a year.“The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses,” the FOMC said in a statement.In other words, “We are desperate to keep people spending money they don’t have to prop up the economy just a little while longer.”The measures announced Sunday include a 100 basis-point rate cut that sets interest rates effectively at zero. Interest rates are now at the same level they were at the height of the Great Recession. The Fed apparently plans to keep rates at zeroRead More »
With the madness in the markets over the last couple of weeks that led the Federal Reserve to implement a 50-basis point interest rate cut, Peter Schiff is starting to get some love in the mainstream media.Peter was a regular on MSNBC, Fox News and other mainstream outlets in the months leading up to the 2008 financial crisis. He was typically the lone contrarian, insisting that the economy wasn’t great. Of course, in 2008, he was proved correct.Over the last few years, there’s pretty much been a mainstream blackout on Peter, with the exception of appearances with Liz Claman on . It’s hard to understand why. Whether you agree with everything he says or not, Peter is one of the best interviews out there. Perhaps the mainstream pundits were a little salty about getting showed up. Or maybeRead More »
Stop and pause for a moment and think about what just happened. The Federal Reserve says the US economy is strong, but it just initiated emergency monetary policy last seen during the worst financial crisis since the Great Depression.Something doesn’t add up.The Fed cut rates 50 basis points on Tuesday. It was the first interest rate move between regularly schedule FMOC meetings since the 2008 financial crisis. The Fed funds rate now stands between 1.0 and 1.25%.The decision to cut rates was unanimous.As the pointed out, this kind of Federal Reserve move has been reserved for “when the economic outlook has quickly darkened, as in early 2001 and early 2008, when the US economy was heading into recession.” The 50-basis point cut was the first cut of such magnitude since December 2008.Read More »
The US stock market continued its freefall last Friday. The Dow lost another 357 points to finish off the worst week since 2008. One would expect a save-haven like gold to thrive in the midst of the massive stock selloff, but it had a bad day on Friday as well crashing through the $1,600 mark and plummeting as low as $1,568.Gold rebounded Monday and was trading back above $1,600, but how do we make sense of its precipitous plunge? Has gold failed as a safe-haven?The short answer is no.The safe-haven bid is there, as evidenced by the rebound on Monday. But as with everything in the economy, there are multiple dynamics driving the gold market.In the first place, some analysts believe the coronavirus scare is causing a bit of a tug-o-war on gold. On the one hand, we have the expectedRead More »
The powers that be insist that inflation is low. In fact, the central bankers at the Federal Reserve tell us that low inflation is one of the reasons they can keep interest rates artificially low. But everyday people who go to the store each week smell a rat. We know our dollar doesn’t stretch as far as it used to. If inflation is so low, why do prices seem to keep going up?The only logical explanation is maybe inflation isn’t as low as the pundits keep telling us.And in fact, by one measure, inflation is quite robust.Before proceeding, I need to point out that I’m using the term inflation in the popular sense of rising prices. In strictly economic terms, inflation is an increase in the money supply. By that definition, there is no doubt that there is rampant inflation due to centralRead More »
Every once in a while, the truth slips out of Federal Reserve Chairman Jerome Powell’s mouth.
Powell was on Capitol Hill this week addressing Congress. He continued to talk up the economy, but in a moment of honesty, tacitly admitted that the central bank is already engaged in extraordinary monetary policy, and confessed the Fed may not have the firepower to fight the next recession. During testimony before the House Financial Services Committee, the Fed chair conceded that the current low level of interest rates “means that it would be important for fiscal policy to support the economy if it weakens.”
As put it, this is an “unusual appeal by the head of a politically independent institution that is used to combating economic contractions on its own.”
To be clear, fiscal policy
Most Americans say the Constitution is important. Most Americans say it’s crucial for the government to stay within its constitutional bounds. But what exactly are the constitutional limits on federal power? How do we know?
Well, whatever you do, don’t ask a lawyer. Most of them know very little about the Constitution.
I can already hear you protesting. Lawyers know a lot about the Constitution. They learn constitutional law, for goodness sake!
But read closely what I wrote. I didn’t say they don’t know a lot about constitutional law. I said they typically don’t know a lot about the Constitution. There’s a huge difference.
Constitutional law is made up of a bunch of lawyers’ opinions about what the Constitution means. But that’s not how you understand the actual meaning of the
Sometimes it’s a lot easier to sit down at the table than it is to fold your hand and leave.Nearly four months after it started, the Federal Reserve continues to run overnight repo operations and it’s unclear when the central bank will actually end these “emergency” measures.The Fed stepped into the repo markets last September to “unplug” the financial system’s “plumbing” with an injection of cash. It was the first such move since the financial crisis a decade ago. The move stabilized the markets, but months later, it doesn’t appear the Fed has a viable exit strategy.Repurchase operations are an important aspect of the banking system. The repo market enables banks to borrow cash in order to maintain liquidity and meet daily needs. In a repo trade, banks and other firms use Treasurys andRead More »
Did you have a piggy bank when you were a kid?I did. And it almost never had anything in it. I would drop a few coins in now and then. Every once in awhile, I even stuffed some paper money in there. But usually within a week or two, I’d be prying the bottom off that thing and pulling out those coins and paper for an important purchase. By important purchase, I mean buying candy bars or baseball cards.My mom tried to teach me to save. Her failure is no reflection on her commitment to the task. It just didn’t take. I’ve always had what economists call a high time preference. I am more concerned about my current well-being than the future. To put it in non-economist terms, I liked stuff more than cash.Now, my son – he’s the opposite. When he was a kid he always had money. When we’d go onRead More »
We’re less than a week away from New Years Day and I already have my 2020 resolution queued up and ready to go.Wanna know what it is?I hereby resolve not to make any New Year resolutions!There is a big advantage in going this route — I’m virtually guaranteed to succeed in my in the resolution department in 2020. I mean, it is highly unlikely that I’ll accidentally slip up and make a resolution.In fact, I didn’t make a single resolution last year and I can confirm that I didn’t break any either. After all, you can’t break a resolution you don’t make.Just consider that your last bit of wisdom for 2019.You’re welcome.Look. Let’s get down to the nitty-gritty. If you make a resolution, you aren’t going to keep it. I’m not questioning your intentions … just your willpower. I mean, I don’tRead More »
As we approach the end of 2019, gold is on track for a healthy yearly gain. To date, the yellow metal is up over 16% on the year.It’s always interesting talking about gains in the price of gold because when you get down to it, it all depends on when you got into the market. If you bought an ounce of gold on Jan. 1 of this year and sold it this morning, you’d have pocketed around $208 (less any taxes and fees). But if you bought your gold at the peak price this year and sold it this morning, you’d be out about $68.So, when we say gold is up or down, you always have to ask a second question: since when? The price can be simultaneously up and down at the same moment depending on the answer to that question.I occasionally get comments on articles posted on the SchiffGold Facebook page byRead More »
Moving is awful.I’m speaking from recent experience. We are in the process of moving from central Kentucky to northern Florida. I say “in the process” because you don’t just move. It consumes your life for months on end.It starts with the packing. We began packing stuff up over the summer. Every time I thought we were making progress, new stuff appeared. I’m pretty sure stuff was multiplying. We had a garage sale. We drug stuff to the curb. We gave a lot of our furniture to my daughter.And then I would walk into a room – more stuff.Even after the great purge, we still completely packed a 20′ U-Haul with stuff. That required a full day of lift and tote coupled with puzzle-solving skills. To my dismay, I discovered my stuff is not symmetrical. When it was all said and done, I had a tangleRead More »
A paper by Scott A. Wolla and Kaitlyn Frerking for the Federal Reserve Bank of St. Louis warns that the Fed’s own policy could lead to “economic ruin.”The paper titled “Making Sense of National Debt” explains the pros and cons of national borrowing in typical Keynesian fashion. In a nutshell, a little debt is a good thing, but too much debt can become a problem.But in the process of explaining national debt, Wolla and Frerking stumble into an ugly truth — Federal Reserve money printing can destroy a country’s economy.So, when does the national debt become a problem?According to Wolla and Frerking, debt only becomes an issue when it outpaces GDP, or national income, as they call it. If debt grows at a faster rate than income, eventually the debt might become unsustainable.They note thatRead More »
People spend a lot of money for headphones and earbuds. I totally get it. I’m a bit of an audiophile myself. There’s nothing like good music played through good-sounding headphones. But in my never-to-be-humble opinion, a lot of the high-end headphones are utter crap. This is because of the obsession with boosting the bass.Hey! Whoever just said, “OK boomer,” I heard that! And I’m not a boomer. I’m an X-er. So turn up the Nirvana. Anyway, these headphones that pump up the bass tend to make everything in the lower range sound muddy. I suppose if you just want to hear “thump-thump,” it’s great. But I’d prefer to actually experience the full range of sound. Of course, maybe this doesn’t matter since a lot of modern music doesn’t have a full range of sound.Yikes. Maybe I do sound like aRead More »
Fiscal 2020 started just like fiscal 2019 ended – with a massive federal budget deficit. And that has Federal Reserve Chairman Jerome Powell worried. In an ironic bit of political theater, Powell lectured Congress about the spending he helps facilitate.The budget shortfall last month was 34% higher than the October 2018 deficit, coming in at $134.5 billion, according to the latest Treasury Department report. That starts fiscal 2020 off on track to eclipse a $1 trillion deficit.The October deficit continues a well-established trend. The FY2019 deficit was $984 billion and ranked as the largest budget shortfall since 2012. The federal deficit has only eclipsed $1 trillion four times, all in the aftermath of the 2008 financial crisis.The FY2019 deficit was 26% higher than FY2018’s massiveRead More »
Since moving to Florida, I’ve been able to spend a little bit of time on the beach. It’s interesting watching what people pick up. You can kind of categorize people based on their haul of beach-combing treasures.First-timers to the beach will basically pick up anything. Broken cockle-shells are worthy of the newbies’ treasure bag, as are sticks, feathers and generic rocks. Hey – it came out of the ocean. It’s probably a whale bone!Seasoned vacationers are more discerning. They’ll walk right over common seashells. More rare shells with cracks or flaws get picked up and discarded. And no rocks. They’ve got those at home.Then you have the locals. They generally aren’t picking up crap. Bending over is way too much trouble. An exceptional shell may warrant picking up. Or maybe not. TheRead More »
As I write this, the Federal Reserve is in the midst of its October FOMC meeting. The central bank is widely expected to cut interest rates another 25 basis points. If the Fed follows through, it will be the third cut in three meetings, totaling 75 basis points since July.Although the Fed continues to call this a “mid-cycle adjustment,” Peter Schiff called the rate cut in July the first one on the road to zero. There’s nothing so far to cast any doubt on that view.But the Fed is not alone. It joins the majority of the world’s central banks on a race to lower rates and inject more easy money into the world’s economy. As of this month, a total of 54 central banks in both developed and emerging markets have cut their policy/base interest rates.World Gold Council head of market intelligenceRead More »
Fun on Friday is supposed to be, well, fun. But I also like to offer useful advice. So this week, I have a tip for you. If your boyfriend or girlfriend wants you to send them a bunch of money in order to help them sell gold, don’t do it. It’s a scam.Seriously. Just don’t. Don’t send people you’ve never met money.Ever.You’re welcome.I bring this up because we have yet another guy busted for running a gold scam targeting lonely, vulnerable people — in this case women. According to reports from a Charlotte TV station, Suleman Alhassan and his posse targeted women through dating apps. He promised them romance and wealth.Look, I dabbled in online dating. I actually met my wife on Yahoo Personals. But overall, in my experience, you’re damn lucky if you get romance and you sure as heck aren’tRead More »
It’s Friday the 13th!You know what? It already seems lucky to me. Heck, it’s Friday. That’s a pretty good start!I’ve never been one to get all torqued up about the number 13 anyway. In fact, I kind of like it. My preferred hockey number is 33 in honor of Patrick Roy and just because it has nice symmetry. But if it’s not available, I’ll go with 13. Why not mock the number gods, right?Truth is I’ve never been particularly superstitious to begin with. Some people are though. I’ve known people who go through every Friday the 13th with a sense of abject dread. Not me. I figure a day is what you make of it. I’m not going to ruin a Friday worried about the number attached to it.Also, if you haven’t figured it out already, I’m a bit of a contrarian. I’m the kind of person who will walk under aRead More »
Did you know that has fact-checked the on multiple occasions? True story. In the obsession to root out “fake news,” fact-checking sites have resorted to fact-checking satire and parody articles.Apparently, some people actually believe satire articles are true. If you’ve ever watched people trying to operate a Walmart U-scan on a Saturday afternoon, this comes as no surprise. Still, it seems odd that a legit organization dedicated to fact-checking news would waste time with the . I mean, really? The name and cheesy graphics are enough of a giveaway.I don’t know. Maybe the people determining what is and isn’t fake news are fake news.Look, the way I see it, if people are dumb enough to believe Walmart is really going to discontinue auto parts sales to help lower traffic fatalities, thenRead More »
As I write this, Hurricane Dorian is taking aim at Florida. What’s fun about that? you might ask. Well, nothing. And I don’t want to minimize the potential for disaster. But the hurricane hasn’t hit yet and the runup to a storm provides a lot of amusement and some educational moments. I just can’t resist.I’ll start with the good news! Florida is about to enjoy an ECONOMIC BOOM! If you believe the Keynesians that is. Now, if you have a shred of common sense, well, maybe it’s not such good news.Anyway, I live in Kentucky, but my mom lives north of Jacksonville and I spent about 20 years in the Tampa Bay area, so I tend to pay more attention to hurricanes than your average land-locked Joe. I’ve got the National Hurricane Service saved to my favorites toolbar, and like most Floridians, IRead More »
Here’s a tip for you.If some guy comes up to you in a gas station parking lot and tries to sell you gold, don’t buy it.Seriously. Just say, “No!”Who would even buy gas station gold? You might ask.Well apparently, a lot of people.According to a report on Eyewitness News 3 in Hartford, Connecticut, one jewelry and coin dealer has had close two 20 people come in looking to sell fake gold they bought in a gas station parking lot. Some 20 people coming into just one store.That’s a lot of suckers.Sue Couture works at Good Ole Tom’s in East Hartford. She says it’s easy to quickly identify the fake gold. Just stick a magnet to it. Gold isn’t magnetic. So, if you’re going to make a gas station parking lot gold purchase, at least bring a magnet with you.But really, I’d stick with my firstRead More »
Confession time.I’m spoiled. And old.I knew this already, but this past week has magnified these truths.You see, I’m in Florida. And it’s been a tough week.That sentence alone probably proves to most of you that I’m spoiled — except for those of you who live here and are already tired of the summer heat and humidity. But when I say I’m literally a five-minute walk from the beach, most of you would probably trade places with me.As for being old – well – I’m in Florida.But I’m not here on vacation. I’m actually at my mom’s house. She’s had some health issues, so I came down to help her out with some appointments and whatnot. Now usually, when I’m here, it’s a vacation. I sit by the pool and chill on the beach. But this time, I had to work.Working away from home creates certain challengesRead More »
Trump’s bipartisan spending deal took a step closer to reality last week when the US House passed a budget bill by a 284-149 vote.The bill increases discretionary spending from $1.32 trillion in the current fiscal year to $1.37 trillion in fiscal 2020 and then raises it again to $1.375 trillion the year after that. The deal will allow for an increase in both domestic and military spending.In other words, no spending cuts.The deal includes $320 billion in additional spending over existing law and simply suspends the debt ceiling until mid-2021.Poof. Debt ceiling eliminated. Just keep on borrowing, boys!This deal is a product of “bipartisan cooperation.” House Speaker Nancy Pelosi hammered out the deal with Trump’s Treasury Secretary Steve Mnuchin.Rep. Thomas Massie (R-KY) used aRead More »