Sorry! Fed Rate Cuts Don't Cause Prosperity

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Unleash Prosperity Hotline
Issue #1106
9/19/2024
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1) Sorry! Fed Rate Cuts Don't Cause Prosperity
The stock market is exuberant over the Fed's decision to cut the federal funds rate by 50 basis points, but hold on. The chart below sent to us by the economics team at Chase Investment Counsel examines the past six initial Fed rate cuts and found that in two of the six instances, the stock market FELL over the next year. And in another two instances, the market was positive - but not in double-digit growth territory.

If Washington wants to stimulate economic growth, it should cut TAX rates, not interest rates. Money creation doesn't create prosperity.

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2) Oh, for a Congress that Would Do its Job
Congress is now like a gang of teenagers who wait until the last minute to do their homework.

This stunning chart from Philip Wallach of AEI, shows that the ten longest bills comprised about 50 percent of the legislative work of Congress as recently as the 109th Congress in 2005-06. But so far, this Congress is on track for a new all-time high of about 95 percent.

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"118th is still incomplete, so that last data point is in flux," Wallach writes. "But the takeaway here is clear: a vast majority of legislating in the House now happens through giant omnibuses. If you want your bill to move, you need to get it a ride--which means you need leadership's help."

Anyone want to guess how many members have any idea what's actually stuffed inside these behemoths?

To say that Congress is a sausage-making factory has become an insult to sausage makers!

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3) Berkeley Gets Mugged by Reality

Regular readers of the HOTLINE are familiar with the panoply of issues plaguing the California economy, which include high taxes, excessive regulation, and a breakdown in law and order - all of which have contributed to an unprecedented decline in the state's population. The massive homeless population is emblematic of the state's woes, and now even the most liberal of jurisdictions - Berkeley - has had enough with the homeless encampments that are littered throughout the city.

On September 10, Berkeley's city council voted 8-1 to approve a measure that will make it easier for the authorities to clean up the areas where the homeless are concentrated.

This met with some opposition from progressive voices, but the city's mayor explained why the law is necessary in a recent interview: "We have these large sprawling encampments where there have been major safety issues - fires, rats, crime; things that pose a risk to the homeless people who are sheltering there and to the broader community."



The resolution, introduced by two city council members ([link removed]) , included recent observations from residents who live near one encampment area:
* Barely clothed woman, clearly impaired by drugs, exiting an RV on cedar between railroad tracks and 4th street.
* Human feces just about anywhere you dare to look.
* Needles on sidewalks and in grass and bushes.
* Drug dealing.
* Infighting among the un-housed people, many times resulting in retaliatory arson.
* Trespassing
* A stabbing

No wonder nine businesses recently filed a lawsuit ([link removed]) against the city of Berkeley, charging it is liable for failing to crack down on the encampments, identifying them as "illegal public and private nuisances."

We're hopeful that Berkeley's move will be a wake-up call to the state's political class and spur a move toward deregulation and free enterprise that California desperately needs.

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4) Left-Wing Economists Cheer Brazil's Censorship Regime

The authoritarian impulse of trendy left-wing economists like Thomas Piketty and Gabriel Zucman is not limited to confiscatory taxation and wealth redistribution.

They now openly endorse suppression of political dissent, specifically the Brazilian government's shutdown order of Elon Musk's X platform for refusing to censor alleged misinformation at the government's command.

They wrote:

President Lula da Silva made clear the Brazilian government's intention to seek digital independence: to reduce the country's dependence on foreign entities for data, AI capabilities, and digital infrastructure, as well as to promote the development of local technological ecosystems. In line with these objectives, the Brazilian state also intends to force Big Tech to pay fair taxes, comply with local laws, and be held accountable for the social externalities of their business models, which often promote violence and inequality...

All those who defend democratic values must support Brazil in its quest for digital sovereignty.

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Liberals around the world are now turning into illiberals.

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5) Seattle Slew

As we've previously reported, citizen activists in Washington state have successfully placed four voter initiatives on the ballot in November that stand a strong chance of passing in what amounts to a blue state tax revolt.

It's one of the most left-of-center states, but even most liberals don't like paying more at the gas pump or for inefficient government. We love the theme "Vote Yes, Pay Less."

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The initiatives would:
1. Stop the ban on cheap and clean natural gas.
2. Repeal the state's recently enacted and unconstitutional capital gains tax.
3. Eliminate green energy mandates that force residents to pay the highest in the nation gas prices at the pump.
4. Give workers more choices when it comes to joining a union.

There's hope yet in Washington.

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6) James Earl Jones, May He Rest in Peace

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