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Unleash Prosperity Hotline
Issue #1335
8/25/2025
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1) What the Fed?

Jerome Powell hinted at a Fed rate cut on Friday and the stock market indices went on a joy ride.

With a rate cut likely in September, now the issue is: WHICH interest rate should the Fed cut?

Lowering the Federal Funds Rate isn't going to achieve much, because few banks borrow at that rate today.

We’re persuaded that Senator Ted Cruz of Texas is right that the Fed should cut the “IOR”, which is the 4.4% interest rate the Fed pays to banks on their reserve balances held at the Fed. The IOR rate has more than doubled from it’s pre-2008 levels.
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These are funds that banks do NOT lend out to businesses, consumers, and homebuyers. As monetary expert Judy Shelton has asked: Why bother with private sector borrowers or even investing in traditional Treasury securities that require at least a 10-year commitment, when the returns don’t come close to what the banks are passively getting on overnight cash. Good question!

Today, nearly $3.5 trillion is being stored in reserves at the Fed by banks. High-powered money from bank deposits has become passive money.

Last year, the Fed paid out $186 billion in IOR to the banks for their not lending. Even foreign banks, which comprise more than one-third of Fed deposits, earn an easy 4.4 percent return.

Gradually lowering the IOR rate would stimulate the economy by incentivizing more bank lending and may save the government money by not paying banks to do nothing.
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2) Brits That’s It

Just under fifty years ago, Britain faced a government spending and debt crisis that forced the Labour Party government to take out loans from the International Monetary Fund. That crisis and humiliation paved the way for Margaret Thatcher's historic election in 1979.

Will history repeat itself?

A spending and borrowing spree has created a $70 billion black hole in Britain's budget, and it looks as if Labour will raise taxes this fall and risk plunging the country into "stagflation."
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Jagjit Chadha, until recently head of the National Institute for Economic and Social Research, says the financial situation is "as perilous as the period leading up to the IMF loan of 1976... We will not be able to roll over debt, we will not be able to meet pensions payments, benefits will be hard to pay out."

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The Brits desperately need a Trumpian anti-big government revolution, and it may be coming soon.
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3) Can Liberals Learn To Talk Like Normal People?

We’ve always wondered what brilliant sociology professor comes up with wacko terms like “people of color,” “indigenous people,” and Latinx.” We have been confused by that last term, so here is the definition from Google AI: “Latinx is a gender-neutral or nonbinary term used as an alternative to "Latino" and "Latina" to be inclusive of people of Latin American descent who do not identify with the gender binary.”

Ok. Got that?

James Carville, a key strategist behind Bill Clinton's 1992 election as president, has warned his fellow progressives to stop adopting the politics and language of elitist "faculty lounges." But they can’t help themselves.

The liberal think tank called Third Way believes that this kind of language has helped make the Democratic Party brand "toxic across the country" because too many of its leaders "sound like the extreme, divisive, elitist, and obfuscatory, enforcers of wokeness." So here are some of the terms they are urging liberals to STOP using:

privilege ... dialoguing ... triggering ... othering ... microaggression ... body shaming ... subverting norms ... systems of oppression ... cultural appropriation ... existential threat to the climate, democracy, whatever... the unhoused ... food insecurity ... person who immigrated ... birthing person ... cisgender ... heteronormative ... patriarchy ... LGBTQIA+ ... incarcerated people..
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"We are doing our best to get Democrats to talk like normal people," says Matt Bennett, Third Way's executive vice president.

He’s right. The left’s language is a turnoff to middle America. But an even bigger turnoff is their pro-tax, big government, soft on crime, anti-growth global warming agenda.
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4) California's High Speed Rail Plan B - We're Not Going To Los Angeles

The California High-Speed Rail Authority (CHSRA) has released significantly revised plans for its route, which was formerly to connect San Francisco to Los Angeles at some unspecified time in the future.
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The new plan calls for service by the late 2030s between San Francisco and either Bakersfield or Palmdale. Railfans (who else would ride?) could complete the last 53 miles between Palmdale and Los Angeles by transferring to a Metrolink commuter train that takes two hours, at an average speed of around 30 miles per hour. The time between such trains could be as much as three hours.
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When no-transfer service is finally available, rail officials say that ticket revenue will be more than double the present Amtrak Acela service, despite the California market being much smaller. And a profit is projected. Right!

As we reported last week, Congressman James Comer (R-KY), Chairman of the House Committee on Oversight and Government Reform, announced an investigation into federal funding provided to the California High-Speed Rail Authority. It's hard to imagine better timing.
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5) Bed, Bath and Beyond California

When the old big box retailer Bed Bath & Beyond went belly up, its brand assets were acquired by Overstock.com, which renamed itself Bed Bath & Beyond and is now preparing to bring the brand back with retail stores. They plan to be everywhere... except California ([link removed]) . The company's executive chairman Marcus Lemonis says the regulatory and tax environment there just makes it too hard to do business - for which Governor Newsom sarcastically responded:
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Lemonis responded:

It's a very simple model for me. As a capitalist myself, I want to do business in all 50 states, and I want to do business with all people of all political parties. That's part of being a capitalist. But what I don't want to do is put my shareholders, my employees, and myself in a situation where we're regulated to a zero, and we don't want to spend $100 million coming into California and then find out that the state's going to take it all and waste it all.
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6) Why Republicans So Often Lose

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