1) Inflation Is Retreating, But The Economy Is Slowing
Good news and bad news on the state of the economy.
The good news is that there are four forward-looking signs of continued reduction of inflation from the current 8% and we see the rate falling to about 5% in the months ahead.
Commodity Index of more than 20 commodities – the index hit a high of 350 in July and now it is at 305. We think the Fed should push the CRB index down to roughly 300 and its monetary policy should be to keep it there.
The Gold price has fallen from a high of above $2,000 an ounce in March to $1,720.
The inflation-adjusted 10-year TIPS spread has inflation at 2.45% down from 3% in March. The five-year has also fallen from its Spring peak.
The dollar is rising in value relative to the Euro, the Yen, the pound, and almost all other currencies. This will likely reduce import costs modestly in the months ahead.
The bad news is inflation is coming down because the world economy is stalling out due to a lack of any growth initiatives almost anywhere on the planet. The war on fossil fuels is wreaking havoc.
What is especially sad is that the U.S. now leads the world in economic idiocy. Under Biden, the U.S. has moved to the left of even Europe on climate change craziness and government as “stimulus.”
We’ve warned multiple times that the Biden-appointed head of the Federal Trade Commission, Lina Kahn, is a hyperactive college professor regulator who wants to slam the brakes on virtually every business merger and acquisition in America. The latest travesty: the FTC is now suing Facebook/Meta for trying to acquire “Supernatural” a hot new fitness app for workouts. The FTC thinks Meta will come to monopolize the physical fitness Industry.
Just for a moment, think about what a laughable proposition that is. The FTC is worried about a monopoly in one of the most competitive markets known to man. There is a fitness center practically on every block of every city in America. Planet Fitness has started offering monthly memberships for 24/7 access to the weights and the stair masters for as little as $19 a month.
This is a declining cost industry. Ten years ago there was no such thing as fitness apps, now there are hundreds of them. Tens of millions of Americans get their fitness for free every morning or afternoon with a three-mile jog or a swim at the neighborhood pool.
We bring this up not because we carry any water for Supernatural or Facebook. We just think this is an Illustrative of the new super-regulatory anti-business instruction manual of the Biden administration.
Oh, and did we mention the Klobuchar/Grassley antitrust bill could be voted on in the Senate in the weeks ahead? That bill would nearly double Lina Kahn’s budget.
We’ve written about the recent and tragic regime change election in Chile that threatens the free-market miracle that made that country the richest country in Latin America. Milton Friedman had a big hand in that agenda of lower taxes, privatization, and sound money. Between 1980 and 2019, Poverty fell from 45% to 6%, and per capita income tripled to $24,000 a year.
But now President Gabriel Boric, the 36-year-old left-wing community organizer, has been stopped dead in his tracks. On Sunday more than six of 10 Chilean voters trounced Boris’s proposed changes to the national constitution.
These changes would have “guaranteed” over 100 fundamental rights ranging from “nutritionally complete” food to “neurodiversity” and even separate judicial systems for indigenous peoples. Economists estimated the new social justice constitution would have increased government spending by between 9% and 14% of GDP per year. Yikes! Who does Boric think he is? Joe Biden?
Let’s hope this voter rejection on Sunday is a sign that the Chileans recognize they have made a big mistake in electing Mr. Boric. He can’t be ousted soon enough. Two former left-wing presidents even spoke out against the new charter’s overreach.
The debate cleared the heads of millions of centrist Chileans and the proposed constitution was crushing, winning only 38% approval and losing in all 16 regions.
Liz Truss becomes Britain’s Prime Minister today after easily winning a vote of 160,000 Conservative party members. She has the advantage of succeeding one of the great British disasters of modern times: Boris Johnson.
Truss promptly announced she would try to revive the flagging economy by scrapping a new income tax hike along with an increase in the corporation tax.
Truss also didn’t flinch when confronted by critics who claimed her policies would benefit the rich.
“To look at everything through the lens of redistribution I believe is wrong because what I’m about is growing the economy and growing the economy benefits everybody,” she told the BBC. “We have had relatively low 1% growth and that has been holding our country back."
Her biggest immediate challenge will be Britain’s self-imposed energy crisis, prompted by the UK’s tragic mistake of getting hooked on Russia for electric power and a foolish and failed reliance on wind and solar power.
Energy bills have doubled since last October. Truss is being urged to put controls on energy prices. A test of her mettle will be whether she takes her case to the people that the radical environmental push for green energy will only further impoverish the British people. The Brits so badly need the toughness of a new “Iron Lady,” Margaret Thatcher.
If Truss can accomplish one-half of what Thatcher did, she will be a success.
5) Back-to-School: Rhinoviruses Soar While COVID Drops
For the second year in a row, back to school is coinciding with falling COVID incidence – but an explosive rise in common cold rhinoviruses and enteroviruses.
This pattern may be more than coincidence; there is evidence that rhinovirus infections block the SARS-COV2 virus:
This may help explain why the modelers were so wrong about schools contributing to COVID spread.
