Fed Rate Hikes Are a Painful Reminder of the Ruinous Biden Fiscal Policy

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Unleash Prosperity Hotline
Issue #735
03/21/2023
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1) Fed Rate Hikes Are a Painful Reminder of the Ruinous Biden Fiscal Policy
The Fed has raised interest rates eight times in the last year from near zero to 4.75% now. Our best guess is they will hike again to 5% today or tomorrow.

As we’ve seen in recent weeks, these rate hikes have caused some turmoil in the banking industry as higher rates have lowered the value of long-term bond holdings of banks.

As the chart below shows, these have been some of the most rapid rate increases in American history. From zero to 500 basis points in just a little more than a year. What do they think the U.S. economy is? A Ferrari?

These rate hikes are a painful reminder that inflation is financial cyanide. Our politicians seem to have collectively suffered economic amnesia – and forgotten this lesson from the last bout of runaway inflation under Nixon, Ford, and Carter, which ended in a stock market freefall and a mini-depression.

What we are witnessing now is the cleanup job the Fed must engage in to unwind from the crackpot Biden Modern Monetary Theory. This was the notion that we could send federal spending and borrowing into orbit with no negative consequences because the dollar is the world reserve currency. Some $6 trillion has been spent and borrowed since Biden came into office – one of the largest and anti-growth transfers of resources from the productive private sector to the unproductive government sector has been an abject failure for all to see. The pain of wringing all of this excess liquidity in the market is just beginning and will last many years– unfortunately.

Sorry, Joe. Milton Friedman was right: there is no free lunch.

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2) Biden Vetoes Your Retirement Security
It's official: the first veto of the Biden presidency puts politics over pensions. He rejected a bipartisan bill that would restore the Trump rule that prohibited pension managers and other fiduciaries from making investments based on "non-pecuniary factors," – meaning climate change, social justice, LGBTQ, and other left-wing policies known as ESG.

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Here's the most interesting part – Biden didn't defend ESG or make the silly Schumer argument that lower financial returns are good for investors if they can solve global warming. He just lied, claiming the bill's supporters, including Democratic Senators Joe Manchin and Jon Tester "would risk your retirement savings by making it illegal to consider risk factors MAGA House Republicans don't like." That's exactly wrong – the bill requires fiduciaries to invest based on expected FINANCIAL returns. Period.

The reality is that Biden's veto is backstopping his pro-ESG policy that actually does risk retirement savings for his political objectives. Here is a chart showing ESG funds SEVERELY underperform non-ESG investments.

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Follow our campaign #HandsOffOurPensions.

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3) Biden’s Get Out of Jail Free Policy for Washington, D.C.
Biden's epic flip/flop helped deliver 81 Senate votes to block DC's proposed criminal code revision, which would have weakened penalties for violent crimes. That’s the good news.

But none of this will matter unless Biden's handpicked US Attorney for DC, Matthew Graves, actually PROSECUTES criminals. So far he isn’t doing so. In 2022 he declined to prosecute more than half of felony arrests and 72% of misdemeanor arrests.

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DC Police Chief Robert Contee III recently reported: "Right now, the average homicide suspect has been arrested 11 times prior to them committing a homicide." ELEVEN TIMES!!! These are professional criminals we are letting out on the streets.

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The House Oversight Committee or the Judiciary should consider holding a hearing that sits Chief Contee down next to US Attorney Graves. We’d pay to see that!
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4) Georgia Parents: Let Our Kids Have Choice
Georgia, the 8th largest state, took a big step towards passing universal school choice on Monday when its House Education Subcommittee voted 7 to 5 in favor. The full Senate has already cleared the bill, which has the support of GOP Governor Brian Kemp by a 33 to 23 vote.

Our hypocrite of the week is Georgia Rep. Lydia Glaize, a Democrat, who led the opposition in the House. Incredibly, she admitted, "All of my children graduated from private schools." But she said low-income parents couldn’t be trusted to handle school choices responsibly.

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School choice is truly the civil rights issue of our time, and what a disgrace that so many Democrats put teacher unions (and their millions of dollars of contributions) ahead of the education of all children.

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5) New York's Education Solution to Falling Test Scores and Failing Schools? Lower Standards
What is New York's plan to remedy the massive setbacks its school closures and mitigation policies had on its public school students – many of whom were already struggling?

This headline says it all:

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Technical Advisory Committee Co-Chair Marianne Perie explained: "Yes, there’s learning loss between 2019 and 2022, but in some ways we don’t want to keep going backwards. We’re at this new normal. So for New York we are saying the new baseline is 2022."

George W. Bush called this "the soft bigotry of low expectations." We can only hope that the Education Savings Account revolution eventually reaches even the bluest basket case states like New York.

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6) Don’t Worry: Our Financial System Is Mostly Stable

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