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Feelin’ Good, But Worried [Up Against the Wall]

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This is an opinion column by Terrence Wall.

Quite a few people have volunteered (out of the blue) to me that they’re excited, that they’re feelin’ good, and that they can’t wait for Trump to get into office. They’re actually relieved like a massive weight has been lifted from their shoulders. But wait folks! There’s more work to do.

First, Republicans have to win the upcoming Wisconsin Supreme Court race in April.

Second, Trump and conservatives have to win the massive upcoming, what I call, the Battle of the Bulge (as in the bulging bureaucracy). And it will be one hell of a battle in a long war on increasing government. DOGE, Musk’s name for his fight against the bureaucratic state, hasn’t even begun to fight. And it’s Rush Limbaugh’s fourth anniversary of his passing (this February), so let’s make him proud by really taking on the government.

Let’s talk spending. I’m glad to hear that Musk knows that DOGE needs to kill at least $2 trillion in annual spending. (Biden increased spending by over $6 trillion during his four-year term, which is now locked in, so figure $1.5 to $2 trillion extra per year!) The fed gov’t must get back to spending no more than what it spent BB (before Biden), so that means cutting $2 trillion per year.

Think about this. GDP under Biden has been about 3.3% roughly on average over the last
three years – by my own calculation. Not bad, except that the dollar value GDP went up from roughly $23.5 trillion to about $29.1 trillion today. (I’m leaving out the negative COVID numbers, but giving Biden credit for what was a natural rebound in 2021 post COVID.) That means GDP grew about $5.5 trillion ($29.1 – $23.5 = $5.6 trillion). But here’s the thing. The money supply grew $6 trillion during that same time, as did federal government spending – $6 trillion. Did you catch that?

Government spending grew MORE THAN the GDP during Biden’s term. In fact, this is
confirmed by simply subtracting inflation off of the GDP numbers, the actual real GDP did not grow one dime! Biden’s inflation was about 20%, so deduct that from today’s GDP of $29.1 trillion and you get $23.28 trillion, which is less than the GDP when Biden started. That’s why everyone felt so shitty under Biden, the real economy was not growing. Yes, your wages went up and you were earning more nominally, but your same dollars bought less, so you were losing ground.

Then throw in your savings accounts and deposits at your bank, which also dropped in
purchasing power by 20%. It’s the same as the government simply stealing 20% of your bank account! So this brings us to the Fed and the recent bond market reactions to the Fed’s statement that the Fed may be done for awhile in terms of reducing interest rates.

The Fed’s reasoning is that the economy is strong (in their mind, but not in REAL terms!! Dah!) But Terrence, statistics show that the economy is firing on all cylinders, you say. No it’s not, and the underlying risk is massive and will create a big problem down the road.

First, the economy is not overheated, as I just proved with the figures above. A nominal
economy heated up with fake money – money the government stole from you and then spent to boost the economic statistics – is not the real economy. The real economy has experienced zero real economic growth over the last four years.

Think of it this way. Biden takes credit for GDP in 2021 supercharging it up by 5.9%. Wow.
Congratulations. But wait, not so fast. Take the negative GDP in 2020 and then add the 2021 rebound GDP and what do you have? Nothing. No growth. In other words, if I fire 10
employees in 2020, and then rehire those same 10 employees in 2021, can I say that my
company grew by 10 employees at the end of 2021? Well, Biden is saying that, but in reality, no, your company didn’t grow by any employees over the two-year period.

Unfortunately, that’s what the Fed under Powell is saying. They say that the economy is
overheating, they need to keep interest rates high, and the Fed needs to slow the economy.
No, no, no. The economy is not overheated. It’s just returning to normal. But as a result of
misreading the economy stats, the Fed is missing the huge risk that is coming, which is the
refinancing risk. All businesses that borrowed money are now seeing those loans come starting to come due, and the interest rate jump up by 2.5 times! That means that the businesses have to raise their prices – adding to inflation – in order to stay even and make those higher debt service payments. This means that the Fed’s policy of keeping rates high is causing inflation.

Not to mention, now we’re seeing Biden’s last gasp for glory kick in (the last-minute spending, last-minute regulations, last-minute awarding of metals, last-minute pardons, etc.) combined with the real economic growth that is starting to kick in because of the optimism of Trump becoming president. There’s no question that businesses are starting to hire, invest, and make improvements knowing that they will have four years of less regulation, lower taxes, and a stable business environment in which to operate. But that is not causing inflation. What is keeping those inflation figures up is more government spending. In Wisconsin alone, voters were foolish enough to approve $4.4 billion (yes, billion) dollars in new school spending! That’s insane.

We still have $2 trillion in annual deficits – that’s the same as spending $2 trillion more than your credit card limit. That then has to be added to the national debt, which is already at $36 trillion and counting!! That’s about $7 trillion more than the GDP. I don’t think that’s ever happened before, where the debt exceeds the annual GDP, or at least not by that much.

Trump has got to replace Powell immediately to stave off an economic disaster. The Fed’s policy is going to spell real trouble, and you’re starting to see that in the bond market. The bond market is reacting badly to the Fed’s announcement about not lowering interest rates
anymore. Why? Because when interest rates decline, bond values increase. So, when the
Fed was lowering rates and announcing it would continue lower rates, bond market investors loaded up on bonds (probably government bonds) in anticipation of the rates continuing to come down. But of course, as is typical with the Fed and Powell, he burped again. Oops.

Ahh, yeah, sorry folks, rates are not coming down as much or as quickly as we told you, the Fed said, so then all those bond investors had to offload all those bonds they bought in anticipation of lower rates! Surprise! This is the same as the federal authorities and Fed telling banks to load up on government bonds (and let the banks count those as capital) – just before then raising interest rates! (Higher rates meant the bond values of all those bonds held in banks immediately dropped in value, thereby, dropping the capital stock of the bank, thereby placing banks in technical default of their capital requirements.) Of course, had the banks held those bonds until maturity, the banks would have received full repayment, but nope, the federal authorities busted down their doors (like Silicon Valley Bank and others) and shut them down.

All because the fed baited them into buying those bonds to finance the federal government
deficits under Biden – using YOUR money!! (I’m getting hotter and hotter under the collar just thinking about all this.)

Now they did the same thing in reverse with the bond market, telling the market one thing, then reversing course and doing the opposite, exposing a lot of innocent bond investors (including YOUR pension funds and your retirement accounts) to losses!! This is why I keep saying, shut the hell up Powell! Just shut your mouth. Stop talking. Stop predicting what you are going to do, because it’s pretty obvious that you don’t know what the hell you’re doing since you keep reversing course. At least if you shut your trap you won’t expose a lot of innocent investors and banks to your wrong direction.

It’s like the sheepherder crying wolf once too many times. When will people stop listening to the Fed and Powell? So this is why the bond market is going crazy; had the Fed just kept its mouth shut, the bond investors could have held on and everything would have been fine, so long as the Fed keeps slightly reducing interest rates in 2025.

And let’s not forget that eventually those low-interest home loans are going to come due as well and have to be refinanced. But Terrence, I got a 30-year mortgage so I’m not worried, you say. Well, that’s true, and so did I, but a lot of borrowers took out 5 and 7-year adjustable rate mortgages, why? I do not know, but they did, and those loans are going to start coming due this year. And their interest rates are going to jump way up, and then those borrowers are going to find they can’t afford their mortgages. Then, the next step is, they walk away, and the banks have to foreclose, and then there’s another banking crisis. All caused by the Fed. It’s simply infuriating. So, Powell, if you’re reading this and hopefully someone will send it to you, please, please, just resign. Is it really so important that you remain on the job for one more year? You’ll be fired then anyway, why not go out on your own terms?

A dignified resignation is a lot better, plus you won’t suffer the embarrassment of Trump berating you all year long to get you to do the right thing. Think about it.

Wisconsin Right Now is a news organization focused on covering the news from a conservative point of view, in particular on politics and policy issues through analysis and opinions, and is protected by the first amendment of the United States constitution. WRN does not make endorsements of candidates or direct readers to vote for or against any candidate or issue. On October 18 and November 23, 2023 Donald Trump tweeted out on Trump’s Truth Social account T. Wall’s October 6th column on Trump’s property valuations. T. Wall has appeared on Fox News, Jesse Waters Show on Fox, Newsmax, CBS, NBC, Spectrum News 1, USA Today, X.com, YouTube, and numerous Madison and Milwaukee news programs and local newspapers (Wisconsin State Journal, Capital Times, Middleton
Review, Middleton Times Tribune, and Milwaukee Journal Sentinel and a dozen other Wisconsin papers) and previously wrote a column for InBusiness magazine and the Middleton Times Tribune for five years each. T. Wall holds a degree from the UW in economics and an M.S. in real estate analysis and valuation and his full time career is
as a real estate developer. Disclaimer: The opinions of the writer are not necessarily those of this publication or the left!

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