Personal Economics 101

Teachers unions are angry about school choice. Of course they are, because they know they can't compete with private schools, and private schools are generally unionized, and don't generate funds for the unions. More money equals more power. It's not about the kids. It's about self-interest and power.  We are continually told that public schools are underfunded. We must pay more in taxes. This is hogwash. School funding is at an all-time high. More money goes to administration and reporting than education. This all began when the Federal government got involved, and the Department of Education was formed.  Don't buy into the left's mantra of more control of education. Parents are starting to fight back by insisting that they are heard and have input into their children's education, though the left believes the state should raise the children (like in Germany in the 1930s).  Just between 2002 and 2019, inflation-adjusted revenues grew by nearly 24%. Yet the r...

The Federal Open Market Committee (FOMC) concluded its two-day monetary policy meeting, making no change to the Fed funds rate, as was widely expected. However, it hinted at the possibility of its first rate hike since 2018 being around the corner, saying, "With inflation well above 2% and a strong labor market, the committee expects it will soon be appropriate to raise the target range for the federal funds."  As well, in its statement of "Decisions Regarding Monetary Policy Implementation," the Committee said it expects its balance sheet reduction "will commence after the process of increasing the target range for the federal funds rate has begun." Schwab's Chief Fixed Income Strategist, Kathy Jones notes in her latest article, The Fed's Policy Tightening Plan: A One-Two Punch, how beginning quantitative tightening soon after rate hikes is a big departure from the Federal Reserve's past policy. The FOMC also said it will continue to taper its...

Two common mantras of the Democratic party are 1) The "rich" don't pay their fair share of income taxes, and 2) the last tax cut signed into law by Trump was a tax cut for the rich.  Both are wrong, facts backed up by actual data from the IRS. While these Democratic party talking points keep getting repeated every year, the Democrats insist on perpetuating their lies in a type of class warfare.  1. The top 1 percent of wage earners pay 20 percent of income tax. The top 5 percent pay 35.9 percent and the top 10 percent pay 47.3%.  In 2019, the bottom 50 percent of taxpayers (taxpayers with AGI below $44,269) earned 11.5 percent of total AGI and paid 3.1 percent of all federal individual income taxes. The top 1 percent (taxpayers with AGI of $546,434 and above) earned 20.1 percent of total AGI in 2019 and paid 38.8 percent of all federal income taxes.  The share of income taxes paid by the top 1 percent increased from 33.2 percent in 2001 to 38.8 percent in 2019, down ...

 A 10 percent drop in any market means that market is in a correction. A drop of 20 percent is normally defined as a bear market.  The Dow Jones Industrial Average (DJIA) is down 5.25% from its high in early January. IWM, which tracks the Russell 2000, is down 16.5% since it's high in 2021. The NASDAQ 100 is down 15% since its high in November 2021. The S&P 500 index is down 5.87%. The drop in prices have been strongest in tech and small caps, with larger cap stocks not reaching correction status quite yet. 

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The Consumer Price Index (CPI) rose 0.5% month-over-month (m/m) in December, above the Bloomberg consensus estimate of a 0.4% increase, and following November's unrevised 0.8% gain. The core rate, which strips out food and energy, increased 0.6% m/m, topping forecasts to match November's unadjusted 0.5% rise. Y/Y, prices were 7.0% higher for the headline rate—the fastest pace since June 1982—matching estimates and following the prior month's 6.8% increase. The core rate was up 5.5% y/y, above projections of a 5.4% increase, and following November's unrevised 4.9% rise. An interesting dynamic played out in the market yesterday as Powell delivered his testimony to the Senate Banking Committee. Many of the expensive tech names recharged, with the Nasdaq closing the day up 1.4%, as investors heard comments that inflation would probably ease by the middle of this year. Others discounted the outlook, citing Powell's infamous "transitory" call from 2021, and said...

Reports on CPI and PPI (Consumer and Producer Prices Indices) and Industrial Production will be out this week.  Payroll employment grew by much less than expected in December as employers only added 199,000 to payrolls. However, we continue to see signs of labor market tightness, with unemployment dropping to 3.9% and wages rising by a robust 0.6% m/m and 4.7% y/y. The durable rise in wages, as demand for workers far exceeds supply, has added a significant boost to the “sticky” inflation narrative as this week’s upcoming CPI report could show a whopping 7% y/y gain. Moreover, there may yet be room to run on wages.  Entering the new year, 21 states increased their minimum wage by an average of 41 cents, with many states approving incremental minimum wage increases for multiple years ahead. While only a small percentage of all workers earn the minimum wage, these increases have the effect of raising the wage floor for all low-wage employees.  Apart from these minimum wage i...

Certain ETFs used covered calls to generate extra income, which are returned to shareholders as dividends. With most of these ETFs, income is the priority; capital gains are secondary. One example of this type of ETF is QYLD , Nasdaq 100 Covered Call ETF. Some, such as QYLG and XYLG, only sell calls on about 50 percent of their holdings in order to increase the possibility of gains. One EFT, NUSI, also write puts, as a hedge against a bear market. (Note: The possibility of gains also increases the risk of losses, so judge accordingly.) If you're looking for income, you should consider one or more of these ETFs. Note that QQQ and SPY, which as pure equity plays, had great returns, but the markets were up last year. This would be different in a down year. Also note that these covered call ETFs are new enough that they have not been tested during a bear market.  Consider that the volume on some ETFs, such as XYLG, has a daily average volume of less than 10,000 shares. This will cause...

I rarely comment on politics, but some issues should be commented on, as it affects the state of the Union.  Jan 6 is worse than 9/11. Vaccines stop the virus cold. CRT is a hoax. What CNN and MSNBC in 2021 wanted to believe.  The Biden presidency has produced an uninterrupted string of disasters: the Afghanistan withdrawal debacle, the Texas border crisis, inflation, an explosion of gun violence and murders setting records in Democrat-run cities, failure to produce an adequate federal response to the delta and omicron waves of COVID-19. Again, Jan. 6 was a riot, involving assaults on Washington and Capitol cops and the disruption of a formal congressional procedure to validate the electoral vote victory of Joe Biden. But was Jan. 6 really the planned coup, the terrorism, the sedition, the armed insurrection, the attempt to overthrow the U.S. government? Was Jan. 6 really comparable to Pearl Harbor and 9/11, during each of which 3,000 Americans went to their deaths in an hour'...

From " The Truths We Dare Not Speak " by Victor David Hanson, Phd.  Everyone knows the government cannot keep running up astronomical annual deficits. It is piling up a near $30 trillion national debt, printing trillions of dollars—and hoping to keep inflation down to 7 percent per year. Everyone knows that, and no one wishes to talk, much less do anything, about it. Instead, we simply will go on redistributing money, inflating the economy, and hoping that the middle classes are naïve enough to believe that their inflated paychecks outpace their greater inflationary costs that, in truth, have more than wiped out all their wage gains. When the interest rate hikes invariably come—the longer we wait, the worse will be the reckoning—we will again know the stagflation of the 1970s and 1980s. The only calculus the Democrats weigh is whether they can print their way to a semblance of normality through 2022, in hopes the helium-over-inflated economy blows up only after the elections....

This chart shows that Americans not only consume more, but we also produce more.  The bottom line is that it's good to be part of western civilization. But it's especially good to be in the United States. David Harsanyl of National Review :  More than anything, it is the ingrained American entrepreneurial spirit and work ethic that separates us from Europe and the rest of the world. ...Europe, despite its wealth, its relatively stable institutions, its giant marketplace, and its intellectual firepower, is home to only one of the top 30 global Internet companies in the world (Spotify), while the United States is home to 18 of the top 30. ...One of the most underrated traits we hold, for instance, is our relative comfort with risk — a behavior embedded in the American character. ...Americans, self-selected risk-takers, created an individual and communal independence that engendered creativity.  ...Because of a preoccupation with “inequality” — one shared by the modern Ameri...

Learn from Victor Davis Hanson how the rights of the American citizen are under attack by a ruling class that seeks to make our government unaccountable to the people. You can enroll in this FREE online course, “American Citizenship and Its Decline,” today at: https://hillsdale.edu/citizen https://youtu.be/7GNl4bPHpX4

Following months of rumors and wrangling in the press, the White House has laid out its first concrete plans to reduce consumer prices - financing independent meat processing ventures. The plan goes against everything taught in Ecnomics 101. Government regulation, price controls, and/or subsidies can only make the problem worse, not better. This plan will probably have very little affect on the overall food industry. It seems more political optics, if anything. The funds will come from the American Rescue Plan, a billed signed into law earlier this year.  The Action Plan cites increased market share - four processors control 85%, 54% and 70% of the beef, poultry and pork markets, respectively - leading to fatter margins for middlemen, lower prices for ranchers and higher costs for consumers. The White House has directed $375M to grants for new projects at independently owned processors; $275M will go towards direct loans; $100M towards loan guarantees; $100m towards workforce train...

In early 2020, I answered the following question posed on Quora :  What will be the best investment strategies for late 2019 going into 2020? Here is the answer I wrote, along with comments today as an update for 2022.  I used this strategy in 2021 and my portfolio returned 16.09% for the year. While not as much as the S&P 500 (about 30%), it did yield 5.9% in income, which was my objective, since I'm retired and looking for income).  I don’t really change my strategy, which is long-term. I may change the allocation of my portfolio, based on current events. While you could be in cash 100 percent right now, you would not have any earnings on your investments. In fact, you’d be losing about 2 percent annually due to inflation. So that’s not a very good strategy. (For 2022, this would be closer to 6 percent inflation). While it is probable that there will not be a recession in the next few months, if we created a strategy that assumed the worse, we might miss the opportu...