Postcards: The Beast Reappears

People thought Modern Monetary Theory was terrible, and it debunked when the government pumped trillions from thin air and drove inflation through the roof. Now prepared for the uglier side. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: The Beast Reappears]( People thought Modern Monetary Theory was terrible, and it debunked when the government pumped trillions from thin air and drove inflation through the roof. Now prepared for the uglier side. [Garrett {NAME}]( Apr 26   [READ IN APP](   Market Update: Solid rebound and reason to be bullish into the Fed meeting (once it’s over, beware). We are Yellow on the S&P 500 and the NASDAQ, but the Russell needs some help. There could be some rather aggressive short-covering into the Fed meeting. Stay tuned. --------------------------------------------------------------- Dear Fellow Expat: To be honest, I don’t give a damn about billionaires. I’ll likely never be one - and that’s fine. I’m not jealous. Every school I attended had a billionaire’s name somewhere on campus… I don’t spend nights like Bernie Sanders raising fists to the clouds because Bill Gates created Microsoft and generated billions… then made even more money because the government drove a surge in stock-based payments and the Fed fueled inflation targeting and Quantitative Easing that pumped untold trillions into equity assets that men like Gates owned. The government is trying to unwind those policies by doing what it shouldn’t: deter investment, generational wealth, and long-term emphasis on productive industries that need capital badly (even if they’re politically unfavored). The New 2025 Tax Plan was unveiled, and it’s a doozy. This isn’t about building a solid economy. It’s not about Green incentives. It’s not about lifting people. It reads like a masterclass in envy. It’s based on flawed and discredited theories and is eager to make long-term wealth and investment a target of centralized planners. Instead of billionaires, we’ll have one gigantic activist investor who decides what investments are productive and worthy of capital. The Federal government. The very entity that created this mess in the first place. There’s no other way to explain it. My three takeaways: Equity Is All That Matters: The U.S. Treasury Department released an article arguing that tax reform was necessary to promote equity. It’s called [Advancing Equity through Tax Reform: Effects of the Administration’s Fiscal Year 2025 Revenue Proposals on Racial Wealth Inequality](. It’s not really about equity. It’s about what it’s always about with radicals: Class warfare and redistribution. The argument goes that too many white Americans have generated billions of dollars in their lives - therefore, the system is flawed and racist. But the real issue is that billionaires exist. That’s always been the problem. Millionaires too. Now, generational wealth plays a large role in the numbers they cite. But there’s more to it. Government policy (easy Fed policies and tax changes that incentivized moves boost stock-based pay), globalization that connected the leaders of organizations to more markets than ever, and scale (more customers means more profits, which means higher share prices). It’s not that complicated, but they decided to make it so by focusing the debate on three groups: white Americans, Black Americans, and Hispanic Americans. That’s fine… But it doesn’t explore the sources of that wealth as I noted above (or aim to correct them) - nor does it address shifts in income gains among various ethnic groups in America. [The highest median income among Americans isn’t white](. It’s Indian at No. 1 - $152,141 Then Filipino… at $101,157 Then Iranian at $96,056 Then South Africa at $94,159 (with a lot of skewed help from Elon Musk) Then Lebanese…$92,697 Then European. Also - please note that the poorest subset of ethnic Americans from the Tax Census are Appalachian Americans by quite a bit: $49,747. If the entire premise here is that too many white Americans have been billionaires… and therefore… no one else can… where does this leave the segment of second and third-generation people who came from pretty nasty economies to achieve the American dream? Well, they are probably eager to become billionaires in their own nations that will gladly take their business. Otherwise, they’re just the collateral damage in this bat-shit theory. The Government Owns All Money. You Don’t. The entire premise of Modern Monetary Theory is that you don’t own your money. And this entire project is based on that idiotic assumption. The government does. It can print all the money it wants in the world—and then tax it back. In this Wealth Equity report… “Treasury estimates that 92 percent of the benefits of the tax expenditure for preferential rates on capital gains and qualified dividends to White Americans.” It’s just 2% of Black Americans and 3% of Hispanic ones. Okay - those are very significant outcomes. How can we get that number up? That seems noble and smart. But how does taking money from one group and giving it to another increase the 2% and 3% figures? It doesn’t. And that’s because of one thing in the sentence above that you just read, which is insane. “Benefits of the tax expenditure for preferential rates” is a creative way to say that all money kept by Americans is money that they are allowed to keep by the government because the government didn’t tax it at 100%. This is the basis of Modern Monetary Theory - which suggests that their financial mechanism (the dollar) - is theirs and theirs alone. Your wealth and whatever time you’ve put into your existence and career - don’t matter. The money in the bank account - from investing is the government’s oversight in allowing people to have too much from investing and dividends. This is completely insane because it thus means that all money in my bank account is theirs. If you remember, they wanted to include Saule Omarova in the Office of the Comptroller of the Currency's chart. She advocated that all Americans should have bank accounts with the Federal Reserve and eliminate the functions of most banks. Same energy… You Don’t Get to Be a Billionaire Either Now, the oddest thing about this is that the article suggests that others will benefit from the massive redistribution of wealth from rich to poor, but it can’t explain how aside from tax credits and the mechanism of other credits and payments. These people won’t become rich by investing… or working because the government has disincentivized that pursuit. This creates a bizarre economic caste system that trickles down tax payments and freezes the number of billionaires in place until they die, and then a massive repossession of their assets through ample capital gains and estate taxes, which the central planner redistributes. [But not before taking their 15% off the top too] It’s fascinating to see this because it is a soft admission that the Federal Reserve’s policies of pumping money into the system have made one group of people rich - at the expense of others. But even monetary and fiscal policy isn’t a zero-sum game. There’s another problem with this plan. Who buys all the debt the government needs to refinance in a few years under this tax plan? What does it mean when we simultaneously have massive debt and inflation? Well, who owns the debt? Americans and institutions. Billionaires and cent-- millionaires own stock and bonds in companies that own the debt. Will they take 40% capital gains on people who buy U.S. Treasury Bonds? The breakeven doesn’t make a hell of a lot of sense - and people might start using CAPM again. The taxes get high at $400,000 on investment income. That’s not as much money as one thinks… and people might start using CAPM again. So, they’ll probably remove capital gains taxes on all U.S. bonds at some point… just to ensure that investors can get something and the whole debt charade can continue. Why Use Their Dollar? If you thought there was an incentive not to operate on the U.S. dollar system, they’ve created it in massive spades. If this goes through, there will be so much money moved offshore that it will feel like the Joker hacked the entire financial system. Why wouldn’t one want to own gold, and when they come to claim it, we lost it in a boat accident? It's no wonder many bureaucrats don’t want anyone moving Bitcoin off-chain… and it's also why other central planners want to ban it. MMT is insane. It redefines everything and rehashes other terrible economic ideals. Not long ago, a white paper by Ecological Economics argued, “Degrowth and Modern Monetary Theory form a strategic symbiosis for addressing social and ecological crises.” If that doesn’t make you want to drink, what doesn’t? We need to be poorer and more reliant on central planning to fix social and ecological crises. Ask around how that ends… [It worked out great for the Belarus Exclusion Zone]( I’m not going to spend much time on MMT - because - as AEI explained - “it’s a joke that’s not funny.” The belief is that just by printing and taxing, you can create any government program and demand the product you want… It ignores the basic monetary rules of inflation. It ignores real prices on real assets at given moments (and begs for greater centralized planning, if not price caps - and thus shortages). It has no solution to address real commodity prices. It ignores the individual as a mechanism of choice and price. It turns everyone into a pawn and requires a centralized bureaucratic group to enforce the horrendous process of tax, spending, credit provisions, and debt. It also enables incredible levels of central planning… on acid. In theory… It solves every problem that the radical desires. Sure, you can have Medicare for All - but if you think healthcare sucks now, wait until it’s free from the shackles of a government budget and removes the incentives for heart surgeons to become wealthy (the most affluent group of people in Minnesota) and invest in the long-term to generate millions from shrewd risk-taking. Sure, you can have a massive minimum wage - digging holes with spoons while others fill them back up. There’s real meaning in work there. Sure, you can create a massive apparatus eliminating individuals' financial and transaction privacy. Every day, I’m convinced that I’ve accidentally stumbled into an insane asylum. It’s a reminder that when it comes to America - good old-fashioned dirigisme is alive, well, and ultimately unproductive. But you can invest in it. You should. Now, if you’ll excuse me, I’m going to buy more “gold and a boat.” Stay positive, Garrett {NAME} Secretary of Defense Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. 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