Postcards: How to Screw Up The Housing Market Even More (Do the Opposite!)

We're moving into cartoonish levels of economic policy proposals... ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ 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: How to Screw Up The Housing Market Even More (Do the Opposite!)]( We're moving into cartoonish levels of economic policy proposals... [Garrett {NAME}](floridarepublic) Jul 17 floridarepublic   [READ IN APP](   Market Update: Keeping my Republic Risk readers informed about this shift from Mega Cap stocks to Small Cap names. Our favorite name, CVGI, has been turning around nicely, but there’s plenty of mileage to go. I’ve warned that we shouldn’t think of this as a Trump Bump for the markets, but instead, a recalibration of a rate cut expectations. Jerome Powell signaled on Monday a willingness to cut before the CPI hits 2%. That means we might have some exciting shifts in expectations around inflation for this market in the back half of this year. Every sector is positive. --------------------------------------------------------------- Dear Fellow Expat: I try. I try to stay out of things. I have already booked my flight to Milan from November 4 to November 10, so I’ll be out of the country for whatever happens on Election Tuesday. But here’s the thing… when you see something so incredibly bad… so completely insane… so utterly misguided - your brain screams at you. I have long complained about the economic advisers currently running things in this country. But I can’t stand by and look at upcoming proposals as “solutions” just a few months before the election that are so poorly conceived that they make the competition look like moderates. The White House’s newest proposals? - A 5% cap on rent increases across the nation… - Forgiveness of medical debt… - Supreme Court reform on lifetime appointments. Now… NONE OF THESE things are Constitutional. The latter… it’s actually in the Constitution. They have lifetime appointments. That’s the rule. But because there have been some shifts in government overreach over the last few months, we now have to eliminate the tenants of this court. Sure… why not… (they can already be impeached if they do anything illegal). Meanwhile, there are no changes in term limits in Congress because, of course… But let’s not rant about that. Let’s just talk about medical debt. There’s a lot of it in America, just like there is so much student loan debt. But can we please ask WHY there is so much medical debt? Why are medical costs so expensive in the United States? The activist coming up with this forgiveness plan will probably gargle the word “capitalism” out of the size of their foaming mouth… but fail to understand that the government effectively nationalized the U.S. healthcare system without directly socializing it. It was - what fascism is - an economic system where the government puts its hands on the scales to determine outcomes - and forces other actors to adjust. The Affordable Healthcare Act isn’t affordable. The law did NOT bend the cost curve of healthcare spending at any point. Why? Because it never addressed through SOUND policy the things that did drive up costs - the underlying diseases: Massive administrative overhead, lack of competition, technology costs, an aging population that falls back on government programs that don’t care about costs (Medicare!), and… Medicare Fraud (an $85 billion a year industry). Consider just… the staffing agency costs in nursing. The AHA says that “hospitals' spending on contract nurses increased from a median of 4.7% of total nurse labor expenses in 2019 to 38.6% in early 2022.” We don’t have enough nurses… maybe we should fix that? Rather than address the underlying policies… the solution is to forgive the debt incurred due to these problems. Funny thing about this. It creates what is known as a moral hazard. Now, if the government will bail out the debt, why wouldn’t the private actors charge higher prices? Why wouldn’t insurance premiums rise? There’s no accountability… ever. If this model sounds familiar… the government did the same thing with the Affordable Healthcare Act and the student loan industry. In a bill that had nothing to do with education, the U.S. government became the ONLY SOURCE of undergraduate student lending in the country. And the cost of college has exploded? Why? Because the government gives away money to anyone who signs up instead of addressing the underlying costs associated with rising tuition (bloated administrative staff, expansion of social sciences programs, government funding, regulatory compliances, and underlying inflation linked to the things people need). This is MADNESS. But it gets worse because they'll try to enforce a price if they can’t forgive the debt. We already have a lack of housing in America. Trying to have a national rent cap of 5% a year is insane. First… shelter inflation is 5.1%… And rent is a local issue. And what’s worse, rent control has a notorious reputation for capping housing production. Here’s Bloomberg “journalism:" Despite broad disagreement between [economists]( and [advocates]( over the [efficacy of rent control]( there is near-universal consensus that the rent is too high. Yes… it’s HIGH. WHY IS IT HIGH? No one discusses that because that requires work. A rate cap doesn’t address the underlying issues in housing. Why is housing so expensive, and why is there a lack of supply? Because input costs are high (the 3Ls of construction: land, labor, and lumber)… but worse, there are 25,000… Yes… Twenty-five thousand local, municipal, county, state, and federal agencies oversee housing production in some way in America. It is one of the most Byzantine industries in the world… and yet… We’ll say what the return on investment can be, even if inflation exceeds the rent cap. This might cap new production and fuel selling in other places. All in a high rate environment that could create unpredictable outcomes when we don’t need those. Who the hell are these people? What are they doing? I was worried when I read the average person in this administration had less than one year of private sector experience. Every day… they prove it. Hey guys! Whatever your plan is… DO THE OPPOSITE… And reap the actual rewards of a market economy. That is all. Stay positive, Garrett {NAME} 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. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()