The U.S. government will keep printing and spending... It's intentional.
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You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Substack: McDonald's, War, and Other Things I Think I Think]( The U.S. government will keep printing and spending... It's intentional. [Garrett {NAME}](floridarepublic) Jul 30
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Good Morning: [Republic Risk Readers Go Here For Today]( [Your morning report…]( [Upgrade to paid]( --------------------------------------------------------------- Dear Fellow Expat: Greetings from a Honda dealership 15 miles north of Baltimore. A week ago, I called a local dealership when the brakes started to squeak. Since Tuesday is a busy day, I scheduled an 8 a.m. appointment. When I asked how long it would take them to fix the problem… they did what any good American business does to attract business. They lied. It’s not going to take only two hours… it’s going to take six. So, I’m sitting in the hyper-fluorescent glow of an auto waiting room. As expected, a tiny sliver of American customers are huddled around one flatscreen television as the NBC Today Show blasts across the room. The first story was an update on McDonald’s (MCD). [The same story I told yesterday about earnings]( and rising prices blared across the screen. Of course, there wasn’t an actual explanation of what was happening here. As the journalist chattered away about rising prices, value meals, and the cost of food pinching Americans, there was a series of odd cuts. As they talked about high prices, they showed short clips of men and women sitting in their cars, recording on their phones, and complaining about the cost of McDonald’s food. “$5 for a Filet of Fish… are you kidding me?” one person shrilled. It’s like these people woke up yesterday and suddenly appeared at a drive-thru. It’s like they haven’t been paying attention… at all to the last four years. I’ll put 99% of my money on the odds that none of them understand where and how inflation originates. And I’ll put about 99% of my money on who these people screaming about McDonald’s prices support as state, local, and federal policymakers. HL Mencken once said, “Democracy is the theory that the common people know what they want and deserve to get it good and hard.” I’ve hit my limit trying to warn people. The politicians don’t care about their policies' inflationary impact. The voters don’t pay any attention. It can’t be our problem in the Florida Republic. Wait until they find out what the Federal Reserve and Treasury Department have planned next… The Kamala Moat Speaking of inflation, the early prediction is that Kamala Harris - should she be elected President - will double down (and likely triple down) on the Electric Vehicle and other alternative energy mandates. There’s a reason for this… I don’t think for a moment that Harris is an electrical engineer. And I know that most policymakers believe that all energy is created equally. What’s interesting is that solar and wind generation are VERY cheap compared to where they were years ago. The intermittent nature of these sources will require batteries at an incredible scale. There are three observations from this (and they will make a lot of money). - The battery requirements for this transition—and again, if Harris wins—it will be forced—are on a scale few people can comprehend. It will require drastic investments in new transmission lines, but the battery scale is what matters. And from that battery scale comes the emergence of a massive electricity trading market still in its infancy. Remember when everyone hated Enron for trading electricity? Well, get ready because the ghost of Enron will dominate the grid for the next 50 years. - Harris’ commitment to turning the U.S. into California on an electricity level will benefit companies with high moats in the environmental and engineering fields. That brings us to Exponent (EXPO). This is a fairly valued, extremely capital-efficient engineering company. It has an F score of 7, a Z score of 15, and a Return on Invested Capital (ROIC) at around 24. Add it to your watch list because this company will benefit if Harris wins. - The amount of money the government will borrow, print, or engage in fiscal repression will be off the charts… and that’s because… Janet Yellen is Insane Treasury Secretary Janet Yellen said over the weekend that the world will need an additional [$3 TRILLION a year to combat climate change to 2050.]( That’s $78 trillion… She said this with a straight face, without laughing… at a time when the U.S. government is $35 trillion in debt. Consider … that the U.S. represents about 26% of global GDP. That puts us with about a $20 trillion climate tab. Yeah… okay. That’s all on top of free college… free healthcare… free child care…. and whatever else is promised to voters. I return to the obvious. This isn’t about the climate, and it’s not about education.... This is really about the never-ending stream of Ponzi debt on which the U.S. government operates. It is the ultimate scam of Keynesian economic theory… and the destruction of the American dollar as a tool to shift wealth from the poor to the Elite. This chart supports my argument. The black line is a real projection from the Congressional Budget Office (CBO), but the red line is a cleaner representation of the exponential growth of U.S. debt. The goal is to make Americans hold this debt, which is used to cover up preexisting debt. Simply put, you need an emergency to unleash more and more waves of debt. In 2002, it was the Dot-Com Crisis. In 2008, it was the Great Financial Crisis. In 2014, it was Europe and deflationary fears. In 2020, it was COVID. Next up… Climate change — the Mother of All Debt excuses… Remember, the basis for all this “growth nonsense” doesn’t ignore that you’re tearing down the old grid. In America, we build buildings, tear them down, rebuild them, and count the replacement as total growth. Finally I anticipate that the Fed will eventually start to include Climate Change in its mandate, and debt expansion is why. The old debt needs NEW debt to refinance; otherwise, the entire game is up. It is a way to avoid a debt-deflation trap, and rather than actually engaging in growth, we will engage in further financialization. It permits the Fed to buy U.S. Treasuries and direct capital into the system. It allows new debt to be issued to paper over old debt. It’s an excuse for monetary operations. The European Central Bank is already here… It’s just a matter of time in America. What’s worse… you didn’t vote for it. It will drive up the price of assets. McDonald’s Big Mac will go to $10 or higher for reasons that include … - Food prices are always going up because… they’re real assets… - Some new form of climate taxes (which these complaining motorists will likely support)… - Supply chain challenges remain on the horizon. Any action by the Fed or more fiscal policy to drive these policies… it will pump new capital into the system… and that money ALWAYS finds itself into risk assets. The play: The same as always. Gold, S&P 500 stocks with no debt, Bitcoin, prime real estate, and commodities… Stay positive, Garrett {NAME} Secretary of Monetary Guidance 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](
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