Triple Threat: Spending, Inflation, and Taxation

The voices of opposition to this unfolding disaster are far too few... [Gilder's Daily Prophecy] August 12, 2021 [UNSUBSCRIBE]( | [ARCHIVES]( Major Alzheimer’s Treatment Catalyst - Expected Saturday [Important Message]( Saturday, an expected announcement could set off a profit run of 10x or more. In short, a small $10 biotech stock is working on a unique new way of treating Alzheimer’s… And one tech researcher expects them to make a huge announcement THIS Saturday, which could set it all in motion. This is the type of “swing for the fences” opportunity that could create fortunes for bold action-takers like you. So please, stop what you’re doing and take a moment to [review this brief message now](. [Warning] Do you enjoy receiving Gilder's Daily Prophecy? Please [Click Here Now]( so we know to continue sending you Gilder's Daily Prophecy for free! [Editor's Note: Before we dive in today, I just got word of a major development you NEED to know about NOW... One of my closest contacts just forwarded me this urgent message. It deals with a staggering opportunity in the fast-moving biotech sector that could return 10x and possibly as much as 43x gains over time. Now, I’m not a biotech expert... But my contact is a GIANT in the industry – someone I know and trust, and who can spot a profit opportunity better than ANYONE. Do NOT miss his latest urgent briefing. [Click here to view it now.]( P.S. Learn How to 10X to 43X Your Money Within 5 Years on the New Alzheimer’s Boom. [Click here now!]( Triple Threat: Spending, Inflation, and Taxation [Jeffrey Tucker]Dear Daily Prophecy Reader, It’s painful to watch any legislature in session, but never more so than now. You have a one-party state in Washington for whom budgets, limits, and restraint mean nothing. They are on a holy tear to blow up every principle of fiscal responsibility — believing that the more they spend, the more they can create a new socialist-style utopia in the US. One we’ve miraculously avoided for a century until now. The New York Times couldn’t suppress its elation at the Senate’s $3.5 trillion budget blueprint: “The blueprint sets in motion a perilous legislative process aimed at creating the largest expansion of the federal safety net in nearly six decades.” You can call it a safety net but better just to call it what it is: a racket. It’s a gang of thieves frantically authorizing as much of a wealth transfer as they can before they are voted out of power in 18 months. This blueprint comes barely on the heels of another disaster: the $1.5 trillion infrastructure bill, which passed (thanks only to Republican acquiescence). Those lawmakers swore that they were supporting this as a way of making it more difficult to get the next budget package through, but that rationale was exposed as bogus only days later. The damage they are doing now, however, will likely be permanent. It is near impossible to believe that this disaster will be reversed once Republicans regain their footing. What we are seeing now is a mere unfolding of what was inevitable once the Democrats gained full control of the House, Senate, and White House, all in one election. [Will this weird device be in your home soon?]( Let’s Talk Inflation How many months now have we heard about how rising prices are merely structural and transitory? The Fed keeps saying that — and people want to believe it — but the numbers keep showing otherwise. The annual rate of increase in the latest figures was 5.4%, more than was expected by many economists but less than last month’s report. But there are other ways to assemble these data than merely annualizing the month increases in prices. Inflation is eating into the real return on savings. That return is in deep negative territory, thanks to historically low interest rates and relatively high inflation. That means that people who save money and keep that savings in safe Treasuries are actually losing money by doing so. The real return on savings is now at the lowest rate it has been in modern times. Even buying inflation-protection Treasury’s still lands you at a negative 1.8% return. Now let’s look at the rate of increase in the Consumer Price Index itself. Here is where we are getting a better sense of what has happened to prices in the US over the course of this year. The picture that emerges is enough to create genuine alarm. In terms of the change from a year ago, measured with a constant 1982 dollar, we see the highest in the postwar period: 13.6%. [Consumer Price Index for All Urban Consumers] You could say that is an artifact of how I just flow the data, and that it doesn’t look so terrible if you examine the one month trend, especially given that so-called core inflation seems more or less under control. In addition, a major component of the increase concerns wages, and these are up due to the incredible worker shortage. Businesses are being forced to pay more to attract workers, and then raise prices at the retail level to cover the increase in costs. There are other factors at work too. - The chip shortage continues to vex the automotive industry, imposing shortages on new cars, used cars, and rentals too. That problem is not going away for another six months or longer. - A new issue has emerged too with rising rents. People are moving out of hovels with mom and dad and back to properties in cities and suburbs, driving up demand in a time of dramatic migration to places now experiencing housing shortage. - Because travel is booming and people are scrambling to get some vacation time in, hotels are experiencing high bookings (despite not having enough employees to serve customers). That has driven up hotel prices. All of this is undeniable. And yet, each month this goes on, we face the prospect that these are mere symptoms of a deeper problem concerning monetary factors. All those bond purchases by the Fed last year flooded the banking system with money, and the Fed has done little to dial it back in a serious way. With new concerns about vaccine passports, possible new restrictions, and even some talk of lockdowns, the Fed believes it needs to stand ready for another round of stimulus. It certainly cannot politically risk weening markets off its paper-money addiction. Billionaire Leaves Crowd In Shock [sky]( audience of a few hundred (including myself) quietly gathered in Washington D.C. a few months back. That’s when the world’s richest man, Elon Musk, took the stage… and shocked the entire room. It all has to do with this image you see on your screen… showing a surprising new discovery he’s made. Not only will this blow you away… it could also transform the American economy forever. [Click here for Elon’s shocking reveal (plus see what it means for you)…]( [No more banks. No more accountants. No more Wall Street?]( The Rear-View Mirror Because these inflation and other data reports come in on a regular schedule, it is easy to confuse them with real-time information. It’s not true: these data are always backwards looking. Whatever implications they have for Fed policy and the market response, it is always in reaction to old information. What is happening out there on the streets right now is impossible to know in the aggregate. The worry here is that by the time the Fed decides it needs to act, with various forms of monetary tightening to deal with inflation, it will be too late. In addition, as this newsletter has emphasized in the past, there is a hair trigger out there over which the Fed has no control. That trigger is velocity, a fancy word used to identify the pace at which consumers are spending their monetary holdings. In an economic crisis, velocity will typically fall. That’s what happened dramatically in 2020 and 2021. The fall in velocity provided a real cushion to the Fed. It could accelerate money creation at a dramatic pace while forestalling the obvious effects. Not only will that turn around in the future; we might already be there. The Fed has no control over this trigger. And there is an additional problem tracing to inflationary psychology. Once people begin to expect price increases in the future, they would prefer to spend their money now before the same goods and services bite even harder in the future. This causes what is sometimes called runaway inflation. The Decline Is Real The prescription for a flourishing and prosperous society has been known for hundreds of years. You need a free economy, a sound currency, an open environment for business and entrepreneurship, protection for private property rights, and a government that lives within its means. The truth of that has been demonstrated countless times in both economic theory and the real experience of nations. There is simply no disputing it. You can tick through that list above and see that everything happening in the US today contradicts every settled principle of economics and good governance. We seem really to have entered into a new era of political nihilism in which every tool is being deployed by a ruling class to take whatever is not nailed down, and to hell with the long-term consequences. The voices of opposition to this unfolding disaster are far too few. We face a highly lethal triple-threat to prosperity today: spending, taxing, and inflation. Regards, [Jeffrey Tucker] Jeffrey Tucker Amazon’s Second Richest CEO Snubs Congress [Person looking at a lightbulb]( stepping down as CEO of Amazon, the world’s richest man refused to testify at a senate hearing on wealth inequality. It could be because his latest project has the potential to make him — and thousands of American’s — even more wealthy. Billions of Dollars are at stake in this project. [Don’t miss out. Read the critical details of this project, HERE.]( [Three founders Publishing]( To end your Gilder's Daily Prophecy e-mail subscription and associated external offers sent from Gilder's Daily Prophecy, feel free to [click here](. If you are having trouble receiving your Gilder's Daily Prophecy subscription, you can ensure its arrival in your mailbox by [whitelisting Gilder's Daily Prophecy](. Gilder's Daily Prophecy is committed to protecting and respecting your privacy. Please read [our Privacy Statement.]( For any further comments or concerns please email us at GildersDailyProphecy@threefounderspublishing.com. Nothing in this e-mail should be considered personalized financial advice. 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