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CHALLENGE
THE PREMISE

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NEIL GORSUCH
JOINS SCOTUS




Gorsuch
Sworn In
April 10, 2017




A Tremendous Day for
sound jurisprudence and
our Constitution!



Watch the swearing-in
and savor the prospect of
a Supreme Court Justice
who will defend our
Constitution:




Below is our rating of
Supreme Court justices
based upon judgement of
their fidelity to the
Constitution:


As the chart illustrates,
there are too many rogue
justices on the Supreme
Court. These appointed,
life-term judges take it
upon themselves to
arbitrarily unilaterally and
autocratically over-rule the
will of the people. They are
the equivalent of tyrants.

It is crucial to our
Democracy to fill all open
seats on all Courts, as
they arise, with true-to-
the-law judges. With
originalist, textualist
judges who apply the law
as passed by the
representatives of the
people.

It is NOT the role of judges
to over-rule laws they just
happen to dislike. As
Gorsuch said at the
ceremony:

"A judge who likes every
outcome he reaches is
very likely a bad judge..."



Gorsuch
Confirmed
April 07, 2017






A Supreme Court seat
opened with the passing of
Antonin Scalia just months
before the 2016 election.

President Obama
nominated Merrick Garland
as a replacement, but
Senate Majority Leader
Mitch McConnell (R-KY)
blocked the nomination,
claiming that the voters
should decide.

Elections have
consequences. Democrats
were certain they would
hold the White House and
regain the Senate in 2016,
thereby giving them full
control of the nomination
process.

But the GOP held the
Senate, and won the
White House, against
all predictions.
Republicans campaigned
on the Supreme Court
issue, and won.

And that's why Democrats
lost the Supreme Court
nomination: because they
didn't win the election. The
people spoke. As it should
be.



Gorsuch
Nominated
January 31, 2017




President Trump has
nominated Neil Gorsuch to
the United States Supreme
Court. View the
proceedings at the White
House:


As the President so
appropriately remarked at
the nomination ceremony:

"I have always felt that
after the defense of our
nation, the most important
decision a president of the
United States can make is
the appointment of a
Supreme Court justice.
Depending on their age, a
justice can be active for 50
years and his or her
decisions can last a
century or more and can
often be permanent."


We anticipate that Neil
Gorsuch will be an
outstanding Supreme
Court Justice, just like
Antonin Scalia, the great
man he will replace.

Neil Gorsuch: a judge who
understands both what a
judge's role is; and what a
judge's role is not.

SEMI-ANNUAL REVIEW - THE WORLD ACCORDING TO CHALPREM

2019/01/23 - Herewith Chalprem provides you with our semi-annual economic review, update and prognostication for the United States economy as well as geopolitical implications of and for the world around us.

Back in July we made the statement "We are not predicting recession or runaway inflation - at least not yet. But it does seem that we are rather close to a tipping point" to make the point that the economic strength that we had enjoyed to that point was in peril and we would need to see wise policymaking to keep the non-inflationary expansion rolling. Let's consider some of the policy choices being considered and/or implemented by policymakers at this time.

EXPANSIONARY DISINFLATIONARY FORCES (+/+):

Fracking
We cannot understate nor underestimate the overwhelmingly positive force that energy independence exerts on our economy. We have made this point repeatedly over the years, and just when we think that it cannot get any better, it does. The
EIA reported that during the week ended January 11th that daily petroleum production in the United States reached 11.9 million barrels, a figure that up until the past year would have been unimaginable.

But here we are. Cheap plentiful domestic energy – great for consumers, great for folks employed in the business, and great for national security and our geopolitical strategic options.

And think about the secondary effects spun off by cheap oil - cheap oil is great for the airlines, for employees of airlines, for customers of airlines, and for shareholder of airlines. And railroads. And automakers.

The main point here is that there is no intrinsic trade-off between inflation and expansion – good policymaking can deliver the best of both worlds.

Chalprem assessment: We fully support President Trump.

Deregulation
President Trump's deregulation agenda is a boon for the economy. The inescapable law of supply and demand ensures that it must be so.

Deregulation lowers costs to business and ultimately consumers, which is clearly disinflationary. Since prices will decline, at the very least on a relative basis over time, more of the product will be purchased, and businesses will increase hiring to deliver that product.

As costs go down and sales go up, profits also will rise, which is good for business, and good for the government authorities that tax both the employees and the employers on their increased wages and profits.

Chalprem assessment: We fully support President Trump.

RECESSIONARY DISINFLATIONARY FORCES (-/+):

Monetary Tightening
The Federal Reserve, our monetary authority, and its Chairman, Jerome Powell, have been raising interest rates for the past several years. In the view of Chalprem this is conceptually correct, but we view that their execution has been suboptimal on two different dimensions.

Tactically, the Fed waited far too long to raise rates, and now, playing catch up, they are raising rates far too quickly, raising rates with both excessive frequency and severity. This is having the effect of disrupting markets and potentially creating the Powell Recession, which would be a completely unforced error.

Conceptually, we would recommend lessening the frequency of rate hikes to no more than two per year, and reducing the severity of the increases from 1/4% to 1/8%; but in practical terms in the here and now we probably need no further rate hikes before the summer; and if we get any rate hikes before our next semi-annual update please quickly head for the hills.

Strategically, we wonder if the Fed knows what they are doing. As we have pointed out above, there are forces at work that are continuing to deliver disinflationary expansion, yet Powell & the Fed seem convinced that anything that is expansionary is by definition inflationary which is flatly false. And if their policymaking framework is falsely premised, can we trust them to make the right decisions? Nope.

Chalprem assessment: Neutral monetary policy, foreseeing loosening more likely than tightening

Government Shutdown
The shutdown, now approaching its forty-somethingth day, is a form of short-term fiscal tightening, so it will tend towards being recessionary and disinflationary. So it is bad for the economy in the short term, but we fully support the President's long-term view on border security funding, and support him in his efforts against obstructionist Congressional Democrats and their blithering nonsense.

Chalprem assessment: We fully support President Trump.

RECESSIONARY INFLATIONARY FORCES(-/-):

Want the worst of both worlds?

Tariffs
Tariffs are bad. They hinder economic growth and drive up prices.

But our lopsided trading arrangements with other nations, that are effectively welfare-for-countries schemes like the Marshall Plan, are worse. We have been running our trade policy like a soup kitchen.

We have allowed nations to take advantage of us, but when we allow the world's second largest economy to do so, and to lie and cheat and steal in so doing, well then shame on us. Shame on Bush 43, and shame on Obama 44. Fail. Both.

The environment and the American worker have both been casualties, if not fatalities, of China's take-no-prisoners make-things-cheap strategy for global domination. Surely the American left and the American right can agree on the need to get tough on China, if absolutely nothing else?

So it's time to take a long term view and fight the good fight. China has been at war with us for decades, defeating us without firing a bullet.

Don't believe it? Well, what did we do to the Soviet Union? China has been doing the same to us. Beating us at our own game. Wake up people.

Overall we are pessimistic that a full, fair, favorable deal will be forthcoming any time soon. Probably not during President Xi's watch. Now that we are fighting back, the battle has been joined, and it could be long and brutal. But you gotta do what you gotta do. Like WW2. This is WW3.

Chalprem assessment: We fully support President Trump

Minimum Wage Increases
At the state level there is a constant swirl of policy initiatives, some good, some neutral, some bad. And plenty that are very bad, particularly in blue states.

The 2010 nationwide surge of Republican control of governorships and legislatures ushered in a new era of positive economic policy initiatives at the state-level, for example, Scott Walker in Wisconsin. Unfortunately statist leftist Democrats reclaimed a significant share of their 2010 losses in the 2018 elections, and foolish state-level economic policy is already on the horizon.

Minimum wage increases took effect in twenty states this month (as well as some cities), including significant increases to particularly high levels in New York and California.

Chalprem is not opposed to higher wages, indeed we fully desire to see higher wages. But you have to earn it, people! Wage increase by government dictate is a problem, not a solution. Dumbasses.

The way for an employee to increase her wages is to stay in school, get a better job, continue to learn new skills, work hard, take initiative, stand out, get promoted, keep at it.

When this happens across the workforce, there will be noninflationary expansionary growth throughout the economy. And higher wages. And public policy should be enacted that institutionalizes a workplace structure that incentivizes this behavior and culture in the workforce.

Minimum wage laws do the opposite. Dumbass government regulation by nature exerts recessionary and inflationary forces. Minimum wage laws increase costs, which raise prices, and reduce demand, so fewer workers are needed. And business will substitute capital for labor, with additional workers being swapped out for automated alternatives.

In addition, this type of regulatory anti-solution embellishes a retrograde workforce culture that disparages hard work, smart work and investment in oneself; and rewards political agitation, confrontation, and conflict.

Instead, states should ensure that their system and structure of incentives motivates the qualities we mentioned above: hard work, smart work, staying in school, investing in oneself, learning how to be a productive and profitable employee.

Chalprem assessment: Policy error, state governments doing exactly the opposite of the right thing

EXPANSIONARY INFLATIONARY FORCES (+/-):

Loose Fiscal Policy
Our governments, and the Federal government in particular, spend far too much money. We need to shrink the government share of the economy so that the dynamic private sector can thrive in a natural supply-and-demand market-forces world, rather than get strangled in the longer term in a sclerotic red-tape world like the EU.

But that's not what we're getting. At least in the short term, big-time government spending – like the shameful $1.3 trillion spending package passed by the last Congress – provides a boost of sugar energy for the economy, but in the long term makes us fat.

We need to reverse the current fiscal overload – and stop borrowing from China to pay for it. But don't bet on any reversal any time soon.

Chalprem assessment: Cut government spending – and the deficit – and the debt –now.

Monetary Loosening (not currently in effect, but that could soon change):
Most monetary choices by the Fed involved the classic Phillips Curve tradeoff of inflation and unemployment, so, the exact opposite of what we said about Monetary Tightening above applies to monetary loosening here.

If the Fed stopped raising rates, and possibly started cutting them, this would allow capital markets time to settle a bit and overcome the shock of the Powell Fed's aggressive, almost violent, interest rate policy.

Chalprem assessment: Neutral monetary policy at this time, loosening may soon be necessary

WHAT DOES ALL THIS MEAN?
The three main takeaways from above are first, that there are many alternative policy initiatives from different policymakers out there, running at cross-currents with each other.

The second takeaway is that there are far too many policymakers out there who are simply not that bright, are too politically motivated to think straight, in a position to make the wrong policy moves.

And thirdly, some of the best and wisest policy choices, like an all-out trade war with China, or fighting for a border wall, may involve some unavoidable near term economic pain.

The economy is clearly slowing, but that hardly means a recession is imminent, and it certainly doesn't mean we are on the brink of a collapse like 2008.

On the plus side, $50 oil is stimulative. Almost every recession in America is preceded by high oil prices. In 2008 it peaked at $140, the next thing you know is that we have a recession. Not happening - not only is the low price expansionary, most of that oil is now produced in America instead of imported, so that too is expansionary.

In terms of the greatest current risks to the economy, the three 800 lb. gorillas in the room are interest rates, the trade war, and the government shutdown.

Regarding interest rates, it seems that the dimwitted plutocrat Powell has realized that he doesn't want a recession named after him, and that we may not see any further rate hikes for quite a while.

But there is less reason to be optimistic about China, and about the shutdown. Dictators don't give up easily on plans for world domination, and like others of his ilk President-for-Life Xi will not be easily dissuaded. Maybe China will surprise us, but the smart money says expect Xicialism to continue.

Nancy Pelosi and the House Democrats will not be any less intransigent then Xi. As long as the Democrats place the interests of non-Americans ahead of Americans the shutdown will continue. Don't expect that to change until Americans wake up and force Pelosi to do the right thing.

So there you have it - recession in 2018 is possible but completely avoidable if we get some good policy outcomes soon. But if we're still having these conversations in our July semi-annual review, then a 2019 recession will... probably be... probable.




Analysis


February 14, 2019 - Amazon kills its NYC HQ2! Dead. Done. Finished. Kaput. Talk about breaking up - Happy Valentine's Day.

After blowback from a cabal of Democrat anti-growth politicians, Amazon pulled the plug. Welcome, Jeff Bezos, to your world - your world, of progressives running amuck.

Last week we referenced the "Green New Deal", a really dumb economic agenda introduced by a junta of Democrats with a Sponge Bob level of economic understanding.

As JP Morgan CEO Jamie Dimon famously said in 2017, "I'm not sure you've heard a Democrat growth agenda." Indeed, we haven't, because the idea of a growth agenda does not even register with Democrats. They have no idea what it's about. Nothing. Their economic IQ is in single digits.

Well, that same stupidity has again metastasized into actual economic malfeasance, this time forcing Amazon to abandon their NYC HQ2 plans. And guess what? The "New Green Deal" junta and the Amazon-killing cabal have a common member: NY's 14th District Congress Critter: Alexandria Ocasio-Cortez.

Will the Democrats get rid of Alexandria Ocasio-Cortez in 2020, or will they be stuck with her - indeed, will America be cursed with her - for years to come?




February 13, 2019 - So can Fed Chairman Jerome Powell now please completely bury the idea of raising interest rates?

The BLS released its January CPI data this morning and... there's no inflation. At all. The rate for January was 0.0% with a year-over-year rate of 1.6%. Excluding food and fuel, the rate was 0.2% for January and 2.2% y/y.

In the 2000's the Fed left rates too low for too long, then raised them too high too quickly, and we got the Great Recession; the Fed seems on the brink of repeating this fiasco in the 2010's, but maybe Powell has woken up and opened his eyes just in time.

The Fed funds rate presently stands at 2.375% and there is no reason to believe an appropriate rate is more than a tad higher at this time; and even if it is, the increases should be with less frequency and less severity - perhaps .125% twice per year, not .25% four times per year.

But can we trust Chairman Powell to get it right? The answer is probably not, his commentaries belie a lack of economic understanding. Better just to take the matches away from him before he burns down the house.

And while voicing our dismay with Powell, we shouldn't let the opportunity to pass without giving credit to President Trump for implementing non-inflationary pro-growth supply-side policies that keep the economy humming along with high employment and low inflation.



February 12, 2019 - The BLS released its JOLTS report today and it appears that the employment trend is indeed strong, and last month's warnings signs were premature.

For the third consecutive month, and fourth in five, the surplus of job openings over job seekers exceeds 1,000,000. It is surprising to ever see a surplus of job openings at all, but the continued surplus of over a million is truly eye-popping.

Last month there appeared to be weakness in the November job openings, but this month the November number was revised upward by nearly 300,000 and strength continued through December:
  • 2018/02: -628,000 (more job seekers than jobs)
  • 2018/03: + 48,000 (more jobs than job seekers)
  • 2018/04: +494,000 (more jobs than job seekers)
  • 2018/05: +594,000 (more jobs than job seekers)
  • 2018/06: +258,000 (more jobs than job seekers)
  • 2018/07: +797,000 (more jobs than job seekers)
  • 2018/08:1,059,000 (more jobs than job seekers)
  • 2018/09: +996,000 (more jobs than job seekers)
  • 2018/10:1,019,000 (more jobs than job seekers)(Final)
  • 2018/11:1,148,000 (more jobs than job seekers)(Revised)
  • 2018/12:1.041,000 (more jobs than job seekers)(Prelim)

  • The President deserves full credit for implementing pro-growth policies that make it easy for Americans to find work; and his Democrat opponents should be voted out of public office.



    February 07, 2019 - A junta of newly-elected House Democrats released a "Green New Deal" today, and it is even more preposterous that you could have anticipated.

    Among the most foolish proposals was “economic security to all who are unable or unwilling to work”. "Unwilling" to work? Like, you get paid even if you don't feel like going to work?

    How is that possibly economically viable?

    Overall this plan is the work of kindergarteners who know absolutely nothing about economics. Yet voters actually voted these economic illiterates to Congress.

    This is what the Trump haters have voted in as an alternative? Be careful what you ask for, you might just get it.

    You don't like Trump, so you vote for Castro/Chavez/Maduro? Hard to tell who is stupider, these Congress critters, or the people who voted for them.

    One can only hope that the next election does not actually hinge on debating these absolutely worthless ideas.



    February 06, 2019 - The EIA released its weekly Petroleum report today and we continue to be reassured by its overall stability.

    Production has been edging up for months but slowly, and continues to hold at 11.9 million barrels per day, as it has for several weeks.

    Meanwhile, inventories have held steady in the 440 million barrels range for over a month.

    With relative stability in the both production and inventories, that would imply stability in consumption as well.

    And prices have held steady in the low $50's, a level that's held for about 3 months now except for a brief dip around Christmas.

    While we currently believe the risk of recession is at an elevated level, the oil market at the moment seems to be indicating neither a cause relationship (high prices causing a recession) nor an effect relationship (low prices the effect of a recession).



    February 01, 2019 - Keep on Making America Great Again! The Bureau of Labor Statistics released the Employment Situation this morning and has reported that 304,000 new jobs were created in January.

    Some of the data was a bit nuanced due to the government shutdown, for example, the unemployment rate edged up to 4.0%, but the employer survey showed clear strength.

    Low unemployment, a growing economy, low energy prices, low inflation, low interest rates... what's not to love? And yet there still so many unhappy people, so much unthankfulness...

    You watch the mainstream media on TV, and the talking heads seem so unhappy - as if they wish America would fail, as if they would try to make America weak again if they possibly could.

    As that old Carly Simon song goes, these are the good old days. Too bad so many people refuse to enjoy the moment, and will only see it in the rearview mirror.



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