The Unvirtuous Cycle of Rate Cuts

Economic Prism Articles | Insights on Gold, Stocks, Inflation & FOMCPresident Trump wants rate cuts. Stock market investors do too. As do home buyers.

Their reasons are slightly different. But they all generally believe rate cuts to be the path to greater riches and glory.

Trump wants cheaper credit for several reasons. First, he wants cheaper credit so the Treasury can better finance the U.S. government’s massive $37.5 trillion pile of debt.

The 2025 fiscal year ends September 30. Through August, the federal government has run a budget deficit of $1.97 trillion. About half of this – $933 billion – was merely to cover the interest on the debt.

If interest rates were to drop by a percentage point or two the annual debt interest could fall by several hundred billion. This may buy a little time for the U.S. government’s fiscal reckoning. But it really wouldn’t change anything.

The U.S. government is on target to run a budget deficit of $2.2 trillion for FY 2025. Lower interest rates, and thus a lower net interest payment, would only reduce the deficit to around $2 trillion – a difference of just over a half percent of the total $37.5 trillion of outstanding debt. In other words, it would do exactly diddly-squat for the nation’s finances. Continue reading

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Invasive Species

The growth of government from day to day is often subtle. A new law here. Another regulation there. The imposition of an added fee. All with the best of intentions.

But over a decade – or a century – like the introduction of an invasive specie to an unsuspecting habitat, the small additions of government take over the entire landscape. The citizenry is left to contend with – and pay for – the wreckage of overgrown government.

Adding to government, however, is much simpler than subtracting from it. In fact, it is a rare day when a government takes it upon itself to shrink its scope and reach. Yet this is exactly what is happening in Argentina.

Joel Bowman, founder and author of Notes from the End of the World, has been tracking the progress of what he calls the Greatest Political Experiment of Our Age. Today we check-in with Mr. Bowman from his interim perch in Villa la Angostura, for his exclusive boots on the ground perspective.

From this remote locale, Bowman encounters Invasive Species and delivers the latest findings of Javier Milei’s chainsaw campaign to eradicate them from the administrative state. The results, thus far, are proving to be mutually beneficial to both personal freedom and economic prosperity. Continue reading

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How a Government Shutdown Can Restore American Independence

“Give me liberty or give me death!”

– Patrick Henry

Shutdown Season

The clock is ticking. Congress has until the end of the month to avert a partial government shutdown. Federal agencies, and their dependent employees, are counting on a last-minute deal to keep the money flowing to their coffers.

Certainly, there have been government shutdowns in the past. In fact, since 1976 there have been 20 of them. Typically, they just last for a day or two. But the most recent partial government shutdown, which took place during President Trump’s 1st term – between December 22, 2018, and January 25, 2019 – lasted for 35 days.

Government shutdowns, without question, can be highly disruptive. This is especially true in America in the year 2025 where a good part of the population is dependent on Washington in some form or another. Federal employees, contractors, businesses and individuals who rely on government services will quickly feel the pinch as federal dollars disappear. Continue reading

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Here Comes the September Swoon

“As a dog returns to its vomit, so a fool repeats his folly.”

– Proverbs 26:11

You’re Fired!

Government bureaucrats thought they had it made. High paying jobs that are practically guaranteed for life. Great retirement benefits. A certain air of importance.

Now they’re walking on eggshells. Tiptoeing around. Trying to stay out of President Donald Trump’s crosshairs.

Several weeks ago, Trump fired Bureau of Labor Statistics commissioner Erika McEntarfer. If you recall, he blew a gasket following revisions to the May and June jobs report, which adjusted total jobs created from 291,000 to 33,000. He said the numbers were rigged for political reasons and gave McEntarfer a pink slip.

This week, it was Federal Reserve Governor Lisa Cook’s turn to get the boot. Cook had apparently taken liberties on several mortgage applications in 2021. She claimed two places as principal residences – in Ann Arbor, and Atlanta – to get better mortgage terms.

Trump said this fraud is sufficient cause to remove Cook from her position. Cook disagrees. She has lawyered up. Continue reading

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