FOMC Minutes Confirm Fed Rate Hike Rocket Not Ready for September Liftoff – Ep. 103

The Joe Rogan Experience Podcast I appeared the Joe Rogan Experience Podcast while on my trip this week to the West Coast. I first appeared on his show about 3 years ago, and since then the popularity of his podcast has really exploded. A couple of million have already listened to my most recent appearance.  I was on for 3 hours and I did almost all of the talking. Huge Reaction to Minimum Wage Discussion If you look at the YouTube video you'll see a tremendous amount of reactions, both positive and negative, which is a far greater reaction than the show usually gets. I could have set the record on thumbs down but I got more than 3 times the number of thumbs up. If you read the comments, many people are attacking me for being "mean" because I am against the minimum wage. Why Am I Against the Minimum Wage? This is the typical liberal reaction when they encounter someone who disagrees with the liberal agenda. They think I am out of touch, that I don't understand, I'm heartless, and they get so upset at me because they think I am a really bad guy. After all, only a really bad guy would want to exploit poor people by paying low wages. It would not dawn on them to think about why I am against the minimum wage. Against Government Mandated Unemployment I am not against people earning money; I am against mandated unemployment. I am against the government preventing people from acquiring the skills that would enable them to earn a lot more than the minimum wage in the future.  Liberals don't consider any consequences - it's all about how good they feel about themselves. "Who actually cares about the consequences of this law, just as long as I can feel morally superior to anyone who doesn't support the minimum wage law?" For Entry-Level Jobs that Provide Value to Employer I did explain that, but apparently it went right over their heads. I am trying to explain that the minimum wage law leads to more unemployment because it causes people with low skills to lose the opportunity to move up in the workforce through entry-level jobs that provide value for the employer. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

26 Aug 201747min

Economic Ignorance I happened to watch a YouTube video Politicon 2017 Live Stream Schapiro vs Uygur and I want to address only the part of the discussion which was about taxes.  Ben Shapiro did a good job, but a much stronger case should be made about Uygur's statements which were economically ignorant. False Logic One of the points that Cenk Uygur made during the debate is that high taxes are good, that we have more prosperity with higher taxes, and lower taxes are bad for the economy. In his opinion, if the government takes money from the people who earn it and gives it to the people who don't earn it, everybody is going to be better off, including the people who are being taxed.  He cited the 1950's as an example of U.S. economic prosperity, concluding that because income tax rates were 91% America was wealthy. This false logic.  it is like eating a banana during a rainstorm and concluding that eating bananas causes rainfall. The '50's and '60's Marked the End of American Prosperity In fact the reason we were prosperous in the 1950's and 1960's is not because of high taxes during those decades, but how low they were taxed in the decades before that. Ben Shapiro's response to Uygur was that we won WWII and the rest of the world was decimated, which is true, but not an accurate response.  The 1950's didn't just occur spontaneously. Tax Rate Was Zero We were wealthy and a mighty power before WWII.  The standard of living in the '50's and '60s was a product of the 19th century, and the early 20th century when we had no taxes at all.  The reason we created such a strong middle class was because we had no taxes. After the end of the civil war, from 1870 - 1913, which was the introduction of the income tax, the income tax rate was zero. That's the time of the industrial revolution. That's when all the immigrants were coming to America - the 1880's the 1890's, the 1900's.  That's when all 4 of my grandparents came here. There were no taxes and massive economic growth when the tax rate was zero. Camel's Nose Under the Tent When they started the income tax in 1913, the top bracket was 7%. That's still very low,  Initially they wanted to cap it at 10% and the reason they didn't is the objection was that the cap would encourage lawmakers to raise it to 10%. Unfortunately, they didn't cap it, and of course this was the camel's nose under the tent and the minute you had an income tax, congress couldn't resist the temptation to raise it. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

18 Aug 201735min

Press Wants Freedom of Speech as Long as It Fits Their Agenda One of the few rights left to us in this country is the freedom of speech.  If we don't defend speech that we find offensive, someone else will find your speech offensive and move to silence you.  Political correctness, is evolving into the Thought Police via the mainstream media. In particular, President Trump's reaction to the events in Charlottesville is being portrayed as a defense of White Nationalists over Black Lives Matter. Nothing is President Trump's remarks supports this story.  President Trump, in the lobby of Trump Tower, was subjected to an inquisition by the Press, who intended to entrap the President and further their agenda to mischaracterize him and anyone who supports him. Disrespecting Donald Trump and the Office of the President I know very few members of the Press respect Donald Trump; this is clear.  But they need to respect the office of the Presidency.  Could you imagine members of the Press treating President Obama the way they are treating President Trump? Can you imagine the cries of racism? Of course, no member of the Press would dare show that type of disrespect to President Obama. Condemning Violence on Both Sides President Trump is refusing to denounce only the violence perpetrated  by the White Nationalists without also mentioning that the Black Lives Matter group, who assembled without a permit, also engaged in violence.  The Left is saying that President Trump has not denounced the White Nationalists enough. What the President said was that he was condemning the violence on both sides and that angered the left. They hold that the President should only condemn violence committed by the White Nationalists. That would be hypocritical. Background on the Event To give you a little background, the park, formerly named Robert E. Lee Park, was re-named Emancipation Park and the city was going to tear down the statue of Robert E. Lee that had presided over that park. So there was a local protest that the statue was coming down.  It was coming down regardless of local protests. A local group wanted to protest the fact that this was happening. This group eventually got a permit although it was initially rejected. So they engaged in a legal protest to exercise their First Amendment rights. The counter protesters, who came in from out to town did not have a permit landed first physical blow. Freedom of Speech is there for the Offensive Ideas Are the ideas that the White Nationalists offensive?  Yes.  But it doesn't matter, because that is Freedom of Speech. It is there because of the offensive statements.  See, nobody cares if you say something that makes everybody happy and doesn't offend anybody - you don't need freedom to do that.  The scenario that the left is trying to spin and the media is playing right into it is that America is afraid to go anywhere near anything that would draw the ire of the politically correct thought police. We have a very tenuous grasp on the right of freedom of speech, and there is no doubt in my mind that this right is going to go. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

16 Aug 201753min

Speculative Asset Bitcoin is a digital risk asset, not a currency. If you own bitcoin you have an asset, but it is not a safe haven. A safe haven is an asset that is not likely to go down in comparison to another speculative investment.  Bitcoin has been extremely volatile; it happens to be going up, but the price is based on speculation.  Does anybody believe that bitcoin has less downside risk than the stock market? Not a Currency Bitcoin is not used as currency.  They trade in bitcoins for dollars or euros or yen to buy things, but very few legal goods and services are priced in bitcoin.  Because the price is highly volatile and backed by nothing, it can not be used as a currency. It is being used as an asset.  The number of top retailers who accept Bitpay is diminishing, not increasing. Merchants will try to make it easy to trade bitcoin for currency which would then buy goods and services.  Most people who own bitcoin are not spending them; they are hoarding them because they think they are going to keep going up. Just Noise At the end of the day, the realized gains from speculation in bitcoin are going to be overshadowed by the speculative losses. All the rest of it is just noise.  The realized profits will be concentrated on a small group of people, whereas the realized losses will be dispersed among a larger population. Reversing the Consequences Bitcoin will end up achieving the opposite of its original goal, which was to challenge the power of central government, to disrupt money, that is would rein in government and have real commodity money in the same way FedEx upended the Post Office or Uber upended taxis. This is going to give more power to government, because when digital currencies collapse, the central bankers will say, "We told you so! This is what happens when you allow the free market to do what government should do.  When the free market creates money it leads to disaster.  You have to stick with currencies backed by government. " No Joke The original currencies that were created by the private sector, and not by government were issued by banks and backed by gold. Today, the private sector could issue digital currency backed by gold just like paper currency backed by gold. What gave the paper currency value was the gold backing. If any bank tried to issue paper currency backed by nothing, it would have been laughed out of existence. It would have been a joke, except now it's not a joke. People actually want digital currency backed by absolutely nothing. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

14 Aug 201747min

Fire and Fury Not Strong Enough Donald Trump's saber-rattling against North Korea continues. Yesterday the President was asked to clarify his statement about the "fire and fury" and he came out and said that that wasn't strong enough; he was really sugar-coating it. What he really means is something worse - if anything his statement was not strong enough. Again, today Trump issued another threat that N. Korea had better be careful, if they say anything if they will regret it big time, so the level of rhetoric is rising. A Legend in Trump's Mind He was talking about the booming economy, the stock market at record highs, employment surging, all these jobs coming back. He is spinning this ridiculous phony story about a recovery that doesn't exist.  Just as I pointed out he took credit for building up our nuclear armament to a level higher than it has ever been - all this is happening, unfortunately, in Donald Trump's mind. Volatility Up There was a big down day in the markets; it dropped over 200 points yesterday; there was a small bounce back today  - the Dow was up about 14, not a major recovery, But if you look at the Vix, which is a measure of fear, a measure of volatility, it was near the lows, below 10 mid-week and it spiked all the way up to 16 yesterday, which is the highest it has been since April. It looks like it is above a key moving average on a weekly chart, so that shows a heightened risk in the market. Dollar No Safe Haven Interestingly enough, the dollar index closed near the lows of the day, just at around 93 even.  It is down on the week.  In fact, this is the lowest weekly close for the dollar index for the entire year. Now, you would expect the dollar to have some kind of a safe haven bounce with all of the saber-rattling - all of the worries about nuclear war.  Typically, you would get money going into the dollar. I guarantee you, if the circumstances were the same a year ago,  there would have been a big rally in the dollar this week. But not now. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

11 Aug 201738min

Elimination of Deductions for State and Local Tax - "SALT" Tax reform is the one remaining 2018 Republican campaign issue, and the argument over "SALT", or the elimination of deductions for state and local taxes. In general that would be state income tax or state property tax. In some states that do not have income tax, you are allowed to deduct your sales tax, although that is a more complicated deduction. In the wealthier states on both coasts, tax payers rely on those deductions. The Mortgage Tax Deduction Restricts the Free Market No one wants to get rid of the home mortgage deduction, but that is a much better deduction to eliminate, as it does more damage to the economy. The politically popular mortgage interest deduction is aimed at altering behavior, rather than to let the free market work independently. The real beneficiary of the mortgage tax deduction is not the home buyer but the house seller. There are many predominately Democratic states with high taxes but I don't buy argument in favor of eliminating that deduction. Why Should the Federal Government Subsidize the State Government? The argument is, why should the Federal government subsidize state government?  If a state wants to have a high income tax, then, its citizens get to deduct that income tax from their Federal taxes and therefore, they don't feel the full burden of the tax, because some of it is absorbed by the Federal government. As a result of this, tax payers in high tax states are more receptive to those high taxes because they get a tax break on their Federal tax returns. If they could not deduct these taxes, there would be a bigger pushback on the state level. Federal Government Taxing Unearned Income If we are going to have an income tax, we have to tax the actual income. For example, if you earn $100,000, and let's say you live in a state with a flat 10% income tax, then they pay $10,000 in taxes. Did they earn $100,000 for $90,000? I would say they earned $90,000. Now if the Federal government does not want to give a deduction on the state income tax, they should not tax you on income you never earned.  I don't think that's Constitutional. You can't be taxed on money that didn't come to you. The money paid to the state in taxes is not a voluntary donation. It is taken by force. No Double Tax If you go back to the origins of the first Federal income taxes exempted tax paid to the states, it was because the Federal government respected the sovereignty of the states to tax the people first. If you allow the Federal government to ignore state taxes, theoretically they could place an income tax so high that you would have nothing left between the state and Federal tax burden. I would not allow the government to double tax anything, because it is diminishing the power of the state. Defer Income Tax to Employers Here's another thing that no one in Congress is addressing: the states can get around this. Let's say they pass  a law that says you can't deduct your state income taxes from your Federal income tax.  In the previous example, the taxpayer pays taxes on $10,000 he never earned. What if the state then repeals the state income tax on wages and salaries and in its place, imposes a payroll tax on employers? So that, instead of an employee getting paid $100,000 and paying $10,000 in taxes, the payroll tax causes the employer to pay a state tax that would then reduce the salary of the employee by that much. That payroll tax would be deductible for the employer as an expense. So all the states would have to do is change the way they tax wages and salaries and the net effect would be no change for the individual worker.  This would deprive the Federal government of all the extra money they think they are going to get by removing the state income tax deduction. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

10 Aug 201731min

Trump Jumps to Tweet on Mediocre Jobs Numbers This morning the Labor Department released the July Non Farm Payroll numbers and Donald Trump tweeted,"Excellent Jobs Numbers just released - and I have only just begun." Many job stifling regulations continue to fall. Movement back to USA!" What is excellent about these numbers?  If you look at the household survey reveals that we created 393,000 part time jobs during the month, and we lost 54,000 full time jobs. Candidate Trump complained about these types of numbers. He talked about the proliferation of part time jobs and the loss of full time jobs on the campaign trail, yet now, it's "excellent news!". Small Rise in Manufacturing Jobs Although the report was not a disaster, it was not greater than many we've seen under the Obama Administration. The expectation was for a gain of 178,000 and we beat it. We came out with 209,000, which is really not a lot of jobs.  Given the size of the American economy, creating 200,000  jobs in a month is really not a lot of jobs.  But exceeding this rather low bar gives rise to over-exuberant headlines over a strong jobs report.  In fact they did revise last month's gain of 222,000 up to 231,000 and this month's was better than estimates. The unemployment rate did tick back down to 4.3; remember it jumped up to 4.4 and now it's back down to 4.3.  We did gain 16,000 in manufacturing jobs and they did revise upward last month's gain from 1,000 to 12,000, so that is somewhat good news, although as a percentage of the overall jobs, it is small. What's the Real Unemployment Rate? The Labor force participation rate did ratchet up one tenth, back to 62.9; still very low.  Wages rose .3% meeting expectations,  and most numbers remained status quo. It's not a disaster of a report but it is not spectacular.  We had plenty similar reports under Obama, which were previously labeled "fraud".  The unemployment rate is low, and candidate Trump was saying, "The real unemployment rate is closer to 49%". What's the real unemployment rate now? Are the Numbers B.S.? The question is, "Was candidate Donald Trump being honest? Did he really believe the numbers were phony or was he just saying that?" Or, was he being dishonest as a candidate and is he being honest as a president? Was he and honest candidate or was he being dishonest? Does he realize that these numbers are B.S. yet embracing them anyway to feather his own nest, when the economy is behaving exactly as it did when Obama was President. Counting Jobs Twice If you look at the jobs, about 40% of the jobs created were in leisure and hospitality, which was the #1 category, and then healthcare and education. We have record numbers of people now tending bar and waiting tables, although these are probably part time workers being counted multiple times as Obamacare drove away full time employment. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

5 Aug 201732min

Trump Takes Credit for Dow Jones 22K We have an all-time high in the Dow Jones today, closing above 22K for the first time ever. Donald Trump did not tweet about this today, although yesterday he did put out a tweet that the market was about to hit 22,ooo; of course he is claiming credit for it. In fact he pointed out in his tweet that when he was elected, the Dow was 18,000 and not it is 4,000 points higher and of course he is claiming credit for it.  He says the media is ignoring it. They are reporting on the record highs, but believe me, when the Dow starts falling the media is going to pay a lot more attention to the declines than they do to  the rises, especially when the Dow starts falling the media is going to pay a lot more attention to the declines because Trump has already branded this market with his moniker. Bad Economic News Did not Dampen Stock Market Donald Trump did put out a tweet in which he was bragging about wages rising.  I don't know what Donald Trump is looking at - we got the personal income and spending numbers yesterday, and June income was flat.  They were looking for a gain of .4 and instead they got a flat number. That was the weakest number for personal income growth since November - the month Donald Trump won the election. He's talking about the wage gains, where are they? They don't show up in personal income, and most people's income is comprised of wages.This weak economic news didn't stop the stock market from making new highs today.  Of course, Apple was the main reason - it had almost a 5% gain. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

3 Aug 201734min