On page A3 of yesterday’s edition of Investor’s Business Daily, there is an article I recommend reading. It is entitled “President Reagan Joined Top Substance With Style“.
It is amazing how quickly a culture can change, how short sighted we are as a collective species, and how easy we forget the past. After making many mistakes in the “Age of FDR”, what I like to call “The Age of Entitlement”, it took a powerful communicator; and honest man, to take charge and reverse the damages created by the excesses of Liberalism. Now here we are again, 25 years after Reagan left office, and all of the gains & progress we made under his administration are eroding under a constant siege of Liberal Idealists who believe that printing more money is the solution to everything. To quote Reagan, “Inflation – that is the price we pay for those government benefits everybody thought were free.” The Federal Government can massage, and then publish all the numbers they like citing that Real Inflation is actually quite low. This is deceptive. I am not sure how many of you do your own shopping, but I can tell you that not 3 years ago I could buy 10 Yogurts at Publix Supermarkets for about $5.00; $4.00 when they were on sale. The SAME yogurts are now $8.00. Milk is also almost twice as expensive as it was just a few years ago. The problem is not isolated to dairy products either. At Costco, not 2 years ago, I was buying frozen fish (salmon, cod, mahi-mahi) bags for between $10 and $20.00. The same bags of fish are now 50% more expensive! Has anyone else noticed that a large number of products have gotten more expensive while the portion size has decreased? My typical Costco shop used to be $300-$400 dollars; now it can top $600, and I buy the exact same stuff I always have. Lets not forget fuel prices! Our country is actually quite rich in terms of fossil fuels; too bad Liberals consistently stand in the way of developing those resources further; instead preferring to transfer some 750 Billion Dollars per year to other oil rich nations, many of whom flirt with the idea of causing a nuclear holocaust on American soil. It goes without saying that their are alternative methods of generating energy both cleanly and efficiently; however, the dominant special interests of our era will always seek to stand in the way of such progress so they can further exploit out-dated, wasteful, and even harmful technologies.
Today’s regime spent the first two years of their administration traveling the world and apologizing for America’s success. Then, to make things worse, they decided to implement a lot of legislation that could not be better designed to create a hostile business & investment environment. To quote Ronald Reagan again, “Government Programs, like Old Soldiers, never die, but neither do they fade away.” I do not believe his intent was comical, but rather an ominous warning.
Critics will argue “So where is the hyper-inflation Conservatives have been touting would be coming?”. Aside from the fact that prices have increased significantly over the past decade for a great number of things; it is very hard to have hyperinflation in an environment where the workforce & workforce participation continues to decline, and job openings are still scarce. Furthermore, the very thing that would create more jobs would be the extension of credit to smaller companies. As it turns out, there is an article on the front of the IBD Newspaper, (entitled Builders Sell Off On Sentiment, Broad Stock Market Retreat) also Tuesday’s edition, that discusses the stock price declines some of the larger, publicly traded home builders took yesterday as the market begins its often predictable Summer decline and/or correction. It specifically goes into the facts that your larger corporations have the capital, and access to credit, yet the smaller home builders do not. It was a no brainer to read that the vast majority of home builders do not have the most positive outlook about the future, however and quite obviously, the larger companies do see more of a rosy picture of the future. With that said, it is small business that, historically, employs 65-75% of the workforce. No credit & no jobs equals no inflation. To boot, certain new Healthcare “reforms” will create a lot of additional pain and suffering for small employers. You gotta love this…not only is all the entitlement spending “spreading the wealth”, but our current regime has. via a healthcare law, found a way to “Spread the Jobs”. We are on tract to becoming a nation of Part Time Workers as a result of all of this.
The Punch Line:
One final quote from the great Ronald Reagan; “Every time the government shifts to the left, the decimal point in taxes shifts to the right“. This reminds me of a story my broker told me last week about his grand daughter. Her elementary school class was assigned to write a speech and each of them would get up in front of the class and present their argument to be elected President of the class. Several kids got up and touted better lunches, longer recess periods, better books and more interesting activities. His grand daughter got up and said “If I am elected President of this class I promise Ice Cream will be served EVERY day”. She won by a landslide. When asked by the teacher “How will you pay for the Ice Cream?” she simply responded “I don’t know”; when asked additional questions about the logistics of having ice cream served in class every day, she simply smiled and said “I don’t know”.
This sort of idealism is adorable in a 7 year old, but in a President of the United States? I say this because unless I was watching a different channel than the rest of you, this is precisely what happened in our last election. The President has promised the American Public their fill of ice cream, but does not have a clue how to pay for it.