Category Archives: U.S. Economy

Why High Meat Prices

26 Saturday Oct 2024

Posted by in Economy, Meat Prices, U.S. Economy

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        Vice-President Kamala Harris and Democratic Nominee for President 2024 said after she was elected she would go after the food companies that were gouging Americans by inflating prices. I try to pay attention to all news including financial. For several years the Big Four Meat Wholesalers have been getting sued by grocery stores for their operating as a monopoly. We know some of the names because their name goes on some of their products. Harris is probably very aware of those suits although few of us are aware of them.

            Those suits have pretty well stayed far out of the news until a huge user of the products of those four companies filed its lawsuit. When MacDonald’s sued for ripping them off and causing their fourteen thousand restaurants to keep their prices high the media paid attention! However the involvement of the Federal Justice System is dependent on who wins the November elections. If Harris wins the Justice Department will investigate and if Trump wins the monopoly will continue with his support since those companies and their leaders support his election.

            The four companies that MacDonald’s is suing are Tyson, JBS, Cargill, and National Beef Packing Company. The suit says the Big Four have colluded in manipulating prices for over a decade. One way they have done this is by limiting supplies of cattle, hogs, and chickens.

            Other companies’ suits have been consolidated in with MacDonald’s are suits filed by BJ’s Wholesale, Sodexo, Target, and Aldi’s. I assume more companies will now want to be added to those retailers.

The Real Economic Boom

29 Friday Jun 2018

Posted by in Politics, Tariffs, U.S. Economy, U.S. Taxes

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I used boom and not boon because the few dollars each week a wage earner may get is more than offset by reality. The tax cut was designed for companies and not the average American. Non-public companies like Trump’s, Koch’s, and others are able to pocket the entire cut. A few public companies gave one-time bonuses. One big Republican donor is Wall-Mart. It was touted as giving raises because of the tax cut, but raises were scheduled more than a year before. They offset by closing almost a hundred stores and laying off hundreds of higher paid managers.

The offset is the rising National Debt which raises interest rate. The Federal Reserve will be raising the rate three more times this year and more times next year. A few dollars each week doesn’t overcome the credit card, auto, and mortgage rate increases.

The tariff Trump is putting on the items we buy means the items cost the consumer money even if paid in cash. Add the tariff increases to credit increases and the tax cut is a net loss to the average consumer. Increasing an item’s cost may cause consumers to not buy an item made overseas or here because the domestic manufacturers are already raising their prices to match the tariffs. Now we don’t buy the more expensive items so Americans lose their jobs.

Future Presidents will have to raise income taxes to pay down the massive debt. As interest rates increase a greater portion of the yearly budget will go to paying the interest just as Greece and other debtor nations do. The rich will move elsewhere leaving the rest of us to suffer the consequences.

Consumers Lose Again And Again And ….

21 Thursday Jun 2018

Posted by in Politics, U.S. Economy

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The Constitution’s Article 1, Section 7 gives the job of raising revenue to Congress. Revenue bills are supposed to be originated in the House of Representatives with the Senate’s agreement and the President’s signing. The Country did not have an income tax so revenue was raised through tariffs. Therefore, putting tariffs on imports (can’t tax exports) is the responsibility of Congress, not the President.

When I asked my Senator’s staff where the President derived the authority to levy tariffs without her approval they couldn’t answer. Republicans always complain about Presidential overreach when a Democrat is in the Oval Office. This combative President appears to overreach his authority every day. Shouldn’t Congress know why the President has usurped power?

Article 1, Section 8 says “Congress shall regulate commerce with foreign nations…” and that means tariffs, treaties and agreements like NAFTA. Trump is trying to get around Congress by saying Canadian milk, cheese, and yogurt involves our National Security. Actually we export several times more of those products to Canada than we import from Canada. (One wealthy dairyman is the cause of this tariff war.)

Nicor Steel says its profits will rise greatly because the steel tariffs are allowing them to raise their prices. Since we import about three-fourths of our steel almost everything will go up because the consumer pays the tariff on their purchases. Since the steel industry is raising their prices too, we will just pay more. That’s inflation which causes the Federal Reserve to raise interest rates on loans to buy the washer/dryer and car. These are two more items with new tariffs. Rich stockholders win, consumers lose!

Call out your Senator and Congressman when you see them. It’s their abrogation of responsibility that’s responsible for the increases costs the consumer will be paying!

Trump Plays Poker with China

08 Sunday Apr 2018

Posted by in Trade Agreements, U.S. Economy

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I like to play seven card stud. The game is dealt with two cards down (hole), then four up, and the seventh down. Betting occurs with each card after third card is dealt. A good player reads the other players, their cards, and their playing. Watching the other players allows a person to evaluate the odds of their cards beating the other players’. An experienced player will seldom bluff because it will give away strategies. Boasting and then folding shows a lack of skill. Instead of constantly bluffing it’s better to fold a weak hand.

Donald Trump, the businessman, tried to bluff his way into many deals and then walked away when he couldn’t get his way. He went forward with several deals and later declared bankruptcy. These bankruptcies were through his many limited liability companies. He made money upfront while vendors and investors lost their investment.

President Trump is now playing poker with China using tariffs as chips. The President’s hole cards are weak and each up card is weak too. He raises the bet with each bad card to continue the bad bluff. The Chinese have two powerful hole cards should they need to use them. One is China could break the sanctions with North Korea. The other hole card is their two trillion dollars of U.S. Treasury notes. China could threaten to sell a discounted hundred billion on the days before we auction our debt. We may not find buyers for ours or have to pay more interest increasing the deficit and debt.

China’s up cards are strong because we need to sell our products to them and they can buy them cheaper elsewhere. For instance we sell a quarter of our soybeans to China. Tariffs mean Brazil, Argentina, and Chinese farms in Africa take up the slack. Each additional tariff means China digs in deeper and the China’s Xi can’t lose face. Xi doesn’t bluff and Trump does!

America, like Americans, Is A Mixture

26 Monday Mar 2018

Posted by in U.S. Economy

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Bob Lemke’s letter of March 22 on Capitalism vs. Socialism was thoughtful and well written. It was entirely one sided because we do not have an idealistic capitalist economy. Our government, at the directions of thousands of lobbyists, right and left-wingers, political strategists, economists and well-meaning do-gooders, keeps our economy from the purity he wants us to have.

Our government gives tax breaks to some companies and not others in the same business. I remember Lee Iaccoca, CEO of Chrysler in the late 1970s and 1980s, persuaded Congress to back a two billion loan to save the company. General Motors and Chrysler were bailed out during the Great Recession to save them. True capitalism would have let them and hundreds of other companies we have bailed out or helped by imposing tariffs on foreign countries to fail. The purists just pushed Trump into the recent tariffs.

A free market is the essence of capitalism so why do we want the government to crack down on the pharmaceutical companies for raising their prices? That is state control of prices. Capitalism means if the price is too high don’t use it. During the Great Repression the government saved our banking industry again and that isn’t capitalism.

We have a controlled capitalism, which is not so far from China’s controlled socialism. China has a thriving economy of barely controlled private sector and a failing public sector which is slowly being eliminated.
Capitalism means standing by ones self and if you fail, then you fall. Social Security, Medicare, Medicaid, and other aid aren’t capitalism but socialism and we can’t survive as a humane society without them.

Can America have purity? No, of course not. Can we have a mixture of both capitalism and socialism? Yes, we can and do as long as one doesn’t override the other. Both survive with a controlling government.

Tariffs Are Taxes to Average Joe

07 Wednesday Mar 2018

Posted by in U.S. Economy, U.S. Taxes

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Lowering the corporate taxes raises the interest rates that companies have to pay to borrow money thus offsetting the cut. Because of the cut we don’t know how the steel and aluminum companies’ finances will shake out. Will they use it to lower their prices to be competitive or use it as profit and increase management salaries and stock price? The companies have stated the cut will allow them to do capital investment. What capital investment do they need to do if their plants are running at 50-60% as they have been reporting?

We, you and I, will be paying more interest on cars, houses, credit cards and other loans because of the corporate tax cuts. The steel and aluminum tariffs will raise the price of most items we buy. (Plastic items require those metals in manufacturing processes.) Tariffs are a tax that goes to the government. Will the government use that money to pay down that increased debt or blow it on some new political grease tax loop hole or unnecessary project.

Since we are huge exporters of high value products and reactions to our tariff will be other countries will raise tariffs on our manufactured items. Europe, for political targeting, says if we put a tariff on their steel and aluminum and they slap a big one on Harley-Davidson motor cycles (Speaker Ryan’s District) and Kentucky Bourbon (Senate Majority Leader McConnell’s state). Trump put a tariff on Canadian soft wood products like 2 X 4s and plywood driving up costs of new houses. Canada could put a tariff on their massive export of electricity to the Northeast states.

Trump says we would easily win any trade war. Only a complete idiot would believe that. The Taft-Hawley tariffs caused isolationist trade wars and the Great Depression!

Made In America

07 Wednesday Mar 2018

Posted by in U.S. Economy

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Everyone probably knows that flip-flops are made in China or Southeast Asia and up to January 20, 2017, there were few American made flip-flops. Thanks to President Trump we have enough flip-flops to make every American unsteady.

I have been told that I do not make any positive comments about President Donald Trump. It isn’t true and I will now make a clearly positive comment. The President has been following through on campaign promises he made no matter how inane, poorly thought-out, irresponsible, and downright stupid they are. Yes, he seems to be doing what he said he would do unfortunately for the country. We just have to figure out which flip or flops he will stand behind permanently!

Messy Economics

02 Friday Mar 2018

Posted by in Politics, U.S. Economy

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A recession is looming because recessions are always going to happen. Economies go up and the economies come down. When it will happen is the question. Just as in the Bible, a government needs to store up money during the good times to use during the bad times. That makes good fiscal policy, doesn’t it?

Why have the Republicans decided the Bible is wrong? When Ronald Reagan cut taxes and run up deficits, we were in a recession with very high inflation, high interest and high employment. The tax cut and the subsequent lowering of interest rates was sufficient to jump-start the economy. Later the taxes were raised to cut the deficit and the economy boomed.

When Bush II took office, the government was paying off the National Debt so future administrations would have some ammunition for future recessions. Bush came to office after the dot.com stock collapse but with a good economy. He immediately put us back into deficits by cutting taxes and then 9-11 shocked the economy. In 2007, the Great Recession hit so taxes couldn’t be raised and some more were cut increasing the deficits and debt while trying to jump-start a terrible economy.

Now it is 2018, the economy is overheating, companies are awash with money, the Fed is selling bonds they bought to float the government rescue, and the Fed is raising rates from near zero. Instead of reducing the deficit and debt, Congress has emptied the ammunition storage so we have nothing to cut when the recession hits. They could have raised taxes to pay down debt and store up some shots for the upcoming recessions. Companies now have more money and the government has less. Our quiver is empty so hold on when the next one hits!

Inflation: Good or Bad

11 Sunday Feb 2018

Posted by in Inflation, U.S. Economy

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Before I decided to build my own house, I was thinking of buying a house. I was trying to figure out how much mortgage we could afford when a friend told me monthly payments would be fixed, and they would be getting easier to handle with pay raises. I didn’t understand what he meant.

When I was building my house in 1978, I was still naive about inflation. I made many trips to Narvick’s lumber yard ordering supplies. Under the heavy glass top of the counter was a newspaper clipping on what a 5% inflation rate did to the price on a pair of shoes. It was a real eye opener in real life terms.

Supposedly some inflation is good for us and too much is bad. Economists, politicians, and consumers disagree about where the Eden spot should be. Controlled economies try to keep it near zero by subsidizing staples with varying success. The worst rate today is Venezuela with several hundred percent.

Inflation is usually caused by human action. Supply and demand, technology, labor shortage, greed, interest rates, taxes, rising living standards, politics, and other reasons can raise or lower it. Inflation can by increased by tariffs on imported items. Tariffs are a hidden tax on the people. Before the income tax was instituted, the federal government was funded by tariffs.

The President just put a tariff on solar panels which significantly raises the price, cutting new installations, causing layoffs and reducing the growth of green energy. Another new tariff is on washers and dryers. Technology has greatly increased their costs and the new tariff will add another 15 – 20% to your purchase price. If Trump gets his way, kills NAFTA, and puts tariffs on all the items imported from Mexico and Canada. Inflation will soar. He has or will be putting a tariff on Canadian lumber and milk products raising the cost of housing and food.

Tariffs are a hidden tax on the people and most heavily on people already stretched by low wages. The rich don’t notice tariffs but the poor do! Tariffs cause inflation, inflation makes the Federal Reserve raise interest rates, which causes loan rates to rise, causing the price of everything to go up. Inflation and tariffs are bad!

Jobs Vs Immigration

11 Sunday Feb 2018

Posted by in Immigration, U.S. Economy

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First let me say I am anti-immigration and pro-birth control. I think our country would be better off at 200 million residents than the current 330 million and rising every day. Population growth is an economic and political goal. One requires the other to make the ideal demography work.

The confusion is in the number and type of jobs needed to support our economy. A few years ago Alabama passed its own immigration laws making sure no illegals had a job in the state. The idea was illegals took the jobs students and the poor would do. They didn’t, so crops rotted in the fields, stores were understaffed, landscapers closed, and manufacturers couldn’t fill unskilled and skilled jobs. After two years the law was quietly rescinded.

Expand the Alabama experiment to a national basis. We have hundreds of thousands of high tech jobs currently unfilled and several times that many low tech ones. This is with the previous system where immigrants filled many slots; and some highly publicized cases, took jobs away from local residents. No system will be completely fair to all.

Tens of thousands of the DACA kids are doctors, teachers, engineers, and have other highly needed and hard-to-replace jobs in a job market with many openings. We can’t support the Republican dream economy by exporting the people needed to build it.

Without immigrants, legal or not, who is going to work in the cattle, hog, and chicken slaughter houses, or pick fruit, strawberries and vegetables. Few people want to kill and cut up thousands of animals each day at those wages and danger. Lack of workers will drive prices up for less American harvested food.