Community Voices: Slippery Slopes and Money Traps | Voices of the community

“If human liberty is to survive in America, we must win the battle to restore honest money … unless you want to give your children and your country to galloping inflation, war, and slavery.” Previous quote from Howard Buffett, US Congressman and father of Warren Buffett, as said circa 1948.

“In our lifetime, we have not seen anything like the developing economic and financial crisis. Interest rate rises are well behind where they should be. Interest rates are yet to reduce the prolonged loss of purchasing power in all major currencies,” said analyst Alasdair McLeod.

In retrospect, it doesn’t seem like we humans fought the battle Buffett talked about with much force. McLeod’s observations, occurring in real time, are a reproduction of the effects Buffett was referring to. For reference, in late 2019, prior to COVID-19, the stock market had a runoff and the economy seemed to have slipped into recession. The COVID episode inspired many trillions of dollars in stimulus, cheap credit, and handing out cheese thanks to our generous government.

We are currently in a recession, markets are under pressure and we have high price inflation. At what level could prices and the economy as a whole end up if the Fed gets rid of the magic money? The litmus is whether this level will be more in line with the organic production potential of the economy. Bonus question, given the huge amounts of money and credit being added, how can we now find ourselves in a recession?

Given America’s cherished ideals and traditions, turning into a nation of government-dependent people sounds impossible. But we are here. I have several observations. Our money masters are now in interest rate hike mode. This, we understand, dampens consumer spending, thereby easing price pressure, or so the theory goes. Notice the federal government is not slowing down its spending, quite the opposite, as it seems content to pay more for the bombs going to Ukraine.

Before the inflation we are not enjoying now, America was and still is trapped in debt. Essentially, it is a condition that requires the borrowing of funds to pay for prior obligations. The world is in an energy trap, tentatively described as a period when the necessary investment in resources for sufficient growth requires higher energy prices, thanks in large part to the religion of climate change, a topic for another time.

America is also caught in a leadership trap like yours described, in which candidates for office who campaign for real remedies (like Buffett) can’t be elected. How about unstable can’t be sustainable, but we’ll get to that later? Finally, Buffett again, if America has not been at war since he spoke those words, if so, not for long? We need any people who know how to read the drafts of the constitutional republic formed by our founders now. Hopefully someone who has something to do with the phrase “debt, honor, country” to go from “woke” to wake up America.

Andy Warrenbrock is an independent investment advisor based in Bakersfield. It can be reached at the address wahrenbrock@att.net.