Thursday, November 30, 2017


Gravity is a word in the English language that can mean two things.

It is used in physics to describe the force that attracts a body to the center of the earth.

The word is also used to describe something that is extremely serious or of great importance.


In reviewing some recent charts and graphs recently I could not help but think of gravity, Sir Isaac Newton and that famous proverb, "what goes up must come down."

Let's take a look at a few charts where things have really gone up and ponder whether the rules of gravity may come into play at some point in the future. If gravity does comes into play, you can be assured that it will also result in investor anguish of the utmost gravity.

Most of these charts were in John Mauldin's recent weekly Thoughts From The Frontline newsletter.

You can subscribe for free at .

How about the rise in value of Bitcoin?


Bitcoin has risen from $972 at the beginning of the year to the $10,000 range.

Credit: Grant Williams via John Mauldin

A 10-fold increase in less than one year? For a so-called crypto-currency that for all intents and purposes is of questionable value unless you are involved in illicit activities or are a rogue government like Iran? How does this make any sense at all?

By the way, earlier in the week Bitcoin hit $1,200 before settling back in the $1,000 range.

Think gravity.

How about U.S. credit market debt as a % of GDP?

Credit market debt is down from its peak in 2009 (379% of GDP) but is still double what the economy has typically shouldered for most of the last 150 years.

Think gravity.

How about the S&P 500 and the Federal Reserve Balance Sheet?

If you wonder where the fuel came for the stock market increases since 2009 compare the rise in stock values with the increase in Federal Reserve assets. It explains at lot.

Credit: 720 Global via John Mauldin

The Fed is now talking about embarking on reversing the dollars it created during its "quantitative easing" program. (The projected drawdown over the next few years is shown with the orange line in the chart).

What does this tell us about the potential for future stock market values going forward?

You also have to consider the potential effects of Federal Reserve interest rate hikes. Rising interest rates typically draws money away from the stock market.

Think gravity.

Central bankers around the world have spent the last decade doing all they could do to penalize investors who were holding cash in order to entice force them to risk their money on assets. The entire idea was to take the profit out of holding safer savings and money market deposits and get investors to chase larger returns with their money in riskier assets such as stocks and real estate.

It appears they have succeeded.  Of course, as asset prices rise it attracts even more investors into the markets. With each rise in the market those that are on the sidelines start to feel more and more foolish by staying in cash.

For example, this chart shows the allocation to cash in the accounts of Merrill Lynch clients is at the lowest level in well over a decade.

It might be getting late in the game to find someone else to purchase your house or buy your position in the stock market and maintain your current gains.

Asset prices move with the laws of supply and demand. Prices rise as more buyers enter the market. Demand exceeds supply. We have been seeing that in the stock market recently. That is why cash allocations in the chart below are so low.

Credit: Fasanara Capital via John Mauldin

Prices fall as more sellers enter the market and there are fewer who want to buy. Supply exceeds demand. Think of the housing meltdown in 2009-2010 or look at the cash allocation in early 2009 above. There was a lot of cash being held in client accounts but few were eager to buy stocks as the market tanked.

Think gravity.

The funny thing about gravity is that things usually fall faster and harder on the way down than the force, effort and time it took to move higher originally.

Think about gravity as you ponder these charts and how big a fall back to earth would affect you. By doing so you may be able to escape sorrow and regret of the utmost gravity.

Tuesday, November 21, 2017

Thankful To Live In The USA

There is much for me to be thankful for on this Thanksgiving. I am blessed with many things in my life and I hope you can say the same. One of those things is being able to live in the United States of America.

I recently wrote about the survey in which 58% of Millennials stated that they would prefer to live in a socialist, communist or fascist country than in a capitalist one. That same survey also found that 44% of Millennials stated that would not be insulted if someone called them a communist.

I think this is a good time to republish what is one of my most popular blog posts since I began writing BeeLine almost seven years ago. It is an especially timely reminder right now as we see people who protest in the streets without seeming to know anything about our nation's foundational principles or history.

The dumbing down and leftist slant that is present in much of our educational system is failing us if we have over half of our young people ready to walk away from those things that have allowed us to prosper.

A history lesson might be in order that most of those Millennials have never read about.

I am sure they have heard about the Pilgrims but I doubt they are aware of the real lessons that were learned as they attempted to make a life in America.

They might want to read the following story of the Pilgrims that is not highlighted in the history books and the useful lessons it teaches us this Thanksgiving some 400 years later.

Feel free to send it to a Millennial you are thankful for on this Thankgiving. Perhaps they will become a little more thankful that they also live in the United States of America.

Pilgrims, Prosperity And Poverty
(originally posted November 28, 2013)

I am thankful for many things.  My family. My friends. My job. I could go on and on. The list is very long.

I am most thankful I was born in the United States of America.  A country founded on the concept of individual rights and freedom.  A country that has embraced the idea of economic freedom, property rights, and capitalism.

Of course, I was born at a different time than where we seem to be today in our attitudes about some of these ideals. Will our young people be as thankful as I am about their country of birth? I certainly hope so.  However, it amazes me how we fail to accept the reality of the failings and foibles of the human condition throughout history. As a result, the same mistakes and missteps plague us no matter how many times the history lesson is taught.

Look no further than Venezuela. What was once the one of the most prosperous South American countries now languishes under a socialist regime despite rich natural resources.  Communist North Korea can't feed its own people while South Korea is giving a tablet computer to every school child. Taiwan flourished in freedom while Red China floundered for decades before its leaders embraced capitalist-based economic reforms. The same was true for East and West Germany.  In all of these cases there was no difference in the people. They were literally blood brothers and sisters. It was the governmental system and philosophy that made the difference between prosperity and poverty for the people of these nations.

Speaking of history, let's revisit the story of the Pilgrims and the origins of Thanksgiving Day. The story as I learned it in school was about a group of rugged individuals who set sail on The Mayflower in 1620 seeking religious freedom in America. They encountered many hardships that first year but thanks to help from Indians and the Grace of God (I am sure this is no longer mentioned in the textbooks) they reaped a bountiful harvest in the following year and gave thanksgiving with a giant feast.

The First Thanksgiving At Plymouth, Jennie Augusta Brownscombe

The real story is much more enlightening.  It also shows that there is absolutely no question about which system works best to provide the most prosperity for the most people and limits poverty. There should be no debate. It has been shown to be true over and over again. in human history. However, over and over there are those who persist in thinking there is a better, more humane way to best provide for people in a society.

The real story of the Pilgrims was written by William Bradford who was the leader of the Plymouth Colony from 1621-1657.  He wrote "Of Plymouth Plantation" to chronicle the story of the Pilgrims and it is recognized today as the most complete authoritative source on the subject.

One of the best summaries I have seen about the Pilgrim story was written by Dr. Judd W. Patton, "The Pilgrim Story: Vital Insights And Lessons For Today".

Let's start at the beginning. When the Pilgrims decided to go to America they had a problem not uncommon to many of us. They did not have enough money. They lacked the funds to sail to America, equip and establish their colony. As a result, they got financial help from some investors who financed New World adventures in return for a share of what the colonists made through farming, fishing, trade and other working endeavors.

The contract between the Adventurers (Investors) and the Pilgrims consisted of ten points. The most critical of which stated, “That all such persons as are of this colony are to have their meat, drink, apparel, and all provisions out of the common stock and goods of the said colony.”
Today we would call this a socialist commune. In other words, the Pilgrims accepted the socialist principle, “from each according to his ability, to each according to his need.” Each person was to place his production into the common warehouse and receive back, through the Governor, only what he needed for himself or his family. The surplus after seven years was to be divided equally, along with the houses, lands, and chattels, “betwixt the Adventurers and Planters.”

The first year after they set sail for America was particularly difficult. The voyage itself took sixty-six days. They landed first on Cape Cod even though they had intended to reach the mouth of the Hudson River. They spent another month sailing the coast of Cape Cod until they finally decided to settle in Plymouth at the site of an old Indian village on December 21, 1620.

Within two months, half of their numbers died. Of the 24 families who had set sail, only four were untouched by death that first year.  Four other families were wiped out completely.  Those that made it to that first Thanksgiving were thankful.  However, it wasn't necessarily because of a bountiful harvest. They were just happy to have survived.

Contrary to legend, the harvests were extremely poor in 1621 and 1622. It was normal to be hungry. Governor Bradford referred to 1621 as the “the small harvest” year. Yet he notes that in “the summer there was no want.” Thankful for what God had given them, Governor Bradford declared a three-day feast for the purpose of prayer and celebration. We all know it as the first New England Thanksgiving – apparently observed in late summer.

Things were marginally better in 1622. The harvest was a little better but many Pilgrims held back and did not work as hard as others. There was stealing and hoarding. Bradford and the other Pilgrim leaders recognized that this would continue unless they changed the system.  What could they do to prevent another poor harvest?

This is how Governor Bradford tells it in "Of Plymouth Plantation".

“So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still languish in misery. At length, after much debate of things, the Governor (with the advice of the chiefest amongst them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things to go on in the general way as before. And so assigned to every family a parcel of land…This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise…The women now went willingly into the field, and took the little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression.”

The socialist system was discarded and replaced with a system that was built on individual property rights and that put the trust in individual initiative to take care of the common good of the colony.

How did that work out?
In 1621, the Pilgrims planted only 26 acres. Sixty acres were planted in 1622. But in 1623, spurred on by individual enterprise, 184 acres were planted! Somehow those who alleged weakness and inability became healthy and strong. It’s amazing what incentive will do to improve bad attitudes!
However, the Pilgrims still had their challenges. The summer of 1623 was hot and dry. For almost two months there was no rain. Their crops were in jeopardy. Governor Bradford did not lose faith.

Governor Bradford then set a “solemn day of humiliation (fasting) to seek the Lord by humble and fervent prayer in this great distress.” Their prayers were answered. By evening it began to rain. It revived the corn and other fruits. Even the Indians were astonished. The soft showers continued along with beautiful fair weather. The result was a “fruitful and liberal harvest …for which mercy they also set apart a day of thanksgiving.”

By the fall of 1624, the colonists were able to export a full boat load of corn! And the Pilgrims settled with the Adventurers. They purchased the Adventurers stock in the colony and completed the transition to private property and free markets.

The rest is history. The experience of the Pilgrims went a long way to forming the values and principles upon which our Founding Fathers created a new nation unlike anything the world had ever seen before. It came to be the most prosperous and powerful country ever known to mankind. For that I am forever thankful to the Pilgrims and the others who endured trials and tribulations to give me the life I have today.

As we celebrate Thanksgiving it is useful to remember the Pilgrims and what their experience can teach us.  I think Dr. Patton summarizes the lessons pretty well.

The Pilgrim experience dating from 1623 was and is yet a prototype for the United States of America. They learned the hard way that: (1) Socialism does not work; it diminishes individual initiative and enterprise; (2) Socialism is not a Godly economic system; and (3) Famine and drought can be used by God to humble a people and set them on a proper course. The Pilgrims responded. The real question today is: Can Americans learn these vital insights from the Pilgrims or must we too face famine and drought in the coming years?

Happy Thanksgiving!

Monday, November 20, 2017

Population, Pyramids & Possiblities

7.5 billion people inhabit the earth.

Throughout almost all of our history, if you graphed the population of the world by age it would look like a pyramid. A very large base with a lot of young people that tapered down with each succeeding age group as it got older.

For example, here is what the age distribution of the world looked like in 1950.

This is how it looks like today. (All charts below are from

The World

Over the last two generations the world population base has gotten smaller due to lower birth rates and the top has gotten wider due to longer life expectancies.

However, the big picture does not reveal even bigger demographic trends in individual countries. It is these trends that will predict a lot of what is to come in the world over the next 50 years. After all, "demography is destiny".

Here is the population pyramid for the United States. It looks more like a skyscraper than a pyramid.


It is pretty astounding when you look at this and realize that there are more 50-59 year olds than 10-19 year olds and more 40-49 year olds than 0-9 year olds in the United States today.

Who is going to pay all of those Social Security and Medicare benefits in the future?

Of course, the United States is nothing compared to Japan. It looks as if it may soon tip over.  Japan actually has more females aged 80-84 than any age cohort age 24 and younger.


Or Italy.


Or Germany.


If you want a reason that Angela Merkel has gambled on her risky policy to allow millions of Muslim refugees into Germany look at this graph. Germany needs young workers and taxpayers. Time will only tell if she sacrificed her country's heritage and culture to do it.

Germany and Italy both look like fire hydrants rather than pyramids. It seems an apt description as both countries are facing demographic self immolation.

China has a similar problem due to its one child policy that was in place from 1979-2015. That has also resulted in a unique imbalance in males greatly outnumbering females in the population.


There are 37 million more males than females in China under the age of 30. To put that in context, that is about the same number of total females that are age 19 or under in the entire United States.

This is a serious issue that likely has never been faced in this magnitude in mankind's existence. There have been times in the past that women of marrying age greatly outnumbered the men in a country or region (e.g. Russia after World War II, the Southern states after the Civil War) but I don't think we have ever seen the reverse with this large of a population group. I wrote about the potential ramifications of this issue here five years ago.

Speaking of Russia, they actually have the opposite problem of China. Females vastly outnumber males in the older age groups. Notice how lopsided the top half of the chart below is? It it tilting to the right (red).

In addition, look at the male population between ages 10-24. Where does Russia draw soldiers from for the future Russian military? Pretty slim pickings if you ask me.

Russia Federation

There are still countries where the traditional population pyramid is in force. This undoubtedly may bring its own set of problems looking to the future.







Most of us probably don't think of Nigeria as a large country. It actually has 192 million people. That is 50 million more than Russia. By comparison, there are 326 million in the USA.

However, Nigeria has 84 million children 14 years and under. The United States only has 61 million in this age group.

If we are concerned about how we can feed, sustain and educate 61 million children in the U.S., how is it going to be done in Nigeria?

And how do all of those 84 million children become gainfully employed in the future?

There are so many who make so much of the problems facing our country. The reality is that there are problems facing everyone and the truth is that the problems of the United States pale in comparison to the demographic challenges highlighted above. In addition, the United States is much better prepared to meet the challenges than other countries.

No country has a better balance of population and no other country has the governmental and economic systems to insure that these human resources reach their full potential.

If demography is destiny, these charts demonstrate that there is no country on earth that has better prospects for future possibilities than the United States of America.

Thursday, November 16, 2017

Drama and Drumbeats

At their core, most people detest political drama. They don't like bickering, backbiting and blabbering. Give them something calming rather than chaotic. A steady diet of drama takes a toll on voters. It wears people out. Their natural reaction is to react negatively to it.

Political drama that is amplified by a constant drumbeat by the media makes it even worse. The drumbeat of repetition engages the "illusory truth effect" in humans. Simply stated, the more often we hear something the more likely we are to believe that it is true---even if it is a complete fabrication.

One of the key principles in any successful attempt to influence is lots of repetition by repeating your points over and over again to engage the "illusory truth effect".

It is also easier to influence people within a group rather than as individuals. Most people look to others for cues to their behavior. Most people are conformists within a crowd. It is hard to go against the flow.

Gustave LeBon was a French doctor and social psychologist who was one of the first to study and publish theories on the psychology of crowds in the late 19th century. Adolph Hitler actually studied LeBon's work and used it to craft much of his propaganda. explains how the psychology of crowds can be used to influence individuals within the crowd.

Le Bon posited that once individuals came together to form a group, the individual’s will was surrendered to what was perceived to be the will of the group. Their faculties of reasoning were impaired or destroyed, and they entered into a more suggestible state. The larger the group, the easier it was to coerce.

This is a big reason why the drumbeats of the mainstream media are so dangerous. They have access to enormous audiences  and they have the ability to repeat their points over and over and over again.

Drama and the drumbeats that follow are the biggest risk that Donald Trump faces in his Presidency. Make no mistake, most of the drama is created by Trump himself. If I was advising him I would do everything I could to try to get him to reduce the drama for the reasons stated above.

However, the drama pales in comparison to the drumbeats that follow. That is far more damaging in the long term. The constant drumbeat from the media that amplifies anything and everything about Trump will undoubtedly take a toll the longer it persists. And it looks like it will persist forever.

Mother Theresa herself could not withstand the type of barrage Trump has taken from the media and the political establishment. It is unremitting and it is unprecedented in its vitriol.

It could be that Trump believes that the only way to try to disrupt the drumbeats is to stay on the offensive, keep moving the target and create more drama. However, he may be missing the bigger point on propaganda. This was also used by Hitler---keep the dogma simple, make only one or two points. The reality is that the drama around Trump  feeds the singular dogma of the message the media and the left are promoting to us---Donald Trump is unfit to be President.

You can expect the media to continue to pursue this narrative and continue the drumbeats---over and over and over again. They will use every opportunity to make Trump look uniformed, uncouth and -most importantly-unfit for the Presidency. Their objective is to play to the psychology of the crowds. Make it so that individuals who voted for Trump will feel more and more uncomfortable when faced with what appears to be the obvious fact that everyone else is opposed to him.

You see the same crowd psychology operating in the Alabama Senate race right now.

I have no idea if Roy Moore is guilty of his alleged conduct with teenage girls 40 years ago or not. However, what is obvious is that the Republican establishment and the Democrats want you to believe it. They have latched on to a dramatic narrative and the drumbeats are strong and unrelenting against Moore. It is hard to not assume his wrongdoing when the crowd is beating the drum so loudly.

I have been well aware of the psychology of crowds since I was a teenager. I am susceptible to the pull as much as any human being. However, I have learned over the years to pull back and use my own reasoning, values and consideration of the motivation of those leading the narrative rather than blindly following the drumbeats.

I cautioned my children when they were growing up to understand that most human beings, if left to our own base instincts, are actually like sheep. Most will follow the crowd wherever it may lead them. I made it clear to my kids they needed to think for themselves and forget about what the crowd was doing.

Too much like sheep for our own good

A perfect example of crowd psychology is the Duke lacrosse case of a decade ago. In the days after that story broke you could not break through the drumbeats. The media, their fellow students, their professors and the Duke administration all jumped on the bandwagon against the lacrosse team. I wrote about the case here on why I was not on that bandwagon. It was not easy, especially when the D.A. was so adamant in proclaiming their guilt. We know today it was all a lie.

As I stated above, I don't know whether Roy Moore was a predator of young, innocent girls or not.

All I know is that there is no middle ground or gray area left for Moore from here on out.

He will either be vindicated or he will be forced from the race (or be defeated) in humiliation.

The most damning accusation against Moore involves a woman who claims she used to be a waitress in a restaurant that Moore frequented back in 1977. Moore has responded that he never knew the woman. He went even further and stated he did not even know where the restaurant is that his accuser is talking about.

That is pretty black and white. That does not leave much gray area, does it?

How do I analyze this rationally and not get swept in the crowd?

1. Moore is hanging out there big time on his statement that he never knew the woman or heard of the restaurant. Gadsden, Alabama, the town where the events took place, had a population of about 50,000 in 1977 when the alleged events took place. Perhaps he never knew the woman in a town that size but he never heard of a restaurant in a town that small?

2. The critical piece of corroborating evidence that the woman has to prove that there was some type of relationship between her and Moore is an inscription in her high school yearbook from 1977. Below is an image of that inscription that an internet sleuth, Thomas Wictor, pulled from the CNN coverage of the press conference in which the woman accused Moore of sexually assaulting her in his car.

Do you notice anything about the inscription?

Why are there two different pen inks in the inscription?

It could be the lighting or the angle that the image is being held at.

It could be the first pen stopped working but you don't see any evidence of that in the prior writing.

It could also be that Roy Moore signed the inscription and stopped with Roy. The woman, seeking to bolster her case, then took it upon herself to forge everything else in an attempt to bolster her case.

It could also be that another Roy, or even a Ray or Kay signed the book, and she used it to frame Moore.

If you doubt there is forgery involved, look at the capital M in "Merry" and the "M" in Moore. Those were clearly not written by the same person.

In addition, compare an actual signature of Roy Moore with what you see above. The signature below is from a 2017 fundraising letter from Moore. Granted, signatures can change somewhat over that period of time. I am not a handwriting expert but it does raise questions in mind that need further investigation.

It seems even more obvious that the printed letters (non-cursive) are distinctly different. Compare Roy Moore's printing on this campaign document with the printing in the yearbook. In particular, the compare the small "e" in each. They are totally different. This photo was also supplied in research done by Thomas Wictor.

3. Another thing that does not seem to add up is the narrative that Moore has a thing for young, innocent girls. However, there is nothing yet to surface on this in the intervening decades. In fact, Moore ended up marrying a 24-year old divorcee with a young daughter 35 years ago. This does not seem to fit the narrative nor the behavior pattern of male sexual predators. They do usually change their stripes with time. The same patterns persist.

4. One final thing to know about Roy Moore is that he has never been one to go along to get along. He is the exact opposite of a crowd follower. He was that way as young officer in Vietnam after graduating from West Point. He was that way as a county prosecutor he convened a grand jury  to investigate underfunding of the sheriff's office. He was that way when he defiantly place the Ten Commandments up in his courtroom. He earned a lot of enemies along the way in the political establishment.

5. All I can make of this is that either Moore has been elaborately framed to remove him from the Senate race or Moore has found himself backed so far into a corner that he is laying it all on the line with outright lies to try to save himself.

From my vantage point it appears that both sides in this may have overplayed their hand.

Truth in these cases is often murky and most times filled with half-truths.

Both sides may have taken half-truths and are trying to make it the whole truth.

If Roy Moore can show that there is any forgery in that yearbook inscription it is going to discredit much of the serious allegations against him. It will make everything look like a targeted witch hunt. He may even be guilty but that fact will be lost because someone tried to build a false case on him. The real losers will be women who have legitimate stories.

If the yearbook inscription holds up, or other compelling evidence surfaces that undermines Moore's denials, he is toast---and that includes a picture of him surfacing that shows him eating at the Olde Hickory House.

The lesson in all of this?

Pay attention to drama and drumbeats.

They are dangerous to politicians.

They are also dangerous to us if we follow the crowd and don't think for ourselves.

Beware the madness of crowds.

Tuesday, November 14, 2017

Predictions As Bad As The Polls

Leading up to last November's election almost every poll predicted that Donald Trump had no chance to be elected President of the United States.

As soon as his election occurred we immediately heard how the country was doomed, the economy was doomed, the stock market was doomed and the Constitution was going to be continually violated.

It is a year later and those predictions have been proven to be as accurate as the polls.

Let's look at a few facts.

The unemployment rate has dropped from 4.8% to 4.1% over the last year. That is the lowest unemployment rate in 17 years (December 2000).

The number of those on food stamps has dropped from 43.4 million in October, 2016 to 41.1 million in August, 2017 (the most recent month available)--a reduction of 2.1 million. It is the lowest number on people on food stamps in seven years.

Consumer confidence reached a 13-year high in October.

You will notice that it spiked immediately after Trump was elected President after trending down for the previous two years.

GDP grew by more than 3.0% for two consecutive quarters (2nd, 3rd quarters, 2017) for the first time since 2014.

Of course, the stock market has set record upon record since Trump was elected despite the doomsday predictions of economists like Paul Krugman and finance expert Steve Rattner.

The Dow Jones Industrial Average was up 24.3% in the one year after Trump's election last November.

The S&P 500 advanced 21.3%.

Credit: Yahoo Finance

We were told that by the New York City Tourism Agency that Trump's proposed "travel ban and related rhetoric" would mean 300,000 less visitors to New York City this year. Foreign tourism in New York City is currently on target to increase 3.6% this year.

We were also told that the Trump administration's decision to reduce outreach advertising on Obamacare by 90% would mean enrollment would drop by at least 1.1 million compared to last year. Enrollment for the first week actually increased 179% over the same period last year. We will see how enrollment progresses over the remainder of the open enrollment period but a smaller ad budget is apparently not a problem.

We were also told that Trump would start a trade war if he tried to pull out of NAFTA. Both Canada and Mexico have indicated they are open to renegotiating the treaty and are currently at the negotiating table.

We were also told that Trump would blatantly ignore the rule of law. In fact, Trump has been the only President in 30 years that is actually working to enforce the immigration laws that are on the books and have been blatantly ignored by the last four Presidents.

Trump even has scrupulously followed the law even when lower court judges came up with unprecedented legal theories to strike down his executive "travel ban" orders. Trump pulled back on let the justice system to work. In the end, Trump largely prevailed on the travel ban when the cases got to the Supreme Court.

A year does not make a Presidency but the predictions about President Trump have thus far been as bad as the polls.

2020 is still a long way off. Much can happen.

Trump, like most Presidents, is going to be measured in large part by how the economy performs.

His first year has been impressive in that regard but the United States has not had a recession in over 8 years. If we avoid going into recession over the next six months we will have had the longest period without a recession since 1850.

It would be an understatement to say that this economy is living on borrowed time. That is one of the reasons that the tax bill before Congress is so important to both Trump and the Republicans. They cannot afford for business and consumer confidence to be shaken. It will if the tax bill does not pass.

You have to also ask how much longer it will be without some sort of stock market correction. It also seems to be living on borrowed time.

Trump's approval rating is currently at 44% according to Rasmussen. More troubling for him is that 45% strongly disapprove of him. People who have strong opinions usually do not sit idly by. They do not keep their opinions to themselves and they vote.

However, Ronald Reagan had a similar approval rating at the same point in his first term. He won re-election by carrying 49 states.

Trump's problem is that the current economic expansion is living on borrowed time while Reagan was in the first stages of turning around the malaise of the Carter years.

Trump built a real estate fortune on borrowed money. Can his political fortunes go as well living on borrowed time? A standard prediction would say no. However, as I wrote last October right after the Access Hollywood tape was released, I have learned to "Never Say Never With Trump".

Sunday, November 12, 2017

Brainwashed U

When we look at the political views of younger voters it follows that a lot of what they believe is the result of an educational system that is decidedly biased and one-sided.

Students are given a steady diet of liberal orthodoxy in which there is little interest in providing exposure to a diversity of viewpoints and open and free discussion.

I saw this early in my own children's education.

I went to my daughter's parochial elementary school one day when she was in the first or second grade and as I walked down the hall I came across a gigantic poster with the picture of a nuclear submarine and something like the following as a headline.

"For the cost of this nuclear submarine we could feed 1 million children for a year"

I could not believe my eyes. It was blatant leftist propaganda directed at Ronald Reagan's defense build-up in the mid-1980's on the wall of an elementary school.

It was not long after that I was called by a friend to contribute money to a capital fundraising campaign for the school. I mentioned what I had seen to my friend and stated I was more than willing to make a pledge but not if the walls of the new school were being used for posters like that.

A few nights later the parish priest was in my family room accepting my check and stating that it would never happen again. He was an honorable man. I believed him but I am not certain that he was patrolling the halls of the school every week thereafter.

A few years later my son was in a public middle school and came home stating that his homework assignment was to write our Congressman asking that he vote for a constitutional amendment to abolish the electoral college. I wrote about this previously in a blog post titled "Electoral College Elucidation".

His teacher had taken it upon herself to have the entire class take this project on as a way to "teach" them about the U.S. Constitution. Needless to say, this was not teaching. It was her attempt to indoctrinate her students with her point of view. I was not pleased and I sent a note back to her telling her that my son would not participate in the assignment. In my view, the electoral college was just fine. After all, our country is called "The United States of America" for a reason.

These are small examples but I think it makes the larger point on how the educational system is often not so much trying to educate students to think for themselves but desires to indoctrinate students into a certain way of thinking.

Students are not provided history and context in much of what they "learn" and they most certainly are not exposed to the logic behind most conservative view points.

Consider again the results in the recent YouGov survey that I referenced in my last blog post in which 58% of Millennials stated they would prefer to live in a socialist, communist or fascist country.

Looking deeper at the survey shows that part of the problem is that many Millennials simply do not really know what socialism, communism and fascism actually is. They apparently do not know the history of the hunger and horrors that have befallen those countries that have adopted the most extreme examples of these systems.

For example, millions and millions of people in Venezuela are literally starving to death under the current regime of Nicolas Maduro and his United Socialist Party of Venezuela.

61% of Millennials are totally unfamiliar with his name.

More shocking is the survey result that shows that only 44% of Millennials would be insulted if someone called them a "Communist". Compare that to the 77% of Boomers (their parents) and 79% of Matures (their grandparents) who would take offense at that word.

Where do the Millennials get these ideas? It doesn't appear they got them at home from Mom and Dad.

It is also interesting that the Gen Z generation (the demographic cohort right after the Millennials) do not have such extreme views. Why is that? Could it be that the liberal indoctrination process is not yet complete as many in this generation are still in school?

Where is the liberal orthodoxy pushed the hardest in education?

On university and college campuses.

It has become increasingly clear that on many college campuses today there is only one accepted orthodox view of what political ideas and views are "right". This then determines what books are read, what speakers are heard and what ideas are considered in an undergraduate's education. Anything outside of that political culture is ignored, ridiculed or banned outright.

It is the antithesis of what a college education should be about. Colleges should be about fostering a politically "heterodox" culture that exposes students to a range of views, idea, theories, books and speakers.

How does one find a college like that in this day and age?

The Heterodox Academy has a mission "to improve the quality of research and education in universities by increasing viewpoint diversity, mutual understanding, and constructive disagreement."

A friend and BeeLine reader recently made me aware of this organization and its "Guide to Colleges" which ranks the top national universities and liberal arts schools on which schools are best for students seeking exposure to diverse perspectives. 

Which national university do they consider as the most open to different perspectives on campus? The University of Chicago. Next in order were the University of Florida and Purdue University.

Claremont McKenna leads the ranking for liberal arts schools followed by Haverford College and Pitzer College.

Who is at the bottom of the rankings for national universities? The University of Oregon is dead last with Northwestern University one notch up. It is probably no coincidence that many mainstream journalists are alums of Northwestern.

Williams College in Massachusetts is at the bottom of the liberal arts rankings with Wesleyan University one rank up. 

If you would like to send your child to a college that is more interested in educating them than in brainwashing them, you might consider reviewing the Heterodox Academy rankings.

As a parent, you might also take more responsibility in learning what your child is being taught (and not taught) in school. Insure that they are getting a complete education rather one than a biased one. Make sure that they understand the values and virtues of capitalism, property rights and free enterprise.

Academics fervently believe in the theory of socialism or communism but there is not one example in the annals of human history where it has proven to work for the populace at large over the long term.

I have seen it over and over in my lifetime. You can take the same people and place them in different economic and political systems and see the real results. Capitalism and freedom always win. It should not even be debatable.

A few examples.

West Germany vs. East Germany

South Korea vs. North Korea

Taiwan vs. Red China.

Cuba and Venezuela as they used to be vs. how they are today.

If you are a student, stay away from Brainwashed U and start thinking freely (and reading BeeLine regularly).

Wednesday, November 8, 2017

One Generation Away

Ronald Reagan said that "freedom is never more than one generation aways from extinction."

We didn’t pass it on to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free.

The same can be said about religion.

The values, virtues and vitality from having religion in our lives does not get there through the bloodsteam. It is passed on and nurtured in us.

The United States of America was founded on Judeo-Christian values by men and women that had a deep and abiding faith in God. Many of those who set out for the American colonies had been persecuted or ostracized for their religious beliefs.

When our Constitution was written it was evident how the lesson of being free to practice your religion was ingrained in our forefathers by their parents, grandparents and their great-grandparents before them.

It is right there in the Bill of Rights to the U.S. Constitution. It is also interesting to note that it is the first item mentioned in the First Amendment---it is before the freedom of speech, the right to peaceably assemble and the right to petition the government for redress of our grievances.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. 

Keeping all of this mind, I thought it was interesting to see the latest Pew Research Center survey on the age structure and median age of U.S. religious groups.

If we are one generation away from extinction on almost anything that does not flow naturally through our veins, this survey ought to provide a sobering perspective for many people of faith.

What are the five "religious groups" with the lowest median ages?

"Nothing in Particular"

What are the "religious groups" with the highest median ages?

Presbyterians, United Church of Christ, Anglicans, Methodists and Lutherans.

Interestingly, these were all among the religious groups who were the most prevalent in the American colonies.

The only major sect that is not on the list from that era is the Quakers (Friends Church). The Quakers founded Pennsylvania. This blog post cites a statistic that at one time one-third of the American colonies were made up of Quakers. Today they are "statistically insignificant" as the Pew Study demonstrates.

The title of that blog post? "Are Quakers Going Extinct?"

How many things that are important in your life are "one generation away from extinction?"

Faith? Freedom? Family?

On the subject of freedom, this recent YouGov poll is of concern for the future of freedom when you consider the answers by Millennials as to what is their "preferred country to live in"?

58% would prefer to live in a Socialist, Communist or Fascist country compared to the country built on capitalism that they now live in?

They don't seem to understand that almost all those things they love the most---iPhones, Facebook, Instagram, Starbucks, Amazon Prime and craft beer---are products of capitalism.

Keep in mind that this generation is one generation away from running the United States of America!

My advice...

Be passionate about those things that are important to you and need to be perpetuated... and pass it on!

You can't expect anyone else to do it.

Tuesday, November 7, 2017

Trump + 1

Five years ago was one the lowest nights of my life. It was the night that Barack Obama was re-elected President of the United States.

This is what I wrote on the day following that night in "Choices Have Consequences". You can almost feel my anguish in reading the words today.

The results of yesterday's election clearly show that we are in The Fourth Turning. History is not made by events but by the reaction of human beings to events.  We saw clear evidence of that yesterday.  We are hurtling down the road for a rendezvous with history of our own making.  Two clearly marked paths were there for choosing.  The American people made their choice.  We all will have to deal with where it leads.
I have many new readers over the last two weeks as interest in the election approached. Many of you probably did not see my post, "How Can There Be Hope When There Is No Change?".  This still accurately captures my biggest concerns about where we are going from here. Like it or not, this is where we are.  We have no choice but to move FORWARD.  That is what President Obama promised.  We will now see where he is leading us.
In many ways I think we exhibit the traits of an addict.  Our drug of choice is government spending and dependency.  Unfortunately, like most addicts, we may have to totally hit bottom before we come to our senses and begin recovery.  As we know, the sad truth is that as the addict spirals downward they also hurt many innocent people around them on that path.
It did not have to be this way.  It still doesn't have to be this way.  However, this seems to be the path we have chosen right now.  We have turned our backs on the warnings. We have failed to listen, somehow thinking that our addiction will not lead to our ultimate downfall.  
Choices have consequences.  We will learn what they are together.  For better or worse. Our only hope now is that the President we elected yesterday is not the same leader we had for the last four years.

Where did that path lead?

"I know how you feel."
Credit: Getty Images/People Magazine

It led to the election of Donald J. Trump as President of the United States. There is no doubt in my mind that Trump would never have been elected President if Obama had not held office. He also likely would not have won if Hillary Clinton had not been the Democrat nominee.

It all resulted in that night one year ago that marked one of the greatest nights in my life. I was close to giving up after the last eight years. I was close to thinking that America had reached the point of no return---that we had reached the tipping point and gone over the abyss.

I can't tell you how much it meant to me to find out one year ago that there were 63 million other American voters who were not ready to give up on the American dream.

"I know how you feel."
Credit: Getty Images/AM New York

The post below is what I wrote on the morning after that great night which I titled, "Shock and Awe".

I think it bears reading again.

A year later I reflect often on what happened and it is still difficult for me to not be in awe.

I was on record early in the campaign that I thought that Trump had a winning message. I wrote this in July, 2015 in a blog post titled, "Will Trump Be A Trumpet Call To The GOP?".

There is a substantial part of the electorate that are fed up with Washington, politics as usual, and political correctness. They are tired of our borders being overrun with illegal immigration while nothing is done by either the Republicans or Democrats. They are tired of the United States being the world's policeman and getting spit in the face. They are tired of seeing every trade agreement resulting in job losses for Americans. They are tired of seeing Islamic extremism being called workplace violence or the acts of lost souls. They are tired of lousy laws and terrible treaties being sold as "good as we can get."
What will be most interesting to me is whether the message survives even if the messenger does not.

Although I believed it was a winning message, I did not think Trump could survive the media and establishment gauntlet he would have to endure to become President. At that time, and continuing through much of the primary season, I simply did not think Trump could withstand the attacks that would come his way in order to win the general election.

However, the more I saw him take those attacks, dish out his own and turn out the crowds he was getting on the campaign trail, it appeared to me that something bigger was in play.

How else do you explain how a candidate could withstand the fallout from the Access Hollywood tape one month before the election?

How else do you explain how a candidate could be outspent 2:1 (Hillary spent $1.2 billion) and win?

How else do you explain how a candidate could withstand media coverage that was 91% negative during the course of the entire campaign?

How else do you explain how a candidate could be opposed by a significant number of influential people in his own party (NeverTrumpers) and still win. In fact, former President George H.W. disclosed this week that he voted for Hillary.

How else do you explain how Trump won my home state of Ohio when the GOP Governor (Kasich) openly opposed him, the GOP State Chairman offered no support and the GOP U.S. Senator (Portman) withdrew his support after the Access Hollywood news?

Let's put that in context.

Bill Clinton won the state in 1992 and 1996.
George W. Bush won the state in 2000 by 3.5%.
George W. Bush won the state in 2004 by 2.1%.
Barack Obama won the state in 2008 over John McCain by 4.6%.
Barack Obama won the state in 2012 over Mitt Romney by 3.0%.

Donald Trump beat Hillary Clinton by 8.5%!

(If you are interested, I did an in-depth analysis on how the Ohio vote swung to Trump last December here.)

The election of Donald Trump cannot be explained by looking at any traditional measures of politics.

This is what makes it so hard for politicians to understand what is happening.

What do we know a year later?

Trump reshaped the Republican party but the Republicans in Washington still appear to not have gotten the message. Many keep saying that Trump does not represent "their" Party.

I wrote last year in the run up to the election that if Trump won he would define the Republican Party. This is something that the Republican Establishment still does not seem to recognize and accept. The voters make the call on what "their" party stands for and who represents them. It is not the politicians who decide. Those that do not understand this fact will not survive in office.

Perhaps it is slowing starting to  dawn on them. What else can you conclude by looking at the loss by Luther Strange in Alabama along with Corker in Tennessee and Flake in Arizona choosing to not run for re-election (after looking at the polls).

What else do we know a year later?

The liberal left and the mainstream media still have a lot to learn about civility and respect.

They continue to show little respect for my views and they certainly show no respect to the President. It is as if they still do not believe those 63 millions votes spread among majorities in 30 states.

People ask me if I am happy with Trump. I like the big picture and the contrast with Obama's agenda. However, I don't like the drama and the distractions. My main gripe is that Trump has not stayed on message enough. He has been too accommodative and deferential with Congress at times. He is also letting the bureaucrats in Washington undermine his goals at many of the agencies that are supposed to be part of the Executive Branch.

I stated a year ago that Trump had a monumental challenge ahead. He is surrounded on three of four sides--the Democrats, the media and the Republican establishment. His only reliable allies are the people that voted for him. If he is to succeed he needs to always keep that in mind. It is the only way forward for a man stuck in the middle of a swamp and surrounded on three sides.

Of course, if I look at everything that has put Donald Trump where he is today, it is almost impossible to conclude that he does not have someone else on his side. You can be surrounded on all four sides and survive if He is with you. It is hard to look at what has happened with Trump and not at least consider that as an explanation for that which should otherwise be unexplainable.

Shock and Awe
(originally published November 9, 2016)

Donald Trump has shocked the political and media establishment and has left liberal Democrats in utter shock and disbelief.

I know where they are coming from. I was in a similar place four years ago.

This tweet from Michele sums up a lot of what some of those on the left are feeling today.  I must say it is not dissimilar to how I felt exactly four years ago.

I felt similarly about getting out of bed every morning, going to work, paying my taxes, obeying the laws, respecting my country and being a man of Christian faith when half the country did not seem to care or respect my rights, our laws, our constitution or my contributions to my country and the public welfare.

Did the left care about me? Not in the slightest. They did not give me a second thought. I will not be that way. I understand and empathize with what they are going through. I hope that this experience will give them a little more perspective and respect for my views.

I am not a racist because I do not like Barack Obama's policies.

I am not sexist because I think Hillary Clinton was corrupt.

I am not xenophobic because I believe that a nation must have borders and its leaders should obey and enforce the rule of law.

I am not homophobic because I believe in the sanctity of marriage between one man and one woman or that men and women should use the proper rest room.

I am not Islamaphobic because I believe that we should have a very careful and stringent vetting test on any immigration from known terrorist countries which might undermine our national security.

I am not an obstructionist because I believe that the Constitution means something. If you don't like something, pass a law or amend the Constitution, don't use executive orders and the judicial system to subvert the rule of law.

If we learned anything last night it is that the people of the United States have the ultimate sovereign power on what kind of country they want to have. Every member of the House of Representatives must stand for re-election every two years. The President stands for election every four years and can serve no more than two terms. Terms for each Senator are only six years. The people have the power to literally turn the country on its head if they want.

We have seen the effects of that over the last eight years. The people have turned it on its head.

When Barack Obama passed Obamacare in his first term he had a 60-40 majority in the Senate and 258-177 majority in the House. Donald Trump will take office with what looks to be a 52-48 GOP majority in the Senate and somewhere close to a 240-195 majority in the House.

This is the legacy of Barack Obama. He has taken overwhelming majorities in the Senate and House and provided the Republicans meaningful majorities in both houses of Congress and the Presidency for the first time since 1928!  This did not happen because voters were happy with the policies of Barack Obama.

It also did not happen because Republicans or others who voted these people into office are racists as some of the liberals on the left want you to believe.

For example, in South Carolina last night, Donald Trump won South Carolina with a 14.1% voting margin. Tim Scott, the African-American Senator from South Carolina won his race with a 23.5% victory margin. Where is the racism when you look at the numbers? The black candidate outpolled the white guy in a deep Southern state.

So much for the shock.

What about the awe?

Awe is the only word I can use to describe what Donald Trump has accomplished.

He took on the Republican establishment when he first got into the primaries. He then took on the Democrats. Finally, he withstood the media elite who conspired against him and he ultimately completely confounded them all.

He had very few of any consequence on his side. In the end, the only thing he had on his side were the people, And in America, that is all that you need.

It is the most amazing accomplishment that I have seen in six decades of closely watching politics.

And it was not luck that propelled Trump to victory.

As Paul Ryan said today, "Donald Trump heard a voice out in this country that no one else heard. He connected with—he connected in ways with people no one else did. He turned politics on its head.”

Trump also did it through old-fashioned hard work. I don't believe I have ever seen a national candidate work harder on the campaign trail. His schedule down the stretch was herculean. If nothing else he showed he has the energy and enthusiasm to work for the American people.

In the process he has reshaped the Republican party. Make no mistake, it is his party now. It also positions the Republicans to become the party that has the potential "to end the long partisan tug-of-war, ending the era of split government that had lasted through four decades" and be the majority party for a generation according to the predictions of Howe and Strauss in "The Fourth Turning."

I don't know if the Republicans can do it. However, I do know that Obama and the Democrats were positioned to do it with their majorities eight years ago and squandered the opportunity.

If Trump ends up doing that, I will truly be in awe.

Thursday, November 2, 2017

A "B" For Better

The House Ways and Means Committee released its proposed tax reform legislation today.

It came out pretty much as I expected as I wrote earlier this week in "The Road To Tax Reform." 

Is it perfect? No. Is it an improvement on the current system? Yes.

My overall grade? A "B" for better.

Revising the Internal Revenue Code is always risky business. There are so many special interests provisions that have been incorporated into the system that any attempt to deal with these is guaranteed to bring howls and hysteria from somebody.

You also have the reality that if you want to lower rates and make things simpler (goals that almost everybody agrees with but for a committed leftist ) you have to get rid of some deductions or tax benefits in order to not bust the budget.

It is a balancing act. What do you trim away from some to provide a tax cut for many more?

The politics are also a balancing act. There are many things that would be nice to do from a tax policy standpoint that just cannot be done politically.

For example, this guy is complaining because there will be no tax rate reduction in the bill for those with joint incomes over $1 million. He said everyone was promised a tax cut during the campaign.

I think he is a little short-sighted in his criticism.

First, I think President Trump spoke primarily about a "middle class" tax cut during the campaign.

Second, there are benefits in here for higher income taxpayers in the estate tax, a lower business tax rate, asset expensing and the like. A rate cut is not everything.

I don't disagree with his sentiments that it is not the best tax policy to have the government further skewing the tax distribution tables and picking winners and losers. However, the politics demanded this.

If the GOP had cut the tax rates for millionaires the Democrats would have demagogued this bill to death. All we would have heard is that this is nothing but a tax cut for the rich.

It might have endangered the entire bill in the end.

We will still hear the same refrain about the rich from the Democrats. That you can count on. I explained that in my last post. The fact is that they are paying most of the taxes. It is hard to do any tax cut and not touch the rich in some way.

However, leaving the top rate unchanged for those millionaires gives the GOP a talking point in response.

"What are you talking about?". We left the tax rate unchanged for millionaires." "The only tax rate cuts are for those making less than that."

The bill also generally repeals the deduction for state and local taxes. I wrote about why this made sense in my last blog post on this subject. This deduction is particularly valuable for high income earners so repealing this made the most sense to tilt tax savings in the bill away from the rich.

As I predicted, an exemption was made to allow taxpayers to deduct up to $10,000 in property taxes per year.

The home mortgage interest deduction was also trimmed. It will only be allowable on the first $500,000 of mortgage debt on homes purchased in the future. Those who have larger mortgages right now will be grandfathered to allow the deduction to continue for their current house.

Both of these carve-outs will help the middle class.

I generally like what the House tried to do in streamlining and simplifying the tax law. They also are proposing to repeal the medical deduction, the deduction for personal casualty losses and deduction for employee business expenses. These deductions added a lot of complexity to the tax return and also required the deduction to be above a percentage of AGI so they were beneficial to a relatively few number of taxpayers.

This lined copy from Forbes shows current law as adjusted for the proposed changes to itemized deductions in the House bill.


The big news involves the tax rate cuts.

Seven tax brackets are being reduced to four.

This chart shows the comparison of old and new rates for a married couple filing jointly.


You can see from the chart that up to $260,000 in joint income it is probably a pretty good bet that most people will benefit. Above that level it is going to depend more on what the trade-offs are on the lost itemized deductions. However, it needs to be remembered that this bill also greatly increases the standard deduction. This alone is projected to mean that 27 million taxpayers will no longer have to itemize their deductions. They will do better with the standard  deduction. This will also result in an enormous simplification of the tax return filing system for many taxpayers.

Here is an example of what the tax "postcard" that it is expected that 90% of taxpayers will be able to use to file their annual tax return.

Credit: House Ways and Means Committee

All in all, when you look at all of this you definitely see the slant toward the middle class income earners in everything that was done.

If there are benefits to the so-called "rich" they are going to generally be available more to those with businesses that create jobs with the lower corporate and "pass-through" business income tax rates ( I am not even going to try to explain the "pass through" rate but I expect this to be a very contentious issue in the debate on the bill).

Will the Republican Congress be able to get a tax reform bill like this over the finish line?

It will not be easy.

The special interest groups are already spinning into action.

They are more concerned with "ME" than with "WE".

I have not run the numbers but I doubt if I am going to benefit directly from this bill. My state and local tax bill is pretty high. I don't have any dependent children to take advantage of the increased child tax credit. I don't own a corporation. I don't have any profits to repatriate from overseas.

However, I believe it is worth doing this reform for a broader, flatter and simpler tax system...and for what it can do for our nation's economy.

Those in Congress need to think the same way. Think "We" rather than "Me".

This bill is not perfect. Far from it.

However, I give it a "B' for better than what we have now.

That is the way the GOP Congress has to grade it as well.

If they do not, they are facing an "F" for failure on their legislative agenda this year.

That is not a good place to be heading into an election year.