The Harris/Walz ticket is offering Joy and Vibes as a campaign promise, but that will neither help pay the bills nor stock the shelves in the short or long term future.
August 19, 2024
By: Bobby Casey, Managing Director GWP
She was wildly unpopular. Her personality, her policies, her track record… nothing about her resonated with the people.
She somehow became the presumptive nominee for the 2024 election, with no one actually casting a vote for her.
From Hope and Change to Joy and Vibes
Despite that, we have spiraled a long way from Hope and Change to land on Joy and Vibes. Kamala is just the wine mom the US needed! And her running mate, Tim Walz, is the dad everyone with daddy issues could want!
It’s really odd that the characterization of the democratic ticket is so cartoonish, and low-key predatory. Tapping into the weaker points in society and appealing to the trend of a “wine mom” and a dad that is more empathetic to your whims isn’t really the aspirational vision one would expect from world leaders… but okay.
The cornerstone of Hope and Change was universal healthcare or what would become Affordable Care Act. There is neither an increase affordability nor care on the other side of that.
The cornerstone of Joy and Vibes is trickling out slowly as there are no clear policies indicated on the website as of yet. However, one possible idea fomenting in the Kam Camp’s barren fields of policy is to address inflation by prohibiting “price gouging” and subsidizing home buying.
What is Price Gouging?
Price gouging is a boogeyman created by people who don’t understand basic economics. It’s like “trickle-down economics”. That isn’t an actual thing in economics. But if it’s repeated enough, you’ll believe that it is a thing.
The claim is that corporations are making “record profits”. As a whole number, yes. As a net margin, no. Large corporations aren’t immune to the effects of inflation. If the currency is worth less, they are also charged more. They pay the same fuel costs we all do to move things around. They pay the same costs for raw materials any other company would.
What they are calling “price gouging” is the record profits as a whole number. What they are ignoring is the flat if not reduced net profit margin: that is, that whole number relative to their costs and actual value of the currency. That net profit margin is what shareholders (including retirees) are looking at.
How can Joy and Vibes help a debt laden economy?
The thing is, the last time price controls were introduced n the US, it failed miserably. Politicians are as unimaginative as moviemakers right now. We’re literally rebooting everything with a diverse woke spin. And they are going to fail just as much.
Under President Richard Nixon, there were price fixes instituted in August 1971. They were so popular, it all but locked in his reelection. And then the results came out:
However, by 1973 and the advent of the OPEC Oil Embargo it had become clear that price controls did not work. As the New York Times noted in June of 1973:
“Housewives searching their supermarket shelves this coming week will find most of what they want still there. But widening circle of food processors and retailers are caught in a profit squeeze resulting from the price freeze, and this is beginning to curtail production of some foods… It could lead to shortages of many items in the next month.
Every echelon of the food industry, from farmers to retailers are criticizing the ceilings imposed on meat in March and on all other items on June 13. Their unhappiness about the ceiling has contributed to recent warnings of shortages.”
If this is the Joy and Vibes people have to look forward to, they need look no further than a few decades behind us to know what that will lead to.
So if shortages are the Vibes, more debt must be the Joy?
Housing affordability, or the lack thereof, is the “student loan forgiveness” policy of the Harris campaign. Rather than give everyone with student loan debt $25,000 in loan forgiveness, she’s going to give new home buyers up to $25,000 toward a down payment.
The subsequent headline could unironically read: “In a totally unrelated story, housing prices went up 6%” because $25,000 is about 6% of the median home price right now in the United States.
This is the most detail I could find on the plan, as it’s not on her website. No cost analysis yet on how much this will cost:
The proposal includes $25,000 in down payment assistance for 400,000 first-generation homebuyers, defined as those whose parents do not own a home. To qualify, these families must have a history of paying rent on time for at least two years. Additionally, the plan offers a $10,000 tax credit for first-time homebuyers.
Free money leads to surges in demand, but also surges in liability and debt. If NIRP and ZIRP or student loans weren’t clear lessons in that, I don’t know what are.
Yet, part of the plan is to subsidize new home buyers with up to $25,000 in down payment assistance. The average closing costs on a home loan is 2%-6% of the purchase price of a house. If the median price of houses is $420,000 then that entire amount could be swallowed up in closing costs alone.
That doesn’t cover the PMI (private mortgage insurance for those who don’t put at least 20% down), the property taxes (which in some states like Texas, New Hampshire, and Illinois is incredibly high), or the home owner insurance. But people are still going to go for this.
What can we to to avoid the Joy and Vibes fall out?
Who will benefit? Lenders, banks, realtors, and sellers will likely benefit in the short term, but in the long term, the cost of living is going up because the inflation of the money supply will continue and the “anti price gouging” measures will create scarcity and a very expensive black market.
With the money supply continuing to inflate, the currency plunging in value, and once great societies becoming untenable, it’s time to start thinking about a contingency plan. What can you do? Where can you go? How can you prepare for it all?
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