Welcome to another edition of The Mueller Report!
Updates
Well, it’s been a week (or two now that I have finally finished this!). I was able to do a couple short TV interviews this week, lead a discussion with AIER’s interns about entrepreneurship, and give a talk to the Bastiat Society in Colorado Springs about ESG.
The kids and Kathryn were taking spring break last week – so they went skiing several times. Amid many adventures of various kinds, Sylvia managed to injure her thumb/wrist. While it wasn’t debilitating, it was severe enough that we decided to get it checked out – and the x-rays showed she did indeed break another bone.
Also last week, we had some decent snow (about 8-12 inches). I got to try out plowing our church’s parking lot. Thankful for a friend who had done it once or twice himself coming along for the ride. The church has an old manual truck with a plow – so you get to practice driving stick while adjusting the plow and figuring out how to get the snow where you want it to be. An exciting twist was that towards the end of the plowing, the truck engine died after idling for more than three seconds or so – which meant a three-second window to shift between gears!
A friend installed another door for us at The Abbey – which means we are in the early stages of being able to create a fully autonomous apartment when we want to. Kathryn got her first commissioned stain glass order for two windows – with some interest from another person for a Texas A&M design piece.
I also need to correct some information I gave in the last newsletter. Our basement space is not 1200 – 1400 feet. After reading my comments a couple weeks ago, Kathryn quickly let me know that was clearly wrong. So I wrangled my six year old to help me measure the square footage to get a more accurate picture (which matters for tax purposes, not just accuracy in this newsletter). Here is what we found:
Personal space: ~600 square feet
Shared space (i. e. boiler and hot water heater room): ~250
So it really is a bit tight for seven people…
News
Inflation ticked up this past month. Nothing crazy, but also not something to dismiss either. It suggests that inflation continues to linger, even with the higher interest rates. And that means that prices are still rising at over 3% annually. The market anticipates the Fed will begin cutting interest rates in June. If we don’t see a reading below 3% year over year, I think they will probably wait even longer.
Surprisingly, the economy still seems strong. Housing prices and stock prices are setting records. People’s wealth on paper has had healthy growth. The labor market remains relatively tight and average wages are rising. I still think there are several headwinds, but I’m also trying to understand why I was overly pessimistic the past two years and whether I am still being overly pessimistic. One of the most striking things about financial crises is that they tend to come when almost no one expects them.
Do we just have to stop expecting the other shoe to drop for the other shoe to drop?
Federal spending continues to spiral out of control. Biden proposed a federal budget of over $7 trillion dollars for the next fiscal year. The federal debt has increased over $3 trillion dollars in the past year. One of my daughters asked me recently what came after a trillion. After confirming she was not asking about one trillion and one but a quadrillion, I had a shocking thought: “The debt level of the federal government of the United States will hit a quadrillion dollars someday.”
Currently it is just over $34.5 trillion. If we continue adding $3 trillion per year, it will hit $100 trillion in 22 years (before 2050); and $250 trillion by 2100.
On the one hand, $3 trillion in added debt seems like a fluke. On the other hand, government spending seems to be growing by leaps and bounds. Who can say that, in 5 or 7 or 10 years we won’t have another profligate President and Congress who run a $5 trillion or $6 trillion deficit? I would bet against the Federal debt hitting $100 trillion by 2046, but I would bet that we will surpass $250 trillion before 2100.
All of this is in nominal terms, though, and doesn’t consider inflation and the declining value of the dollar. 3% annual inflation for the next 22 years means that a dollar will be worth 1/2 what it is today by 2046. So that $100 trillion dollar debt would be the equivalent of *only* $50 trillion in today’s dollars. If you stretch that inflation to 2100, the dollar will only be worth 1/9 what it is today and $250 trillion would be the equivalent of about $27 trillion today – less than our current debt.
The projected debt shrinks in real terms because I assume the value of the dollar declines by 3% annually, but the debt only increases by $3 trillion every year. After the debt passes $100 trillion, that $3 trillion annual growth becomes less than 3% of existing debt – meaning the debt grows more slowly than the dollar loses value. Adjusting for these inflation assumption, today’s $3 trillion deficit would be roughly equivalent to a $27 trillion dollar deficit in 2100 in devalued future dollars.
Just a little back of the envelope figuring here – who knows how things will play out over that long a time.
Reflection
As I’ve reflected on Psalm 2, I reached methods 4 & 5 from Don Whitney’s list in Spiritual Disciplines before having the Psalm memorized. Method 4 involves coming up with or looking for an illustration for the text. Jesus often used parables and metaphors starting with “The kingdom of heaven is like…” to illustrate his point. So what kinds of illustrations or examples do we have of Psalm 2 about the nations, peoples, kings, and rulers raging and plotting against God and suffering the consequences: “Kiss the son, lest he be angry and you perish in the way. For his wrath is quickly kindled.”
After a brief reflection, I found many clear biblical illustrations: the quick downfall of Haman and the reversal of his plans to destroy the Jews, Herod being struck down for receiving praise and not giving praise to God, the counselors and satraps that plotted to have Daniel thrown in the lion’s den being thrown in themselves, judgments on Nebuchadnezzar and Belshazzar, etc. God’s judgment seems to tarry until it doesn’t – “his wrath is quickly kindled.”
In most of these examples, the final verse of Psalm 2 also rings true: “Blessed are all who take refuge in him.” Esther, Daniel, etc. were preserved during the judgment of wicked rulers.
Method 5 (find an application) was more challenging for Psalm 2. “Serve the Lord with fear, and rejoice with trembling….Blessed are all who take refuge in him,” these seem practical, though general. How do we “take refuge” in the Lord? And what does it mean to rejoice “with trembling?” It reminds me of Paul’s exhortation to keep a “close watch” over your life and your doctrine when he writes to Timothy. This also connects with the repeated claim in Proverbs that “The fear of the Lord is the beginning of wisdom.”
Writing
Law and Liberty will be publishing my article about the “goodness of free enterprise capitalism” on Monday. I received some helpful comments and questions from one of the editors – so the final piece is almost 800 words longer than the original one, but I think it is much clearer than it was.
I wrote a column about the SEC this week. They implemented new Climate-Related Disclosure rules that require publicly trade companies to disclose emissions produced by their operations and emissions produced when the energy they used was created. The rules are onerous (over 800 pages!), unnecessary, and unrelated to companies’ financial performance. The column hasn’t been published anywhere yet, but I’ll link to it when it is.
I’ve also been working on another long ESG article. This one spends more time looking at the tensions (and often contradictions) between environmental criteria, social criteria, and governance criteria. The general argument is that there is no clear logical relationship or connection between the E, the S, and the G of ESG. Instead, they were thrown together to serve as a useful umbrella for a whole set of “corporate responsibility” issues and progressive ideological goals.
If you want things to check out, here is an interview I did for NTD earlier this week.
AIER has also launched two new podcasts: Qualified Opinions and Econception
There are both good, though I prefer Econception at the moment.
Game Corner
This week we broke out a classic game, Innovation, that we’ve been playing for over a decade now. It’s a great two player game and is also fun to play with partners. I won’t walk through the dynamics of play here because it will be hard to conceptualize without seeing the cards themselves. The play is not too complicated. The more challenging part is learning what all the cards mean and do. Each card is different!
The idea of the game is that you play innovations from various ages (pre-history to enlightenment to modernity to the information age). There are nine ages, each with its own stack of cards. For each age you can earn one achievement with points you have gained. The achievements become more expensive as they come from later ages – and you have to have an innovation card played on your board from that age or beyond it in order to achieve (i. e. you can’t get an achievement for the Enlightenment when your most advance innovation is from the bronze age).
There are also five special achievements you can get by meeting certain general conditions or specific card conditions. There are different kinds (colors) of innovation and a variety of icons on each innovation card. The number of icons is important about how other players interact with you when you exercise “dogma” the abilities of a specific innovation.
One other great thing about innovation is its compactness. It’s basically two decks of cards and four score/achievement/instruction sheets. Great for travel!
Have a good weekend!