The Un-American Dream: Kamala Proposes Price Controls
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As the U.S. economy emerges from the grip of high inflation, the road ahead remains uncertain. While the Federal Reserve’s battle against rising prices shows signs of progress, market fears of an impending recession loom large. According to recent reports from Goldman Sachs and JPMorgan, the market-implied odds of a downturn have "risen materially," reflecting a growing unease despite declining inflation rates.
This concern is compounded by a cooling labor market and increasing delinquency rates, with more Americans skipping credit card and auto loan payments. Delinquency expectations are now at their highest since the peak of the COVID-19 pandemic, signaling financial strain on households. Even as wholesale prices came in softer than expected last month, and the Consumer Price Index (CPI) for July showed a mere 3% annualized increase, markets remain on edge.
In the wake of these developments, Vice President Kamala Harris faces the challenge of convincing American voters that the administration can steer the economy through these turbulent times. Although inflation is no longer the top issue for voters, concerns about the broader state of the economy, including labor and stock markets, have taken center stage.
Financial markets have responded to these mixed signals with characteristic volatility. Bitcoin and Ethereum experienced sharp declines following the release of the CPI data, with both cryptocurrencies losing significant value before partially recovering. U.S. equities also stumbled, with the S&P 500 and Nasdaq Composite suffering early losses before regaining some ground later in the day. The report sparked speculation about a potential interest rate cut by the Federal Reserve in September, but the underlying worry remains: Is inflation slowing because growth is stalling?
As fears of recession grow, investors are flocking back to bonds. More than $66 billion has flowed into fixed-income funds since July, underscoring the shift from inflation fears to concerns about economic slowdown. This move highlights the renewed appeal of bonds as a hedge against stock market turbulence, especially as growth decelerates and central banks, including the Federal Reserve, are expected to cut interest rates further by year-end.
Meanwhile, corporate earnings reports paint a varied picture of the economy. Retail giant Home Depot revised its sales forecast downward, citing high interest rates and macroeconomic uncertainty as factors deterring consumer spending on home improvement projects. Similarly, Walmart reported strong earnings but warned of continued price sensitivity among shoppers, leading to a cautious outlook for the remainder of the year.
In this complex environment, Vice President Harris has unveiled a new economic plan aimed at tackling lingering inflation and high costs. Her proposal to ban “price gouging” by food suppliers and grocery stores seeks to address voter concerns about persistently high grocery prices, even as overall inflation eases. However, the effectiveness of such measures remains in question, with economists divided on whether price gouging is a significant factor in today’s economy.
Harris’s initiative reflects the administration’s attempt to address inflation, which remains a politically charged issue. While grocery prices rose only 1.1% in July compared to a year earlier, they are still painfully high compared to pre-pandemic levels. The proposal to ban price gouging targets spikes in prices that typically follow supply disruptions, a phenomenon that became all too familiar during the pandemic.
Critics argue that this approach could be seen as a form of price control, reminiscent of the failed policies of the 1970s, arguing that increasing supply is the best way to decrease price. Others, however, view it as a necessary consumer protection measure, aimed at curbing corporate practices that exploit supply chain disruptions for profit.
While price controls might seem like a quick fix, they are not only contrary to the principles of a free market but also harmful to the economy. Venezuela serves as a cautionary tale.
In 2003, the Venezuelan government implemented price controls on approximately 400 basic food items, aiming to "counter inflation and protect the poor." By March 2009, they extended these measures by setting minimum production quotas for 12 essential foods, including white rice, cooking oil, coffee, sugar, powdered milk, cheese, and tomato sauce. However, the absence of a free-floating currency caused the government to overpay for these goods, resulting in significant shortages. As imports dwindled, demand continued to grow, exacerbating the scarcity of these essential items.
One could expect that price controls in America will lead to further shortage of goods and widespread subsidies to keep grocery stores stocked.
This Week By the Numbers 📈
🌍 Geopolitics & Government
Trump taps Cantor Fitzgerald CEO Harold Lutnick on as co-chair of transition team
Japan’s Prime Minster to step down
Prime Minister of Bangladesh Sheikh Hasina resigned on Monday and fled the country
U.S. Secretary of State approves sale of $20B worth of military equipment to Israel
U.S. releases $3.5B to Israel to spend on U.S. weapons and military equipment
💰 Finance & Economics
Goldman Sachs discloses $418M worth of Bitcoin ETF holdings
UK inflation reported increase below expectations at 2.2%
Reserve Bank of New Zealand cuts cash rate by 25 basis points, lowers rate forecasts
Mars will acquire Kellanova, maker of Pringles and Cheez-Its, for $35.9B
South Korea’s public pension fund buys $34M worth of Microstrategy, $51M Coinbase
El Salvador announces $1.6B investment for new Bitcoin City
🏦 Cryptocurrency & Blockchain
Trump reveals he holds up to $5M in ETH, $7M in NFT licensing
US Government moves 10,000 BTCs (~$600M) to Coinbase
Third largest public pension fund, NPS, buys $34 million worth of MicroStrategy shares, the largest institutional holder of Bitcoin
$1.3 trillion asset manager Morgan Stanley discloses $187 million Bitcoin ETF holdings
Coinbase teases the upcoming launch of tokenized Bitcoin, cbBTC
IRS releases new draft crypto tax form omitting wallet addresses
Marathon Digital stamps ‘Made in USA’ on Bitcoin blocks mined
Bitcoin miners at ‘max pain’ as experts reckon bottom is in
Binance returns to India following 7 month ban
Dubai court recognizes crypto as valid salary payments
Circle says tap to pay using USDC on iPhones coming soon
🧪 Science & Technology
xAI’s Grok chatbot now lets you create images from text prompts and publish directly to X
Pump.fun has 24h revenue that outpace the next 24 crypto protocols combined
Low-cal sweetener linked to increase blood clots, heart attacks, and strokes
Scientists find water in Mars
U.S. agency develops new standard for timekeeping on the moon, where atomic clocks tick faster
Top Stories 🗞️
US Considers a Rare Antitrust Move: Breaking Up Google
A bid to break up Alphabet Inc.’s Google is one of the options being considered by the Justice Department after a landmark court ruling found that the company monopolized the online search market, according to people with knowledge of the deliberations. The move would be Washington’s first push to dismantle a company for illegal monopolization since unsuccessful efforts to break up Microsoft Corp. two decades ago. Less severe options include forcing Google to share more data with competitors and measures to prevent it from gaining an unfair advantage in AI products, said the people, who asked not to be identified discussing private conversations. Alphabet shares were down 3.8% at 10:13 a.m. in New York, the most since Aug. 5, when a federal judge ruled the company has an illegal monopoly in the search market.
Ukrainian troops have captured 28 Russian settlements
Ukrainian troops have captured more than two dozen settlements in Russia's western Kursk region since launching its incursion nearly a week ago, as thousands of residents have been ordered to evacuate, Russian officials said. The commander-in-chief of the Ukrainian armed forces, Col. Gen. Oleksandr Syrskyi, said Monday that Ukraine controls about 386 square miles of Russian territory as it continues its offensive operation in the Kursk Oblast. Some 180,000 residents of Kursk have been ordered to evacuate and about 121,000 of them have left their homes in the areas near the border with Ukraine, Smirnov said.
SEC charges NovaTech with allegedly operating a pyramid scheme that raised $650 million in crypto
A couple who founded company NovaTech Ltd., allegedly operated a pyramid scheme that raised more than $650 million in cryptocurrency, according to the U.S. Securities and Exchange Commission. The scheme affected more than 200,000 investors globally, including many in the Haitian-American community, according to the SEC. "Certain Defendants targeted affinity groups, in particular the Haitian-American community, and used religious overtones and appeals to financial freedom and independence to solicit investors," the SEC said in the complaint filed in the U.S. District for the Southern District of Florida. The Petions "lured investors" by saying that NovaTech would invest their money in crypto and foreign exchange markets, but instead, NovaTech used most of those investor funds to pay existing investors, pay commissions to the promoters and spend millions of dollars on themselves, the SEC said.
Schumer Sets Stage for New Era of U.S. Crypto Politics
The big news from the Crypto4Harris town hall Wednesday night is that Senate Majority Leader Chuck Schumer is going to try to pass a crypto bill through the upper chamber by the end of the year. "Congress has a responsibility to provide common sense and sound regulation on crypto, and we need your support to make sure that any proposal is bipartisan," he told the online group, which was assembled to prove that Democrats are “engaged” on crypto issues this election year. Of course, the background here is that Democrats… haven’t exactly been engaged on crypto for a long time. The Biden Administration has said little publicly on the issue but has quietly backed a host of crypto-unfriendly actions through the Department of Treasury and, by proxy, the Securities and Exchange Commission.
MetaMask Starts Rollout of Blockchain-Based Debit Card Developed With Mastercard
MetaMask, the popular self-custodial crypto wallet for the Ethereum (ETH) network, is starting the rollout of its blockchain-based debit card developed with payments giant Mastercard (MA) and crypto payments specialist Baanx. The offering comes as traditional financial services and blockchain-based digital assets are getting increasingly intertwined. As global institutions tokenize old-school instruments like bonds and credit and asset managers start offering bitcoin (BTC) and ether (ETH) exchange-traded funds, payments giants are exploring ways to implement blockchain tech into financial rails. Mastercard has been working with Baanx on its web3 payments initiative, connecting traditional payments with crypto platforms like hardware wallet firm Ledger and decentralized exchange 1inch. Rival company Visa (V), meanwhile, has partnered with Circle's USDC stablecoin and the Solana (SOL) network to speed up cross-border payments.
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Until next week,
Tatiana Koffman
About the Author: Tatiana Koffman
Hi there and thanks for reading! If you stumble upon my newsletter, you will notice that I write about money, economics, and technology. I hold a JD/MBA and spent my career in Capital Markets working across Mergers & Acquisitions, Derivatives, Venture Capital, and Cryptocurrencies. I write to make financial topics more accessible and create equal opportunity for the next generation of investors. Currently working as a proud General Partner at Moonwalker Capital.
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