Paulitical Economy™

By Paul Musson

A snapshot of what’s going on in the world’s economy.

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FAQs about Paulitical Economy™:

How many episodes does Paulitical Economy™ have?

The podcast currently has 25 episodes available.

Paulitical Economy™ episodes:

November 25, 2025Post 343: America is trading down and the affordability crisis policymakers don’t want to fix
Home Depot sales are once again weakening.
They’re blaming a lack of hurricanes.
Target department store sales are accelerating downwards.
With discretionary items taking the biggest hit.
Meanwhile, consumers are increasingly turning to off-price retailers such as TJ Maxx and Marshalls.
Sales are accelerating upwards.
Core inflation in Canada remains elevated.
And I add some comments on the scandalous increases in property taxes and new development charges over the last twenty years.
In Financial Ructions:
Record low mortgage rates resulted in record high home prices and record high profitability for homebuilders: We look at Lennar.
They are now going in reverse.
But home building costs are sticky downwards.
And record permanent buydowns by homebuilders are preventing home prices from falling even faster.
In our book review of Where Keynes Went Wrong by Hunter Lewis.
We see that Keynes believes that savings without an expectation of profit will not lead to economic prosperity.
Yes, and expectations of profit without savings will have the same effect.
And how Keynes reverse engineers to justify government intervention.
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42min
November 17, 2025Post 342: Wealth Disparity in the Special K Economy – Even the Fed is Noticing
Americans are dining out less often.
Traffic has been down eight months in a row.
Yet Darden, owner of Olive Garden, is seeing same store sales accelerate.
But not Wendy’s:
US same store sales are accelerating downwards.
They said that lower income consumers remain under pressure.
And we take a look back.
As financing costs go up, used car sales go down and loan losses go up.
CarMax, the largest used car dealer in the US, is struggling.
Car repossessions in the US could hit a new record this year.
Penniless: The US stops minting pennies.
And why this is a sad indictment of monetary policy in developed economies.
Older Americans have a much higher delinquency rate on student loans than younger ones.
The US government is proposing 50-year mortgages:
This is a really bad idea.
But it didn’t stop the Canadian government from also going down that path back in 2006.
After a year of declining sales, Caterpillar turns things around.
Government spending is helping.
In Financial Ructions:
The establishment is finally waking up (or admitting) to the fact that the US is a two-tier economy.
This is what happens when one part of society benefits at the expense of the other.
This is the opposite of capitalism.
And we revisit when a former vice chairman of the Fed said people were too stupid to realise the economy was in great shape.
In our book review of Where Keynes Went Wrong
Hunter Lewis and I address Keynes’s assertion that saving is bad for the economy during an economic slowdown.
And it’s related to what I consider to be the most dangerous word in economics.
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58min
November 10, 2025Post 341: Denial and Decline: Signs from the Real Economy
Manufacturing in the US has been contracting for most of the last three years.
Chipotle has a younger customer base that is struggling economically and thus eating at home more often.
Its share price is down 47% this year.
Starbucks comparable sales finally turn positive – just.
Introducing the PM Loser Index.
McDonald’s sales tick down a bit but still in positive territory.
Traffic from low-income consumers was down almost 10%.
Inflation pressuring margins but profitability still rose.
Clorox sales are down.
And consumers across all income groups are trading down to lower cost/better value items.
Diamonds are a man’s best friend?
Kimberly-Clark sales ticks down but still in positive territory – just.
And they announce the acquisition of Kenvue (the consumer health company that Johnson & Johnson spun-off).
My thoughts on why they bought it.
Tyson Food’s beef division is steadily increasing beef prices, but continues to lose a considerable amount of money.
Consumers seem to be switching from beef to chicken.
And a look back.
In Financial Ructions:
We look at a WSJ article from February of 2008 by the late Martin Feldstein.
And how he saw well before others that the US was in recession.
And why the downturn would be more severe and last longer than previous recessions.
And some similarities to today’s situation.
Book Review
We continue Chapter 10 of Where Keynes Went Wrong by Hunter Lewis.
We find that Keynes believes that interest rates should be driven to near zero and kept there.
HL and I explain why this is really bad for the economy.
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42min
November 03, 2025Post 340: The Reckoning Begins: Capital Misallocation Comes Home To Roost
All of a sudden a lot more companies are announcing layoffs.
Things have significantly changed from when companies used to hoard employees just in case.
A look back at Porsche.
And sales are falling as their customers are feeling poorish.
US inflation ticks up to its highest level in eight months with core inflation remaining well above the Fed’s 2% target.
Which itself is a joke.
Core inflation measures in Canada remain elevated.
One of the biggest increases is in property taxes.
As new development tax revenue plummets what for property taxes to rise even higher.
Heaven forefend that instead municipalities would become more efficient and cut taxes.
New rental prices in Canada are moving down: twelve months in a row.
Existing rents still moving higher.
In Financial Ructions
I have a go at a couple of pieces that attempt to rationalise today’s expensive stock markets.
And no, valuation is not a timing tool.
Martin Wolf says that the UK economy needs more investment.
And higher taxation.
I have a few comments.
Some notes from a Grant Williams podcast which looks at the Wicksell spread.
It was driven down to record negative territory post-COVID and has resulted in monumental misallocation of capital.
Book Review
We start looking at a number of things Keynes said about interest rates and the author’s response.
And how Keynes wanted to do away with the economic truth that interest rates disclose.
And Hazlitt’s refutation of Keynes’s liquidity preference used to explain interest rates.
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48min
November 03, 2025Post 339: From Keynes to Krispy Kreme: The Economics of Unsustainable Indulgence
A look at social security in the US.
It will be insolvent within ten years in large part because deductions from payroll to pay for social security are consumed rather than invested.
Krispy Kreme is experiencing consumer demand that is softer than their donuts.
And a look back.
Sales for Gucci and Yves St. Laurent are less bad.
And they sign a new deal with L’Oreal.
L’Oreal continues to grow its like-for-like sales.
And has been a solid long-term investment.
Nestle announces thousands of layoffs.
And their coffee sales pale in comparison to Fed money printing.
Over the last five years Coca-Cola has increased prices over 50%.
Unsurprisingly, concentrate sales are falling.
Target also announced layoffs.
Sales of essentials are falling while their largest category, food, is just above water.
In Financial Ructions:
US business bankruptcy filings are now above pre-COVID levels.
Auto loans and mortgages moving into serious delinquency are rising.
While credit card delinquencies remain at an elevated level.
A look at the impact investors have on home prices in the US.
And the percentage of homes bought by first-time home buyers is at a historic low.
A quick look at how baby boomers have benefited from the system.
And who is being told to pay for it.
We start a new book in our book review section.
Where Keynes Went Wrong: And Why World Governments Keep Creating Inflation, Bubbles and Busts by Hunter Lewis: 2009
Keynes’s economic doctrine was highly influenced by his ideology.
That is, economics as he wanted it to be rather than what it actually is.
And economists are no longer “custodians of the future.”
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50min
October 23, 2025Post 338: Pepsi and governments lower the volume with further confirmation of our Special K economy
Cheap funding has been the main cause of housing affordability crises.
After two quarters of negative sales growth, luxury group LVMH creeps into positive territory.
And after only one quarter of negative sales growth, Domino’s soars into positive growth territory.
Amazing what happens when you improve your customer value proposition.
Pepsi’s volume has declined for thirteen straight quarters.
And prices continue to rise.
London’s black cabs are increasingly under threat.
And a look back.
Sales growth returns to Delta.
But still the K-Shaped economy.
In Financial Ructions:
Yes, higher government spending results in lower economic growth.
A look at France.
And a look at Japan and how soaring debt to GDP ratios are inversely correlated with real wages.
Despite quantitative tightening, the Fed has been increasing its holding of securities with maturities longer than ten years.
We finish our book review of Taxes Have Consequences:
Fed Chair Volcker’s restricting the money supply, combined with tax cuts set the stage for almost two decades of stellar economic growth
The Keynesian multiplier theory ignores the negative multiplier impact on the private side.
As well as ignoring the negative impacts of the substitution effect.
The authors believe that the optimal tax rate on the Laffer curve is in the sub-20% range.
Whatever it is, it’s a lot lower than the current tax rate here in Canada.
Thus our disastrous record on investment and productivity.
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38min
October 14, 2025Post 337: More Beer, Less Bubbles: When Policymakers Toast Fake Growth
Beer maker Constellation Brands’ sales and share price are going down faster than its beer.
US office vacancy rate ticked down from last year.
But is still over 25% in some Western cities.
When you buy a home the government assumes you’re paying rent to yourself and they add it to GDP making the economy look much stronger than it really is.
Particularly if there’s a housing bubble.
Another reason policymakers like to drive housing price higher.
Mercedes Benz sales have been falling for some time.
And a look back.
In Financial Ructions:
We look at an apologist for central banks.
Who believes that government debt to GDP over 100% is nothing to worry about.
PM: Spoiler alert: It is.
There may be a new prime minister in Japan and some are likening her to the next Margaret Thatcher: Uh, no.
And gargantuan levels of government debt have sapped economic growth over the last 35 years.
One of the original architects of rampant investment in the unproductive housing sector in Canada, now says we need more productive investment.
Better late than never I suppose.
A journalist claims that the stock market is one of the best economic indicators.
No, it’s an indicator of spending through the wealth effect.
It no longer says much about the underlying health of the economy.
A sociologist is right about the cracks in our economic system.
But wrong with respect to how they got there.
In our book review of Taxes Have Consequences:
President Kennedy distances himself away from the New Deal doctrine of the Depression era 1930s.
In 1932, local taxes were four times higher than federal taxes.
Not anymore.
Keynes cautions against high taxation.
From 1966 to 1974 the S&P 500 fell approximately 60% in real terms.
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43min
October 06, 2025Post 336: “Truckloads, Tax Loads, and the Working-Class Squeeze”
PACCAR is one of the leading truck manufacturers in the U.S.
A look back.
New truck deliveries are down 13.5% from pre-COVID
J.B. Hunt is one of America’s largest trucking companies and its sales growth has finally nudged into positive territory.
And no, supply chain bottlenecks did not cause the inflation of 2022.
UPS sales growth in the US returns to negative territory.
But Fedex’s sales accelerate.
Mortgages in Canada are renewing at much higher rates.
Inflation has a much greater impact on the working class.
And their real earnings are falling.
Car sales jumped temporarily as buyers rushed to beat the expiring EV tax credit.
In Financial Ructions
Canada is heading for a budgetary crisis.
And total government debt to GDP is over 100%.
No, A.I. should not prevent corporate profitability from mean reverting.
In our book review of Taxes Have Consequences:
We see why the US economy soared after the war rather than collapse like many Keynesians predicted it would.
Spoiler alert: it was because of less government.
And the 1950s was all that it was cracked up to be.
High taxation had returned and individuals and corporations spent more of their energy avoiding taxes than growing the economy.
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36min
September 30, 2025Post 335: Paycheck to Paycheck, Kellogg’s, and a Dressing Down of the Federal Reserve
Two thirds of American workers are now living paycheck to paycheck.
And job prospects are the lowest in at least 12 years.
Kellogg’s has had a long history and the company split into two separate businesses a couple of years ago.
Now both of those businesses will be taken over by private companies.
Sales for both are very weak.
Lennar is one of America’s largest home builders.
Its home prices are now down over 20% from peak.
And down from pre-COVID.
Core inflation in Canada remains elevated.
In Financial Ructions:
Treasury Secretary Scott Bessent pens a particularly scathing article about the US Federal Reserve.
And I agree with virtually all of it.
Canada’s monetary base exploded higher during COVID and we’re still paying the consequences.
Deficits do matter:
As Japan is now finding out.
Reverse repo is now drained.
And will no longer be a source of liquidity for the market.
In our book review of Taxes Have Consequences:
We see that local and state governments were the worst tax perpetrators during the Great Depression.
And the authors expose the myth of the Keynesian multiplier.
And how consumers did not benefit from soaring GDP during World War II.
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51min
September 23, 2025Post 334: Coffee, Airlines, and Lululemon: Signals of Strain
Tariffs are sending coffee prices soaring.
A tax for American consumers with no benefit.
Delta Airlines passenger revenue growth has been grinder lower for the last couple of years and is now flat:
And now falling in economy class for two straight quarters.
Lululemon has not grown comparable store sales in the US for a year and a half.
And sales are accelerating downwards.
The Canadian government has wisely scrapped next year’s quotas for new cars that must be low emission.
Future targets may also face the chopping block.
Conagra’s share price comes back down to earth (yes that’s a joke: see below re: name origin).
And the share price is back to where it was in 1996.
And we take a look back at 1996.
General Mills has grown volume in only one of the last sixteen quarters.
And it’s reflected in its share price.
A Wall Street Journal survey shows that the American dream is slipping away.
And readers of Paulitical Economy will know why that is.
In Financial Ructions:
The trade agreement between Canada, Mexico and the US (in alphabetical order: see below) is scheduled to be reviewed in less than a year.
A quick look at potential paths forward.
An article in the FT pushes for a 2% annual wealth tax on billionaires.
I have a better idea.
In our book review of Taxes Have Consequences:
The authors walk us through the Great Depression step by step highlighting how various tax acts tanked the economy.
And we look at what caused the Roosevelt Depression of 1937.
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46min

FAQs about Paulitical Economy™:

How many episodes does Paulitical Economy™ have?

The podcast currently has 25 episodes available.