Government has become increasingly lazy and disfunctional; the roads are a mess, traffic is the bane of everyday existence, taxes and regulations are oppressive, and modest cottages start at $1 million. Famously, Los Angeles can't even keep the fire hydrants and reservoirs full. Not surprisingly, there is an ongoing exodus of state residents and many of its major corporations. The state has spent tens of billions of dollars on an absurd "bullet train" without managing to lay even one foot of track. Thank goodness Trump has put this project out of its misery. The scattered bridges and columns that have been completed should be left standing for future generations, as monuments to the stupidity and corruption of our politicians.
As a 5th generation Californian, with ancestors dating back to the Gold Rush, it pains me to post these facts: Grok reports that "Between 2020 and 2025, approximately 500 companies have moved their headquarters out of California or shifted significant operations elsewhere, with a notable spike in relocations since 2019. From 2018 to 2021 alone, the Hoover Institution reported 352 companies relocating their headquarters out of the state."
Nuni Cademartori, my good friend and great artist, penned the above cartoon which I featured in a post almost five years ago. Back then it seemed like there was little hope for any change on the horizon.
Sadly, things have just continued to get worse. The only thing that has changed are the names of the companies opting to move out of California, as this second cartoon illustrates.
I especially like the signpost on the right: "Gavin Newsom Memorial Highway." Yes, Gavin Newsom deserves full credit for the deterioration of this great state. May this be a warning to the rest of the country. In case you haven't already noticed, our Guv thinks he would be an ideal choice to run the country after Trump. Heaven help us if he gets the chance!
Quality of life is more than about money.
ReplyDeleteJohn, I have to agree. The main reason I'm not leaving CA is that 55 members of my extended family live within 60 miles of me.
ReplyDeleteMy in-laws are in escrow overlooking T-Street Beach. I've only checked it out once, but it has me thinking that even without the 55 family members nearby, you still wouldn't leave. The "golden state tax" is is punishing but worth it.
DeleteI'll take a restaurant recommendation or two if you have them.
I have read your posts for over 15 years and have very much appreciated you having shared your thoughts.
ReplyDeleteLIBERALISM DESTROYS EVERYTHING IT TOUCHES - MICHAEL SAVAGE
ReplyDeleteScott: Love your blog and insights. Like yourself, I'd love to see less fraud and silliness within Government-- and I'd love to see more analysis on this topic. But I'm wondering if we should see this as an opportunity for America to distribute our nation's wealth to seed other regions with great companies whose CHOICE to relocate is as American as their CHOICE to set up shop in CA to start with? Why should we see capital flight / commercial exodus as anything but opportunity for Texas or Tennessee or other beautiful parts of our South and East needing investment & modernization? It's so easy to LOVE California -- I'm grateful for it & love it-- an amazing place. I hope you're doing well.
ReplyDeleteScooottttttttt!!! What is up! Cut these rates!
ReplyDeleteUnknown: T-street is by far the best beach in San Clemente—for surfing and boogie-boarding and just hanging out. Only a short walk to the pier. Your in-laws will be happy.
ReplyDeleteI visited San Clemente for the first time. I was expecting a busy, dirty, crime filled mess like the rest of the state. But I was blown away by its cleanliness, safety, and ease. What a beautiful beach and a wonderful place to visit. Unlike anything else I’ve seen in urban California
ReplyDelete1. San Clemente, 2. California used to know how to be productive; both political parties...
ReplyDeleteGood to hear San Clemente is still nice. Haven't been there in about 30 years. It is a very nice place to do all kinds of surfing. The waves are usually just about the right size to be fun but not dangerous.
Gov. Edmund G. Brown wrote down long term plans for California roads, water management, education, etc. in the '60's. They are ignored now.
https://www.hoover.org/research/crisis-management-california-infrastructure-fifty-years-after-last-big-buildup-time
The problem of course is that all the reasons listed here as to why to remain in CA is the reason CA is in the state it's in! It's a beautiful climate and the pols know that and exploit it.
ReplyDeleteHello Scott. This has nothing to do with the subject of California, but I don’t know when this subject will come up again, so … sometime during/after covid I remember you saying that the mechanism by which the money supply went up so much during covid was a mystery. Can you elaborate on that?
ReplyDeleteI thought it was clear that the Fed was buying treasuries (and other) directly from non-banks (maybe even directly from the Treasury), thus directly injecting money into the system.
The ROC in means-of-payment money supply hit all-time highs in November 2020. The inflation trajectory was text book. Money its peak in Jan/Feb and velocity followed up for 3 additional months.
ReplyDeleteSee: “Quantity leads and velocity follows” Cit. Dying of Money -By Jens O. Parson
See Debit and Deposit Turnover G.6 release
"Powell didn’t cut because the market sets the rates not the Fed. Had the 3- and 6-month yield move beneath the Fed window, the Fed would have followed. It’s really that simple. The market moves first; the Fed follows."
ReplyDelete-- Daneric's
For as long as I can remember everyone is trying to leave Californiacation. " You can check out any time you like. But you can never leave"
ReplyDeleteNo comment on the Antoni nomionation,scott? Seems terribly unqualified.
ReplyDeleteThe FOMC’s proviso “bank credit proxy” used to be included in the FOMC’s directive during the Sept 66 – Sept 69 period.
ReplyDelete“1966 A new measure, the bank credit proxy, was developed during the year in order to get current information about the operating guide more frequently. This measure infers changes in member bank loans and investments (assets) from changes in member hank deposits (liabilities). Deposit data are available weekly on a daily average basis, whereas bank credit data are available less frequently.”
Today we have the opposite situation. The money stock measures are delayed, while bank credit is published much sooner. Commercial bank credit shows the FED is not tight, in fact it is validating the increases in real estate.
PPI today- a little hot
ReplyDeletePPI has been trending up for about 2 years, so assigning a root cause, e.g. tariffs, is tricky. However, the usual result of the relative behavior of CPI and PPI that we have now is a future (approximately over the next year) corporate profit squeeze.
US producer inflation is the highest in 3 years.
ReplyDeleteUS producer inflation heats up as goods, services prices soar
https://www.reuters.com/world/us/us-producer-inflation-heats-up-goods-services-prices-soar-2025-08-14/
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ReplyDeleteSalmo, can you please explain, in clear logic (if this, then that), why you think banks should get out of the depository business? You have sometimes referred to old, very long documents that are too hard to wade through. Thank you.
ReplyDeleteIt is cerebral indeed. In short, the bankers pay for the deposits that they already own. It is the proper policy, as a group, not for an individual bank.
ReplyDeleteTo the bankers accustomed to thinking of banking in terms of their own individual bank operations this may seem unreal-perhaps theoretical. Their everyday experiences have demonstrated beyond any reasonable doubt that a bank’s lending capacity is increased when funds flow into the bank. These funds, they know, build up the bank’s balances with correspondents and , insofar as the funds are not required by law as a reserve against the incremental deposit inflow, they can be used to buy securities or make loans.
In other words, the individual banker thinks of his banking operation as being of an intermediary nature. He sees his bank as standing between savers and borrowers, transmitting to worthy borrowers the savings of the bank’s customers. There is nothing in the individual banker’s experience to dispel the illusion that he is operating an intermediary type of financial institution. And it is for this reason that bankers and their associations have been, and are, such vigorous proponents of time deposit banking.
Viewed from the vantage point of the entire commercial banking system an entirely different perspective is obtained. It then becomes evident that the commercial banks are not intermediaries, they are not credit transmitters rather are the commercial banks credit creators. That is to say, the commercial banks create new money when making loans to, or buying securities from, the nonbank public.
This can be demonstrated by examining the differences in the consolidated condition statements for banks and the monetary system for any two points in time.
It will be noted that the increase in loans and investments (all earning assets) of the banks during the interval are approximately equal to the increase in the demand and time deposit liabilities of the banks (excluding inter-bank demand deposits). That these two net increase figures are so nearly identical is no happenstance, for demand deposits largely come into being through the credit creating process, and time deposits owe their origin almost exclusively to demand deposits, either directly through transfer from demand deposits or indirectly via the currency route.
There are many factors which can, and do, alter the volume of bank deposits, including: changes in currency held by the nonbank public, in bank capital accounts, and in Reserve bank credit, etc.
Although these items are large taken together, they nevertheless have been peripheral in altering the aggregate total of bank deposits. Thus, the expansion of Reserve bank credit during any period is offset by the increase in currency holdings of the nonbank public. Since the nonbank public is taking more out of the banks than they deposit in the banks, it follows that the funds which financed the net increase in earning assts were generated within and not outside the banking system. Taking into account the principal “outside” factors of the monetary system, outside sources of funds for this period of unprecedented expansion of the commercial banking system are offsetting.
That is to say, the capacity f the commercial banking system to lend, and the aggregate size of the system, given ample opportunities to make bankable loans and acquire eligible securities, are determined by monetary policy.
If the FED was fighting inflation, then the U.S. $ wouldn’t be falling
ReplyDelete