Three Things You Need to Know - December 15, 2017

Neutralizing Net Neutrality

The apocalypse is here.

The Earth and all its inhabitants will soon be consumed in flames.

And that’s ok.

Because Obama’s net neutrality regulations are dead. And so are we inside.

That’s basically a synopsis of every leftist on social media yesterday.

They took the news that the FCC voted 3-2 to get rid of net neutrality really, really, hard.

I bet they are all writing their dramatic and misinformed posts on stone tablets now in protest.

The hyperbolic statements from the left about the vote on net neutrality would make you think that the internet has been tortured and killed. In reality, the repeal of these regulations doesn’t affect their lives in any way whatsoever.

And yet, people are literally going crazy over it. In fact, the vote was briefly delayed yesterday after security had to clear the room to conduct a search for a possible bomb threat.

It begs the question, why are some people such emotional trainwrecks over net neutrality? Rescinding the Obama-era regulations will return us to a 2015-esque internet. Can anyone honestly say they noticed a difference in their internet usage over the past two years?

That’s a resounding “No.”

But the imagined hell of living without the internet we’re used to is enough to bring people to the edge of despair. It just goes to show that we are always closer to chaos than we think.

The only reason people think they want “Net Neutrality” is because it sounds nice. Period.

But the internet can only remain truly “neutral” if the government keeps its grubby hands off of it. And that’s just what the FCC voted to do yesterday.

False Rape Claim Almost Ruined This Oklahoma Football Player

If you googled the name Rodney Anderson before yesterday, you might think the star running back from Oklahoma University was a rapist. Anderson’s accuser claimed he had raped her on November 16th, and - after a few weeks - a friend of hers convinced her to come forward. The story alleged that on the evening of November 16th, Anderson and the accuser had met up at a bar. Later that night she decided to go home with him. It was then that she claimed he raped and bit her.

Anderson categorically denied the allegation, but the media exposure continued to pile on. The story seemed yet another domino in this post-Weinstein era. Hollywood, corporations and Washington had already fallen. It seemed only too obvious that the sporting world was next. That’s the mentality we have lately. With forty plus accusations of sexual misconduct in under two months, everyone waits with bated breath to find out which industry will be the next to fall.

Up until this point - over the past couple of months - most companies have responded to similar accusations with an immediate suspension or termination. In this new age of instant information and social media, accusation is equivalent to guilt. One sports analyst summed this up perfectly when he called for Anderson’s suspension on an Oklahoma City talk radio station. He said:

“[It’s] Business, right? We’re talking about a billion-dollar athletic department. It’s not the best thing for Rodney Anderson. I understand that. But it’s the best thing for the brand.”

This kind of thinking is exactly what’s enabling and fueling this witch hunt mentality. ‘We can’t have bad press!! Label him a rapist and let’s be done with it!!’

Anderson’s story was already trending all over the country. The taglines included the words “Anderson”, “star running back” and “rape.” Can you imagine what would have happened if the University of Oklahoma prematurely suspended him for rape? He would have been finished, but we’ve seen it handled that way literally DOZENS of times over the past two months.

The DA’s office announced yesterday that no charges would be filed. Text messages were found showing that the accuser was lying. Witness interviews reported that the accuser thought Anderson was a quote “nice guy” for not going all the way with her that night. It was only after Anderson stopped responding to her advances that she decided to accuse him of rape.

This story is a perfect example of a couple things. First, never pre-determine someone’s fate based off of an accusation. The accuser should be treated seriously and fairly, but so should the accused. Second, this rush to save face and protect the brand is creating a lynch mob mentality that has got to stop. The University of Oklahoma handled this the right way. Maybe the rest of the country can follow that example.

This Could "Rock" the White House

Would he go by President Rock or President Johnson?

Yesterday, Variety reported that Dwayne “The Rock” Johnson is seriously thinking about running for president in 2024. By the way, that would be for president of the United States.

In case you’ve been living under a rock, Dwayne Johnson is a former pro wrestler-turned-movie star.

Even though he’s known for his comedic chops in movies like Baywatch, and unintentional comedies like Hercules, running for president does not appear to be a joke. He told Variety he would “100% consider” running for office.

However, Johnson’s fans will have to try to contain themselves because the actor/producer has a huge slate of movie and TV projects that will keep him booked for the next four years. Realistically, he won’t be able to run for president until 2024.

Donald Trump ushered in a new era in which celebrities now think, “if Donald Trump can get elected president, why not me?” But this actually seems to be more than just idle celebrity talk from a guy whose wrestler name was “The Rock.” A Washington Post article in 2016 about Johnson’s political ambition got people talking. He says he’s entertaining the idea purely out of loyalty to the American people.

So, what are Johnson’s political credentials? He doesn’t have any. But he says, “the best thing I can do is continuing to listen and learn as much as I can” – which is more than you can say for most politicians, so maybe Mr. Rock is onto something here.

He used to be a registered Republican but is now an Independent. He lives in Florida, which is an important state in presidential elections. He also has 175 million followers on social media. If just one-third of them showed up to vote for him, he’d have nearly as many popular votes as Trump got in 2016. So maybe a Rock presidency isn’t so far-fetched.

Then again, there are questions about his judgment, after all, he starred in a movie called Tooth Fairy.

Fun Fact: If Dwayne Johnson is elected president in 2024, he would be the third Johnson to occupy the White House, but the very first Rock.

MORE 3 THINGS

Rapper Kendrick Lamar brings white fan onstage to sing with him, but here’s the catch

Matt Winkelmeyer/Getty Images for American Express

Rapper Kendrick Lamar asked a fan to come onstage and sing with him, only to condemn her when she failed to censor all of the song's frequent mentions of the “n-word" while singing along.

RELATED: You'll Never Guess Who Wrote the Racist Message Targeting Black Air Force Cadets

“I am so sorry," she apologized when Lamar pointed out that she needed to “bleep" that word. “I'm used to singing it like you wrote it." She was booed at by the crowd of people, many screaming “f*** you" after her mistake.

On Tuesday's show, Pat and Jeffy watched the clip and talked about some of the Twitter reactions.

“This is ridiculous," Pat said. “The situation with this word has become so ludicrous."

What happened?

MSNBC's Katy Tur didn't bother to hide her pro-gun control bias in an interview with Texas Attorney General Ken Paxton in the wake of the Santa Fe High School killings.

RELATED: Media Are Pushing Inflated '18 School Shootings' Statistic. Here Are the Facts.

What did she ask?

As Pat pointed out while sitting in for Glenn on today's show, Tur tried to “badger" Paxton into vowing that he would push for a magical fix that will make schools “100 percent safe." She found it “just wild" that the Texas attorney general couldn't promise that schools will ever be completely, totally safe.

“Can you promise kids in Texas today that they're safe to go to school?" Tur pressured Paxton.

“I don't think there's any way to say that we're ever 100 percent safe," the attorney general responded.

What solutions did the AG offer?

“We've got a long way to go," Paxton said. He listed potential solutions to improve school safety, including installing security officers and training administrators and teachers to carry a gun.

Pat's take:

“Unbelievable," Pat said on today's show. “Nobody can promise [100 percent safety]."

Every president from George Washington to Donald Trump has issued at least one executive order (with the exception of William Harrison who died just 31 days into his presidency) and yet the U.S. Constitution doesn't even mention executive orders. So how did the use of this legislative loophole become such an accepted part of the job? Well, we can thank Franklin Roosevelt for that.

Back at the chalkboard, Glenn Beck broke down the progression of the executive order over the years and discussed which US Presidents have been the “worst offenders."

RELATED: POWER GRAB: Here's how US presidents use 'moments of crisis' to override Constitutional law

“It's hard to judge our worst presidential overreachers on sheer numbers alone," said Glenn. “However, it's not a shock that FDR issued by far the most of any president."

Our first 15 presidents issued a combined total of 143. By comparison, Franklin D. Roosevelt issued 3721, more than twice the next runner up, Woodrow Wilson, at 1803.

“Next to FDR, no other president in our history attempted to reshape so much of American life by decree, until we get to this guy: President Obama," Glenn explained. “He didn't issue 3000, or even 1800; he did 276 executive orders, but it was the power of those orders. He instituted 560 major regulations classified by the Congressional Budget Office as having 'significant economic or social impacts.' That's 50 percent more regulations than George W. Bush's presidency — and remember, everybody thought he was a fascist."

President Obama blamed an obstructionist Congress for forcing him to bypass the legislative process. By executive order, President Obama decreed the U.S. join the Paris Climate Accord, DACA, the Clean Power Plan and transgender restrooms. He also authorized spying in US citizens through section 702 of FISA, used the IRS to target political opponents and ordered military action in Libya without Congressional permission.

All of these changes were accepted by the very people who now condemn President Trump for his use of executive orders — many of which were issued to annul President Obama's executive orders, just as President Obama annulled President Bush's executive orders when he took office … and therein lies the rub with executive orders.

“That's not the way it's supposed to work, nor would we ever want it to be," said Glenn. “We have to have the Constitution and laws need to originate in Congress."

Watch the video above to find out more.

Six months ago, I alerted readers to the very attractive benefits that the TreasuryDirect program offers to investors who are defensively sitting on cash right now.

Since then, those benefits have continued to improve. Substantially.

Back in November, by holding extremely conservative short-term (i.e., 6-months or less) Treasury bills, TreasuryDirect participants were receiving over 16x more in interest payments vs keeping their cash in a standard bank savings account.

Today, they're now receiving over 30 times more. Without having to worry about the risk of a bank "bail-in" or failure.

So if you're holding cash right now and NOT participating in the TreasuryDirect program, do yourself a favor and read on. If you're going to pass on this opportunity, at least make it an 'eyes-wide-open' decision.

Holding Cash (In Treasurys) Now Beats The Market

There are many prudent reasons to hold cash in today's dangerously overvalued financial markets, as we've frequently touted here at PeakProsperity.com.

Well, there's now one more good reason to add to the list: holding cash in short-term Treasurys is now meeting/beating the dividend returns offered by the stock market:

"Cash Is King" Again - 3-Month Bills Yield More Than Stocks (Zero Hedge)
'Reaching for yield' just got a lot easier...
For the first time since February 2008, three-month Treasury bills now have a yield advantage over the S&P; 500 dividend yield (and dramatically lower risk).
Investors can earn a guaranteed 1.90% by holding the 3-month bills or a risky 1.89% holding the S&P; 500...

The longest period of financial repression in history is coming to an end...

And it would appear TINA is dead as there is now an alternative.

And when you look at the total return (dividends + appreciation) of the market since the start of 2018, stocks have returned only marginally better than 3-month Treasurys. Plus, those scant few extra S&P; points have come with a LOT more risk.

Why take it under such dangerously overvalued conditions?

If You Can't Beat 'Em, Join 'Em

In my June report Less Than Zero: How The Fed Killed Saving, I explained how the Federal Reserve's policy of holding interest rates at record lows has decimated savers. Those who simply want to park money somewhere "safe" can't do so without losing money in real terms.

To drive this point home: back in November, the average interest rate being offered in a US bank savings account was an insutling 0.06%. Six months later, nothing has changed:

(Source

That's virtually the same as getting paid 0%. But it's actually worse than that, because once you take inflation into account, the real return on your savings is markedly negative.

And to really get your blood boiling, note that the Federal Reserve has rasied the federal funds rate it pays banks from 1.16% in November to 1.69% in April. Banks are now making nearly 50% more money on the excess reserves they park at the Fed -- but are they passing any of that free profit along to their depositors? No....

This is why knowing about the TreasuryDirect program is so important. It's a way for individual investors savvy enough to understand the game being played to bend some of its rules to their favor and limit the damage they suffer.

Below is an updated version (using today's rates) of my recap of TreasuryDirect, which enables you to get over 30x more interest on your cash savings than your bank will pay you, with lower risk.

TreasuryDirect

For those not already familiar with it, TreasuryDirect is a service offered by the United States Department of the Treasury that allows individual investors to purchase Treasury securities such as T-Bills, notes and bonds directly from the U.S. government.

You purchase these Treasury securities by linking a TreasuryDirect account to your personal bank account. Once linked, you use your cash savings to purchase T-bills, etc from the US Treasury. When the Treasury securities you've purchased mature or are sold, the proceeds are deposited back into your bank account.

So why buy Treasuries rather than keep your cash savings in a bank? Two main reasons:

  • Much higher return: T-Bills are currently offering an annualized return rate between 1.66-2.04%. Notes and bonds, depending on their duration, are currently offering between 2.6% - 3.1%
  • Extremely low risk: Your bank can change the interest rate on your savings account at any time -- with Treasury bills, your rate of return is locked in at purchase. Funds in a bank are subject to risks such as a bank bail-in or the insolvency of the FDIC depositor protection program -- while at TreasuryDirect, your funds are being held with the US Treasury, the institution with the lowest default risk in the country for reasons I'll explain more in a moment.

Let's look at a quick example. If you parked $100,000 in the average bank savings account for a full year, you would earn $60 in interest. Let's compare this to the current lowest-yielding TreasuryDirect option: continuously rolling that same $100,000 into 4-week T-Bills for a year:

  1. Day 1: Funds are transferred from your bank account to TreasuryDirect to purchase $100,000 face value of 4-week T-Bills at auction yielding 1.68%
  2. Day 28: the T-Bills mature and the Treasury holds the full $100,000 proceeds in your TreasuryDirect account. Since you've set up the auto-reinvestment option, TreasuryDirect then purchases another $100,000 face value of 4-week T-Bills at the next auction.
  3. Days 29-364: the process repeats every 4 weeks
  4. Day 365: assuming the average yield for T-Bills remained at 1.68%, you will have received $1,680 in interest in total throughout the year from the US Treasury.

$1,680 vs $60. That's a 27x difference in return.

And the comparison only improves if you decide to purchase longer duration (13-week or 26-week) bills instead of the 4-week ones:

Repeating the above example for a year using 13-week bills would yield $1,925. Using 26-week bills would yield $2,085. A lot better (34x better!) than $60.

Opportunity Cost & Default Risk

So what are the downsides to using TreasuryDirect? There aren't many.

The biggest one is opportunity cost. While your money is being held in a T-Bill, it's tied up at the US Treasury. If you suddenly need access to those funds, you have to wait until the bill matures.

But T-Bill durations are short. 4 weeks is not a lot of time to have to wait. (If you think the probability is high you may to need to pull money out of savings sooner than that, you shouldn't be considering the TreasuryDirect program.)

Other than that, TreasuryDirect offers an appealing reduction in risk.

If your bank suddenly closes due to a failure, any funds invested in TreasuryDirect are not in your bank account, so are not subject to being confiscated in a bail-in.

Instead, your money is held as a T-Bill, note or bond, which is essentially an obligation of the US Treasury to pay you in full for the face amount. The US Treasury is the single last entity in the country (and quite possibly, the world) that will ever default on its obligations. Why? Because Treasurys are the mechanism by which money is created in the US. Chapter 8 from The Crash Course explains:

As a result, to preserve its ability to print the money it needs to function, the US government will bring its full force and backing to bear in order to ensure confidence in the market for Treasurys.

Meaning: the US government won't squelch on paying you back the money you lent it. If required, it will just print the money it needs to repay you.

So, How To Get Started?

Usage of TreasuryDirect is quite low among investors today. Many are unaware of the program. Others simply haven't tried it out.

And let's be real: it's crazy that we live in a world where a 1.68-2.09% return now qualifies as an exceptionally high yield on savings. A lot of folks just can't get motivated to take action by rates that low. But that doesn't mean that they shouldn't -- money left on the table is money forfeited.

So, if you're interested in learning more about the TreasuryDirect program, start by visiting their website. Like everything operated by the government, it's pretty 'no frills'; but their FAQ page addresses investors' most common questions.

Before you decide whether or not to fund an account there, be sure to discuss the decision with your professional financial advisor to make sure it fits well with your personal financial situation and goals. (If you're having difficulty finding a good one, consider scheduling a free discussion with PeakProsperity.com's endorsed financial advisor -- who has considerable experience managing TreasuryDirect purchases for many of its clients).

In Part 2: A Primer On How To Use TreasuryDirect, we lay out the step-by-step process for opening, funding and transacting within a TreasuryDirect account. We've created it to be a helpful resource for those self-directed individuals potentially interested in increasing their return on their cash savings in this manner.

Yes, we savers are getting completely abused by our government's policies. So there's some poetic justice in using the government's own financing instruments to slightly lessen the sting of the whip.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

NOTE: PeakProsperity.com does not have any business relationship with the TreasuryDirect program. Nor is anything in the article above to be taken as an offer of personal financial advice. As mentioned, discuss any decision to participate in TreasuryDirect with your professional financial advisor before taking action.