Never underestimate the power of innovation. Only a year ago I said there were “no-payment mortgages” in our future. I predicted the Federal Reserve would create them. But I was wrong. It wasn’t necessary for the Federal Reserve to create them. They already existed!
Who knew? I didn’t. I was thinking about them the wrong way. The no-payment mortgage was becoming a done deal, available to all. Indeed, Texas became the last state in the union to allow home purchase reverse mortgages when the proposition was approved on November 6.
Now, anywhere in the country, you can sell your house, use the equity for a large down payment on a new house, and never make a mortgage payment! In fact, you don’t even need to sell a house; all you need is a big hunk of equity! The only limit is that you have to be at least 62 years old.
So please, take my predictions seriously. Even when they are wrong, they are right.
Our new Federal Reserve chairperson will call for “virtuous inflation.” The phrase will go viral. People will chant in the streets for virtuous inflation. Economists will explain that the growth and strength of the middle class would not exist without it. It will turn out to be one of those things that “seemed like a good idea at the time.”
SenatorTed Cruz Will Not Win a Nobel Peace Prize.
I’m going to stick my neck out here, but I’m pretty sure he won’t be winning the Prize in 2014. Maybe not in 2015, either.
Wall Street Will Plead for a Continuing Crisis in Washington.
A group of market analysts will notice that stock prices have risen handsomely since the first budget crisis. Hoping to continue market gains, they will lobby Congress to continue doing what they have been doing to keep the angst and new highs coming.
The First Congressional Reading Test.
A public referendum will pass in all 50 states requiring all sitting or aspirant members of Congress to pass a biennial reading test. Not to be too much of a burden, the test will be based on only 1,000 randomly selected pages of the Affordable Care Act. A broad coalition of Democrats and Republicans— the first in years— will defeat the measure, claiming it is a violation of their civil rights.
The Last Legitimate Child Will Be Born in America.
An anthropologist/demographer will predict that the last American child born in wedlock will arrive no later than 2060, citing the accelerating trend of births out of wedlock over the last half-century. A descendent of the late President Richard Nixon, running for office in that year, will paraphrase his great great grandfather and gleefully say, “We’re all Keynesians now,” only he will use a popular expletive rather than the word “Keynesians.”
The Great Marijuana Roll-Up.
Noting that 20 states have legalized the use of marijuana for medical purposes and two states have legalized it for recreational purposes, a Wall Street investment banker will start “Puff-Away,” an internet-based firm with the goal of vertical integration for the production and distribution of cannabis. He’ll do this by doing a “roll-up,” buying and integrating hundreds of smaller stores and farms.
After the highly successful public offering, however, the chief financial officer will be arrested for improprieties with, err, inventory and cash. His first statement before the judge will be: “Wow, man, far out,” a phrasing that will identify him as a very senior citizen.
The Limit of Tax Credits Will Be Discovered.
Our friends in Washington love to cut taxes with twitchy little deductions here and there. Doing this has built an enormous karma bank for them, with over 200 “tax expenditures” that reduce federal tax revenue by billions each year while providing them with a rich source of campaign funds. In 2013, for instance, the Congressional Budget Office estimated that the 10 largest tax expenditures were worth some $900 billion.
The new Affordable Care Act, which is laden with tax credits to subsidize health insurance premiums, may break the karma bank. While the CBO estimate of this cost is small, it will also turn out to be wildly wrong. By 2015, pundits will be talking about how healthcare reform hijacked the federal income tax.
The March of the Plug-Ins.
The success of hybrid plug-ins, reducing gasoline consumption by nearly 75 percent, will cause the greatest re-identification of states since they were labeled “red” or “blue” for their political preferences. In the future, states will be divided between “utility” states and “gasoline” states.
In the gasoline states, legislatures will increase gas taxes to offset the revenue decline from decreased gasoline consumption. In the utility states, legislatures will increase taxes on electricity, betting on higher electric demand to offset what they lose in gasoline taxes.