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GOVERNMENT SPONSORED PROGRAMS CAUSE INFLATION UPDATE NOVEMBER 2 2026

" WHY DO MY COSTS KEEP GOING UP?"

Where a national insurance program goes, so goes inflation. An adage of mine hanging in my broadcast booth.

There is another saying also plastered on the wall of the studios of Money Matters radio and that one says, “where government money goes, so goes inflation”.

Most people scratch their head at that one but it’s pretty simple to explain.

Using a fictional food insurance plan explains it quite succinctly and it’s also a fun exercise.

Imagine the calls for food insurance arises from the masses because of rising food prices due to inflation.

We will call this fictional social-safety net the National Food Insurance Plan. It would be a single payer food insurance plan, much like Medicare or any other government funded plan covering the masses.

The program’s function is to provide food to anyone that needs it, which is basically everyone.

The costs for the premiums would be calculated by including all the expense to procure, package, ship, warehouse and market all foodstuffs.

Like most government programs, almost everyone has to participate. Customers pay the premium with help from the government, and start to shop at the grocery stores with the National Food Plan Card. As the wheels are set in motion, many things start to happen.

The grocery stores, knowing customers have the card and won’t care nor ask about costs since the food is covered, start to raise prices.

This is similar to what happens now with medical insurance.

When is the last time you asked about the cost of an MRI or X Ray?

Since food is essentially “free” to the customers, they now buy whatever they want and in whatever quantity the desire. This causes an increase in the demand over what would have been bought when price was a consideration.

Demand now skyrockets. This causes what is called “demand push” inflation, where higher demand causes prices to rise. Keep in mind the prices have already been raised by the grocery store because no one looks nor cares about what the food costs due to the insurance plan.

The costs to the insuring entity then skyrocket due to the higher prices set by the grocery stores because customers no longer care about price and therefore the stores can charge whatever they want. Adding insult to injury, the increased demand also pushes prices up even farther.

As the demand pushes prices up, the premiums are no longer sufficient to cover the program costs. The premiums then have to be raised to enable the program to continue. As long as the program continues to function, the cycle of higher food prices followed by higher premium prices continues in a never-ending upward spiral.

I know there will be some people that dispute the mechanism of government fueled programs, but the economic machinations are functioning perfectly, although the result is the opposite of perfect.

The explanation is simple. Government spending is nuclear fueled spending. Their funds are unlimited and the costs are massive. Price constraint on the consumer side is removed. The demand is unlimited as the food is essentially free to the consumer. The price constraint of limited funds on the consumer side is eliminated as the program pays the bill. Much like the unawareness of medical costs in the case of medical insurance, the same is true for food costs under the National Food Plan. Consumers don’t care about price as they don’t pay it. Suppliers know the customer doesn’t care nor even asks the price (much like today’s medical environment), so suppliers jack up prices.

There are multiple examples of government fueled price inflation. Medical costs are a prime example. Fueled by medical insurance from both public and private funds, the cost for medical care has become astronomical and continues higher. The housing boom was fueled by government entities like Fannie Mae and Freddie Mac. Supplemented by a variety of government backstops and monies, housing costs rocketed higher as more and more programs were initiated to help first time buyers and buyers in general.

Take a look at college costs. Once again funded by a variety of government programs, government monies funneled into colleges and university tuitions driving them through the roof where they continue to climb today.

Although inflation has rifled through the prices of many goods and services, college tuition, medical costs and housing costs continue to climb out of the reach of many Americans.

The mechanism of insurance was originally designed to transfer risk to a partnering entity in exchange for payment. On very large scales, such as at the national level, it can morph into an affordability program through a similar mechanism.

Instead of a one-off occasional occurrence, like a house fire, the problem arises when the risk is more like a necessity, or a widely used service by many.

What happens then is when it is government funded, coupled with huge demand, such as medical needs, housing or college, it can result in incredible price increases in any area where these programs exist.

“Watching the markets so you don’t have to”

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance.

Well, That didnt take long. The AI trade may be in trouble Nov 1 2026

AI Up in Smoke?

Don’t say I didn’t warn you. Many times, actually.

I am talking about the artificial intelligence trade (AI) and the hype surrounding it. In the last half a year or so, the hottest trade going has had its fair share of fits, starts and stops.

Ending its nearly straight up trajectory of the past two years, in recent months, we have seen heart pounding up days followed by heartbreaking selloffs. Last Friday featured another harrowing selloff, set in motion by less than stellar earnings posted by chip maker Intel.

The subsequent bowling pins hit many of the AI chip stocks hard. I had mentioned a few months back that the bipolar up and down movements of the AI stocks that we witnessed may have signaled what in trading circles is called a “climax top”.

Climax tops are when certain stocks move uncharacteristically up and down by a greater percentage than what historically is regarded as normal. That volatile action can signal a change is coming.

The amount of money going into the AI trade added to the amount of money spent by companies on their AI infrastructure has been massive to say the least. Literally hundreds of billions of dollars have been spent both by companies and investors in anticipation of the hottest mechanism in communication since the telephone.

The jury is out on whether the demand can be met on the supply side and if the investment will have a return in profits for those companies paying out all those billions for AI.

This analyst doubts that there will be enough money made on AI to pay for all the investment that companies have paid out. Additionally, as covered in a previous Money Matters article, the hundreds of billions of dollars spent on AI by companies will have to be passed on to those that buy their products, and that means you and I. In my opinion, AI costs will likely add a healthy percentage to consumer prices that are already skyrocketing from our current inflation.

Right now, investors in the AI trade are bleeding very red from the recent selloff and there’s no telling when it will stop or how low AI stock prices will fall.

Selloffs after extreme run ups can be surprisingly violent. An old Wall Street adage says stocks can rise a lot faster or fall a lot lower than one might think.

AI traders, be careful out there.

“Watching the markets so you don’t have to”

(end)

(As mentioned, please use the below disclaimer exactly) THANKS (Regulations) This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License OL34249.

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Thar' She Blows The AI Trade October 10 2026

Thar' She Blows

The AI trade

Wait for it..

(Bloomberg) – “Billionaire Ray Dalio warned that artificial intelligence (AI) is a "classic bubble" that is nearing a bursting point thanks to rising interest rates and the need to turn wealth into cash”.

And welcome to Wayne’s world.
Well, actually my world. And Ray Dalios’.

I have, on more than a few occasions, have said to beware of AI stock prices, only to be right for a few days, then see AI stocks hit more all-time highs.

Seriously now, cautious investing is warranted when stock prices are anywhere near the multiples resembling the early days of the Dot.com bubble. Back then, stocks like Pets.com went ballistic only to crash and burn as early “investors” bailed out to massive profits.

AI stocks have been on a tear for close to two years. Not straight up mind you. There have been scary price vortexes from time to time, sucking back billions of profits.

Sell-offs shake out what they call the “weak hands”.

But those weak hands are usually not mom and pop investors. Mom and Pop don’t have the good sense to take profits when things start to wither.

The weak hands they speak of are nervous traders that see any downtick as the beginning for a massive sell-off. Usually not the case, but selling at the first sign of trouble can save the proverbial bacon at times.

More often than not, mom and pop just sit there and think things will return to normal. The normal of straight up that is, which is anything but normal.

In any case, I always tell investors the markets can stay illogical longer than you can stay liquid. The saying applies to professional option traders. Options are high powered investing (gambling) tools that magnify up and down moves by 100 times or more.

As a result, it’s rare that an option trader will ride a security to zero. Heck, they seldom ride an option position down more than a few percentages before ejecting the position. That’s because the 100-1 (or more) leverage can wipe out an option trader’s entire net worth in minutes if moves are violent enough. Leverage works wonders on the upside but also can bring the wrecking ball when things go south.

No such discipline exists in most retail (mom and pop) investors nor their advisors. They go by, and often repeat, the mantra, “stocks always go up in the long run”.

Professional traders who use their own money don’t listen to such nonsense. Option traders especially don’t live long enough using that strategy to even say the phrase.

For mom-and-pop investors, many have had success using that belief, but it can be stressful in severe market sell-offs.

That said, the current AI trade has all the classic signs of a bubble.

Keep in mind, however, those in early on such manias and who have the guts to stay a while can make buco bucks. Keeping those profits is the trick and many amateurs give it all back and then some as the greed DNA takes over the commonsense sector of the brain.

I don’t know, nor does anyone else, when the AI trade will hit the skids. When super-hot sectors deflate, they can do so surprisingly fast.

I also liken it to an “everybody in, everybody out” moment. When vast profits are made quickly, and by a large number of investors, many are of the “tag-along” variety that just bought because everybody else was buying. Fundamentals go out the window early and it’s a pile on moment.

When the air comes out, just imagine somebody yelling shark on a crowded beach. It’s everybody out, all at once, and many get trampled underfoot in the resulting melee.

In conclusion, when I avoid such hot sectors, as I often do, I might end up losing out on all the fast money being made. But there is something in me that just won’t bite on prices that seem to go straight up forever and a day.

I would love the high, true. But it’s the hangover I won’t miss. And often, the hangover is much worse than the party that preceded it.

“Watching the markets so you don’t have to”

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A in economics with honors from SDSU in 1979. His website is moneymanagementradio.com.

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A Check in the Hand Those Refund Checks Oct 2 2026

Money for Votes

A bad idea

I received more than a few calls and emails regarding my opinion on the recently proposed “tariff refund” checks from Washington. These checks are not a done deal but the amount of $5,000.00 is healthy enough to garner plenty of attention as well as debate.

The proposed amount pales in comparison to the free money given out during the CoVid bailouts. Those monies totaled into the many trillions.

But $5,000.00 is almost ten times the amount of the $600.00 checks mailed out during the 2008/2009 financial crisis.

Although the exact details of the disbursement have not been announced, estimates for the total cost of the checks would be well over a trillion dollars.

I can’t help but wince. No one in government on either side of the political aisle seemingly knows anything about economics. Nor politics for that matter.

Much like the implementation of tariffs, mailing out $5,000.00 checks to every citizen in the U.S. would be extremely inflationary.

As if we haven’t had enough free money given out already. Have we learned nothing from the inflation we are now witnessing? And another round of free money would add even more fuel to the inflationary fires.

And what about the political bribery of promising funds if the election goes one way or the other. Does anyone else see a problem with this?

Once we go down that road, there will be no end to the tit for tat money giveaways from future candidates.

Not that it hasn’t already occurred, mind you. Money for votes is nothing new. There just seems to be something especially egregious about this latest political offering.

The amounts of money given out during the CoVid fiasco was beyond unprecedented. And so is the inflation from it.

Add to that the oil price spikes, the ongoing tariffs, the deficit spending spree that occurs every year since Lyndon Johnson was president, and the many other government programs tossing tax dollars everywhere. Then there is the fraud no one hardly talks about.

This whole check thing scares the heck out of me. I cannot imagine what would follow after millions of people get a whopping five grand in their mailbox.

The stock market would obviously benefit and probably run like hell for months. Then, as companies reap profits from their inventory flying off the shelves, the earnings reports from this buying spree would further boost stocks well into the future.

Theme parks, cruise lines, airlines, hotels, restaurants and other sector stocks would likely jump as people splurge on the experience dividend. Companies that cater to these sectors would also rise. No doubt some people would buy those overpriced sneakers, running outfits and the like and car companies would certainly sell some shiny new toys.

The imagination wanders as to who would do what with their newfound wealth.

To some, it would be a nice bump in lifestyle. To others, it would be a life saver.

For the most part, convincing a nation (where more than half its people can’t afford a $500.00 emergency bill), that handing out $5,000.00 checks is a bad idea, is a nonstarter. Few people would object.

Much like hiring Erin Brokovich to go speak and convince the people of Paradise, California to sign with a particular class action law firm (yes that really did happen), the move by Washington had brilliance in it.

Whereas the party not currently in the White House arguably errs on the side of free giveaways, the $5,000.00 check proposal takes the ‘money for votes” page right out of their playbook.

It will be interesting to see and unpredictable in its effect of what a $5,000.00 windfall to every wallet in America, all at the same time, would look like.

It would be like injecting a racehorse with ten times the amount of steroids, or something like that.

There is no telling what all that money hitting all at once will do to demand, supply and the eventual hangover.

These are vast amounts of capital we are playing with, and like the CoVid money tsunami that caused the massive inflation we have today, this check idea is very bad medicine for an economy already reeling from similar medicine handed out just a few short years ago.

And now they want to do it again?

Insanity is defined as doing the same thing over and over again yet expecting a different result.

It won’t be. Inflation will shift into overdrive.

This $5,000.00 check idea may be a brilliant political move, but in my opinion, a very, very bad idea.

“Watching the markets so you don’t have to”

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The middle east crisis continues and oil spiked north of $100/bbl. last week. A client of mine showed me a report on the gasoline supplies in various areas of the United States and it was not encouraging.

Petroleum Reserve crude inventories fell to 311.45 million gallons in the week ending July 17, which is the lowest level since 1983.

With inflation’s relentless climb since the Covid shutdowns, doing the math on the money created to finance the massive bailouts, I am of the opinion that the price of oil will not come down significantly any time soon.

I would say “if at all” as it relates to oil’s future price, but knowing the resilience of the oil industry, if not constrained, it can ramp up enough production to at least get the price back under $100/bbl. and perhaps even in the $80/bbl. range.

Any lower than that I think is out of the question as the inflation we have been experiencing since Covid is baked into the cake and therefore prices of everything will stay elevated for years to come.

Barring an economic collapse that is, which could happen, given the ongoing erosion of the consumer’s pocketbook due to the same inflation.

Not to be too negative mind you, but prices have always risen over time since about the 1900’s due to the policies of modern governments, and the latest round of inflation in the past few years has been particularly egregious.

Tariffs are estimated to have added 235 billion to retail costs. The increase in oil prices has done further damage to consumer pocketbooks. Covid bailouts dwarf the latter costs at an estimated 5 trillion. The Federal Reserve also increased its balance sheet by an estimated 4.5 trillion. That’s a fancy way to say it financed a good portion of that bailout money by creating dollars out of thin air. More monies went into financial `system` to address liquidity concerns that also occurred because of the shutdowns.

Can you say bank bailout?

Right or wrong, experts will certainly debate the whys and how’s of the whole mess for years to come.

Subsidies to both consumers and businesses alike have pretty much run the gamut since the 1960s’ and show no signs of stopping.

Whether one agrees with subsidies to either group is highly debated but the effects are clear. Government spending that exceeds government income is known as deficit spending. Most, if not all governments of the world, practice deficit spending on a grand scale.

And the scale gets grander seemingly every year.

As such, inflation is accelerating and this analyst sees no relief to that acceleration.

On many of my past radio shows, I often ended many economic discussions with “You ain’t seen nuthin’ yet.”

And sadly, once again, I am afraid you still haven’t.

“Watching the markets so you don’t have to”

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