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“Party Time Is Just Around the Corner” “PARTY TIME is just around the corner”… This is the conclusion of Money Week, the gleeful conclusion. Why is “party time” just around the corner? Because the 2020s will roar as the 1920s roared… and the “deflationary fog” long overhanging the economy will finally scatter:
Who… or what… will dispel the stubborn gloom? The answer is 74-years old and stands 5’3” in height:
This nomination is “incredibly significant,” Money Week informs us — and for this reason:
We are inclined to agree. It is difficult to believe spending will not increase. “Extraordinary Fiscal Support” for a Long Time She has conceded that monetary policy alone cannot lift the economic doldrums currently prevailing. She has therefore yelled for “extraordinary fiscal support” while the virus “is still seriously affecting the economy.” We do not know when the virus will cease seriously affecting the economy. Yet we hazard that time is far distant. Consider for example the restaurant industry… Some 100,000 eateries nationwide — one in six — have “closed either permanently or long-term.” This, according to a September survey of the restaurant industry. That same restaurant industry expects to lose a thumping $240 billion in sales this year. That is $240 billion in sales lost permanently. It is gone. Meantime, winter is stealing in. The virus rages and many of the nation’s wardens — its governors — will likely reimpose home arrest. California’s jailor has already locked some 33 million residents indoors… for example. Many states will likely forbid indoor dining. Many of them do not enjoy the California climate. Who will shiver over an outdoor dinner… as Mr. Jack Frost lacerates his cheeks … and the polar chill stings his lady’s hands? Not enough patrons to keep a restaurant a going concern, in all likelihood — heat lamp or no heat lamp. Its profit margins are slender under optimal conditions. QuestionsThus we have questions to ask: How many more restaurants will shutter their doors this winter? How many will never reopen? How will their owners scratch along? Or the landlords of the properties no longer collecting rents? Or those to whom these landlords themselves are indebted? Or the restaurant staffs? Or the butchers, bakers and candlestick makers who will go without the waiter’s trade? The rentier’s thigh bone connects to the owner’s hip bone… which connects to the waiter’s hip bone… which connects to the butcher’s, baker’s and candlestick maker’s backbones. Rip a ligament — extending from the restaurant industry in this case — and the entire structure wobbles. It is not a transient economic handicap. The patching requires time. It may not take at all. We give but one example of a hobbled industry. There are others. A recent USC study revealed the United States economy may hemorrhage up to $4.8 trillion over two years. We therefore suspect Ms. Yellen will be extremely busy in the months and years to come… blowing wind… blowing money… blowing bubbles. A Green Energy Bubble? On what causes might she (and the administration) blow money? And what bubble could she help blow? Money Week:
Mr. Biden — incidentally — has pledged climate action. Climate is also a hobby horse of his nominee. Ms. Yellen helped found the so-called Climate Leadership Council, in fact. She has also moaned about income inequality — income inequality that she herself perpetuated by ballooning the stock market. The “stimulus” of zero interest rates and trillions of quantitative easing bypassed Main Street. Yet rather than blame today’s false capitalism… she fingers an innocent bystander — capitalism itself:
How might Ms. Yellen sandpaper the hard edges of “capitalism”… and distribute its bounties equitably? We are not entirely certain — or partially certain. She is not Congress. She cannot authorize spending. Yet this we predict with confidence: If she intends to lift the economy from its rut… she will botch the job. Debt, Debt, Debt The nation is already over $28 trillion in debt. That debt has jumped 400% in merely 12 years. How much has national income increased over the same space? 30%. That is, America has gotten a mighty buck. But it has gotten little bang from it. Meantime, its debt-to-GDP ratio presently nears 150%. Today’s ratio approximates the previous record of 121%… in 1946. “Advanced” nation debt crested 432% of GDP in the third quarter. The United States accounted for nearly half of it. How an economy can expand under such a groaning debt burden, we do not know. Yet with sufficient fiscal fireworks we suspect inflation will finally put in an appearance. Our minions inform us that the price of industrial commodities — iron ore, copper, aluminum, etc. — is already on the jump. Pricier consumer items will result eventually. That is, inflation will result… potentially a mighty inflation. Money Week:
Hence the prediction of a roaring ‘20s sequel. Perhaps they are right. Perhaps they are wrong. We envision a return of a 1970s-style stagflation. That is, stagnating growth twinned with severe inflation. But if they are correct… how precisely did the roaring 1920s conclude? Regards, Brian Maher
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