12.08.21- Unsound Money, Unsound Society
Of course, one of the most important and consequential parts of the incredibly complex organism that is the economy is money itself. It is its lifeblood and as the song goes, “it makes the world go round”. Therefore, manipulating the currency itself is one the most dangerous and hubristic things a central planner can do, which probably explains why it’s their favorite pastime. Ever since the gold standard was officially abandoned, the floodgates opened and governments and their central bankers had a field day. They’ve tried all kinds of schemes and strategies to render money just another tool in the hands of whomever happens to be in power at the time: they tried diluting it, printing tons more of it on a whim, assigning arbitrary and imaginary value to it, restricting its free use and punishing its accumulation. Read More
12.07.21- The taper that never was
For many months now, the mainstream financial press and market analysts have been anticipating some kind of violent reaction or a “taper tantrum”, based on what they described as “hawkish” statements from the Fed and other central banks. Removing the “crutches” from the economy, by hiking interest rates and stopping the asset purchasing programs, was often cited as a serious threat the economic recovery and was expected to have a severe impact on stock market performance. And yet, none of those fears materialized. Read More
12.06.21- The Fed Will Break the Economy
Last week, the Fed was handed an unexpected gift as first-time jobless claims fell to the lowest level since 1969, which gives the Federal Reserve the green light to continue tapering its $120 billion monthly purchases of U.S. Treasury and mortgage-backed securities. Given the Fed’s dual mandate of maximum employment and stable prices, low unemployment claims along with a low unemployment rate allow the Fed to focus on combating inflation. Read More
In 2021 it seems we have forgotten the official motto of the United States of America: “E pluribus unum,” out of many, one. Up through January 21, 2009, America had achieved a society where our culture accepted fully the concept of e pluribus unum. America had evolved into a true melting pot where people from anywhere in the world could arrive legally and be blended into America as a citizen with all the rights associated therewith. Read More
12.03.21- Why Inflation Is a Runaway Freight Train
The value of these super-abundant follies will trend rapidly to zero once margin calls and other bits of reality drastically reduce demand.
Inflation, deflation, stagflation--they've all got proponents. But who's going to be right? The difficulty here is that supply and demand are dynamic and so there are always things going up in price that haven't changed materially (and are therefore not worth the higher cost) and other things dropping in price even though they haven't changed materially. Read More
Not even close to transitory. After giving its turkey advice for Thanksgiving, the Federal Reserve finally gave up completely on the “Inflation is transitory” chorus it has been singing all year. Chairman Powell of the People’s Bank of Amerika stated outright today that inflation is not transitory after all,confirming what I have been preaching all year, and he stated that inflation may likely force the Fed onto an even faster tapering path than the it already laid out, confirming the second part of what I have said all year: Read More
12.01.21- "Perfect Storm"
“Frosty wind made moan, Earth stood hard as iron, Water like a stone.”
Did you feel markets judder when Powell spoke? The mood has changed as markets wake up to the danger Central Banks might just start doing their jobs. As Winter begins, Europe faces a bleak energy crisis of its own making. My solution? Buy a generator!
Lots to talk about this morning as Powell shifts the rules, bond markets get the heebie-jeebies, transitory inflation is consigned to junkpile, and markets wake up to the threat Central Banks might just start doing their jobs… A deep judder just ran down the spine of the market…. Read More
11.30.21- And Now. for Someting Entirely Different: Vaccination Causes Covid Variants
These “mutant strains” or variants are produced in response to the Covid vaccine. In other words, Fauci, Big Pharma, the medical establishment, and dumbshit politicians have unleashed an ever changing virus upon the world. The only hope is to immediately stop all Covid vaccination. Read More
11.29.21- The Scariest Inflation Chart You’ve Ever Seen
History teaches us something important about inflation: it can spiral out of control just that fast.
Inflation has been in the news a lot lately. The massive money pumping the Federal Reserve began in 2020 has finally got people’s attention, and is no longer a topic for just economists and free market advocates. Read More
11.27.21- And Now, for Something Entirely Different: We Don't Talk About Collapse To Revel In It, We Talk About Collapse To Prevent It
It’s semi-hilarious that when Covid first occurred at the beginning of 2020, I couldn’t get a single soul to listen to me when I warned that the market would eventually react negatively.
Now, entire continents stop all travel, immediately consider lockdowns and markets sell off 2% every time a new variant makes its way into the news cycle. Read More
11.25.21- No, Inflation Is Not Good for You
With the recent rise in inflation—with subsequent increases in both consumer and producer price levels—one suspects that sooner or later people on the left either would downplay it or find a way to spin the bad news into something positive like an alchemist would want to spin straw into gold. Both accounts have arrived, thanks to the New York Times and the hard-left publication, The Intercept. Read More
As I outlined yesterday, inflation has arrived in the financial system… and there’s nothing policymakers can do to fix it.
When the U.S. opted to shut down its economy in 2020, it embarked on the single greatest mistake in policy history. Economies are not like Netflix, you can’t just pause them for a while without doing MAJOR structural damage.
That damage has arrived in the form of supply chain issues and labor shortages. Read More
We have just entered those days of heady inflation that I have said will kill the stock market and bond funds. There is a tipping point at which inflation and the interest changes that respond to inflation matter, but it has never been a clearly defined point. Read More
When you see someone setting fire to a federal building, shouldn’t you say something?
And what if the matches and gas can are in your own hands?
The Federal Reserve printed up nearly 5 trillion brand-spanking-new dollars between August 2019 and today.
Surely, there must have been at least one alert economist among the 1,000 Ph.D.s on the Fed’s payroll who noticed that they were about to cause the whole economy to go up in flames.
But what was he thinking? Was he thinking at all? Read More
11.20.21- Tweedledee? Tweedledum? Either Way, You’re Paying the Bill
Since 2008 there have been numerous examples where the Federal Reserve has protected the wealthy elite while failing both Main Street citizens and the U.S. economy as a whole. Right now, Chairman Jerome Powell stands at the center of another major failure to live up to the Fed’s mandates to keep inflation in check (remember that 2% target?) and unemployment under control. Read More
After last week’s sizzling hot CPI data, inflation talk continues to dominate the news. The government and central bank have been insisting inflation is transitory. Now they’ve turned to a new spin tactic – recycling 1970s inflation propaganda.
In the usual post-FOMC meeting jawboning circus, today we had not one but two Fed officials discussing not the topic du jour - Fed policy errors and soaring inflation - but something far more ominous: the broken Treasury market. Read More
After last week’s sizzling hot CPI data, inflation talk continues to dominate the news. The government and central bank have been insisting inflation is transitory. Now they’ve turned to a new spin tactic – recycling 1970s inflation propaganda.
Recently two Fed presidents, Eric Rosengren of Boston and Robert Kaplan of Dallas were forced to resign. Before discussing the circumstances surrounding their resignations, it is useful to examine their backgrounds because they give insight into the two types of people who dominate the Federal Reserve - academics and Goldman Sachs alumni. Rosengren is a PhD economist and has never held a job in private industry. He started with the Fed in 1986, a year before he completed his PhD, and never left. Read More
11.15.21- Bitcoin & The End of
In 1972, one year after President Richard Nixon defaulted on the dollar and formally took the United States off of the gold standard for good, the financial historian and analyst Michael Hudson published “Super Imperialism,” a radical critique of the dollar-dominated world economy.
The book is overlooked by today’s economic mainstream and puts forward a variety of provocative arguments that place it outside of the orthodoxy. However, for those seeking to understand how the dollar won the money wars of the past century, the book makes for essential reading. Read More
At least since May of 2021, the Biden Administration has been secretly flying illegal aliens around the country in the middle of the night with the intention to grant them all citizenship and bonuses, provided they vote Democrat. There has been no notice to states, and those pulling the strings in his administration have been targeting the Republican states. Read More
Having taken aim at Elon Musk earlier in the week, Famous short seller Michael Burry of The Big Short game emerged once again from his latest self-imposed twitter exile to lambast The Fed (and The SEC) for fiddling while Rome burns.
In one tweet, reflecting on the fact that Rivian - the newest entrant into the electric vehicle market - is now worth over $100 billion and larger than GM and Ford: Read More
11.12.21- The Contrarian Trade of the Decade: The Dollar Refuses to Die
Which is more valuable: Wall Street's debt/asset bubbles or the global empire? You can't have both, so choose wisely.
The consensus makes sense: the U.S. dollar is doomed because the Federal Reserve and the Treasury will conjure trillions of new dollars out of thin air to prop up the status quo entitlements, monopolies, cartels and debt/asset bubbles, and since little of this issuance actually increases productivity, all it will accomplish is the dilution / devaluation of the currency. Read More
11.10.21- From Powell to Brainard
So what happened last Thursday? Why did bond yields suddenly plunge while COMEX gold prices soared? Was it simply a reaction to the latest FOMC meeting, or is there something behind the scenes that bond and gold traders have begun to sniff out?
Let's start with the bond market. Last Wednesday finally brought confirmation that the Fed was planning to taper their existing QE plan. In fact, the tapering is actually now scheduled to begin this month! This removal of some of the Fed's ever-present bids in the bond market should lead to lower bond prices and higher rates. At least that's the traditional opinion as put forth by mainstream economists and pundits. Read More
11.09.21- Gold soars as central banks seem reluctant to hike rates
The markets have been highly attuned to central bank statements, particularly those involving interest rate hikes. Despite there being little in the way of supporting the notion that the hikes will go as planned, gold has been suppressed for over a month with the hikes seemingly being priced in.
With the Federal Reserve, the Bank of England and the European Central Bank all inclined to watch and see, the markets were quick to react to dovishness. After a strong week, gold’s price jumped to a high of $1,818 on Friday with the surge only ending due to the trading day closing. Read More
It’s been nearly 11 years now that Ben Bernanke, who was then Chairman of the Federal Reserve, sat down for a rare TV interview with 60 Minutes back in late 2010.
As he sat across from journalist Scott Pelley, Bernanke appeared shaken, but not stirred; he was visibly nervous, but displayed the emotional detachment of a trauma surgeon. Read More
As unlikely as it may sound, the Federal Reserve might actually be the institution that finally returns the stock market from its fantasy world where historic overvaluations will last forever to cold, hard reality.
Not so much because the Fed is making any effort to restore reality (it’s not), rather because the Fed is simply the last institution standing between markets and reality. Read More
The anniversary of Guy Fawkes’ Gunpowder Plot is a perfect time to remember Bitcoin as truth, and to move another step closer to obsoleting the parasitic nature of the current system.
It is an economic rule which free market philosophers like Adam Smith have tried to explain to governments and monopolists for centuries:
Less liberty and more centralization equals less production and less overall wealth.
Governments and central banks have sought to circumvent this rule by printing money from thin air, thinking that they can create wealth while at the same time suffocating public financial interactions and trade with authoritarianism. This, of course, only leads to inflation or stagflation, and thus wealth is never actually created, it is projected like a hologram in order to trick the masses into thinking that all is well – until everything breaks, that is. Read More
By now, it's a fait accompli that the FOMC will announce a QE taper schedule on Wednesday at the conclusion of its November meeting. How the COMEX precious metals react to this news will likely set the course for the remainder of 2021.
First, you must understand that what the FOMC announces on Wednesday will not be "news". Various Fed presidents have foreshadowed these changes since early August. And what will those changes be? The Fed will begin reducing its current $120B/month debt monetization plan (QE). They'll trim $15B/month off the total over the course of eight months with the goal to be at zero by August of 2022. Read More
11.02.21- Inflationary Wonderland
Apologies in advance for some of the possibly confusing content to follow. But if this were easy anyone could do it, eh?
There are a lot of balls in the air; balls known as inflation vs. deflation and most of all time frames. Read More
Here’s the administration’s talking point: the US economy is rolling along so well that Americans are demanding huge amounts of goods. That’s overwhelming the supply chain and causing the backups roiling America’s ports and logistic infrastructure. Read More
10.30.21- And Now, for Something Entirely Different: You Know What They Sayin’?
Do you marvel, as I do, at this malignant hive organism - arguably worse than the Covid-19 chimera virus -that calls itself “Joe Biden”? The personage of that name is a mere effigy, of course, like one of those grotesque mummies hoisted above the mob in a religious procession from some primitive cannibal kingdom. It’s the mob itself that actually matters, though, the twerking parade of Woke-Democrats, because it is bent absolutely on rooting out, punishing, and torturing its perceived enemies, which in this case are about half the people in the country. That's really all it seeks to do. It has never been about anything else, because, get this: the Woke mob is insane. Read More
10.29 .21- The Fed is WAAAAY Behind the Curve on Inflation
Inflation is ROARING.
Five year breakevens, which is a key inflation measure, just hit a new all-time high of 3.0% (started in 2002). Inflation expectations running out to five years are now higher than at any point in the last ~20 years.
Unfortunately, that’s not even the end of the bad news. The 10-year breakeven rate (inflation expectations 10 years out) hit 2.7044% this week. Read More
10.28.21- Lights! Camera! Inflation!
Today's Federal Reserve regularly makes two extraordinary claims;
The fact that the Fed is completely wrong on both of these claims is more than sufficient justification to pull the plug on the Fed in its current form. In the past, I have discussed "inflation" - using the Fed's preferred definition of rising prices - and not the classical definition of inflation as an increase in the money supply. Representative of these articles is (1), which included Figure 1. Figure 1 plots the prices of food and energy and uses the Fed's own data to do it. There are several conclusions that could be drawn from this Figure. However, the notion that prices are rising too slowly isn't one of them. Read More
10.27.21- What is the Federal Reserve
What is the Federal Reserve Hiding From Us?
“The most inappropriate monetary policy that I’ve seen maybe in my lifetime.”- Paul Tudor Jones on the Federal Reserve via CNBC
The Federal Reserve has three mandates per their Congressional charter. They are to effectively promote maximum employment, stable prices, and moderate long-term interest rates. The Fed has met the first goal, employment is largely maximized. As far as the other two, the Fed is running monetary policy consistent with destabilizing prices and doing it with interest rates that are well below moderate. Read More
10.26.21- Doing 90mph On Deadman's Curve: A Few Thoughts On Risk
When the wreck is recovered, witnesses will wonder why they took such heedless, foolish risks.
You're in the back seat wedged between tipsy revelers, the driver is drunk and heading into Deadman's Curve at 90 miles per hour. Nobody's worried because the driver has never crashed. Before they slid into euphoric incoherence, the other passengers answered your doubts with statistics and pretty charts showing that the driver had never had an accident, so there's nothing to worry about. Read More
10.25.21- Brink of Totalitarianism; Get Out of the Banks, Own Physical Warns “The Creature from Jekyll Island” Author
10.23.21- Central Banks and Socialism Are Forever Linked Together
It is well known that socialism is a shortage economy. It is the economy of inefficiency and corruption, of indifferent workers and of bigwigs, of lacking spare parts, of lacking funds, of failure, of permanent reform needs and of constantly unsuccessful reforms. This concerns in particular total socialism, as it was realized in the Soviet Union or under National Socialism. But it is no less evident in the numerous partial socialisms that are featured in the real existing welfare state, in its numerous state “systems.” Budget deficits year in, year out despite high contributions—that is the reality in the state pension system and in the state health system. Read More
If you had dreams of retiring soon, perhaps even next year, and starting your “dream retirement” off on the right foot … you could be in for a bit of a nasty surprise.
That’s because there’s a hidden thief picking the pockets of most people’s retirement accounts.
Despite the mainstream media’s spin on just how fabulous next year’s cost-of-living adjustment (COLA) from Social Security will be. For example this dreamy USA Today article couldn’t contain its excitement: Read More
Politicians may be morons when it comes to public policy, but they’re geniuses when it comes to inventing new ways to control your life and steal your money.
Tax increases seem old-fashioned compared with new 21st-century ways to take over the financial system to your detriment and make you pay for their pet projects. Take climate, for example…
We’re all familiar with how climate alarm has been used to dictate changes in transportation, energy generation and construction codes. Of course, these efforts have been massive failures, as witnessed by the ongoing supply chain disruptions and energy shortages. Read More
10.20.21- Rabobank: Central Banks
Workers AND bourgeoise of the world, unite!
Yesterday’s slump in US housing starts (-1.6%) and building permits (-7.7%) dragged the Atlanta Fed’s GDPNow Q3 tracker down from 1.2% q/q annualised to just 0.5%. One or two more bricks pulled out of the Jenga wall, and it’s flat growth or even contraction. Q4 will be even worse on the present trend – after all, even The Washington Post says “Lower Your Expectations” is the best response to empty shelves, prompting the rest of the country to rant like Larry David in ‘Curb Your Enthusiasm’. Read More
If “a person is ever charged with counterfeiting, he should tell the judge he was engaging in monetary policy,” quipped the late economist Walter E. Williams. This comes to mind when pondering the 21st-century government habit called “quantitative easing.” Most Americans have probably heard this term, but may not know that it amounts to weasel words. It’s a euphemism — something you say when you don’t want to say what you really mean — sort of like using “pleasingly plump” instead of “fat.”
As for quantitative easing (QE), it actually means creating money backed by nothing; it’s legalized counterfeiting. Read More
10.18.21- Is the US willing to give up the world’s reserve currency to fix its trade deficit?
10.16.21- Are We Really Crazy Enough to Believe This Is Going to Work?
Unbeknownst to the giddy participants, they're not just betting on the omnipotence of the Fed Politburo, they're also making a max-leverage bet that "the madness of crowds" will never end.
Imagine an economy so dominated by its central bank that all markets hang on every word of its priesthood as life or death. You know, like the Federal Reserve and the American economy. Read More
10.15.21- Inflation Is Here to Stay
BALTIMORE, MARYLAND – Yes… we’re cantering across the broad pampas… looking for tomorrow’s headlines.
And what’s this? Today’s headlines already have a tango beat. Here’s The Wall Street Journal:
Back in the days before infinite liquidity and markets being in love with the idea of being big just for the sake of it, there used to be discussion about the difference between extensive and intensive growth. Put simply, extensive growth is achieved by adding more inputs to get more output; intensive growth is achieved by getting more output from existing inputs - what we call productivity. Back in the old days, we used to have that too. Read More
The economic gurus and magic-chart advisors who told you inflation was going to be transitory or that it wouldn’t amount to much or even the dimmest of all who proclaimed it wasn’t happening at all could not have been proven more foolish and blind to the obvious all around them. Now they are revising themselves faster than I can write about it. Read More
10.12.21- A Current Burden of Deficit Financing
My late Nobel-laureate colleague James Buchananmade many important contributions. Among the most significant is his proof, first offered in 1958, that Adam Smith and other classical economists were correct to argue that government projects that are funded with debt are ultimately paid for by the future citizens whose taxes must be raised (or whose government benefits must be reduced) to get the funds necessary for repayment. (Randy Holcombe and I explain further here.) With deficit financing, today’s citizens-taxpayers impose costs on tomorrow’s citizens-taxpayers. Read More
10.11.21- The Future of Direct Taxation
The image above may be considered by some as unfair, as it suggests that taxation is a form of robbery. Well, let’s check the dictionary for a definition:
Well, that certainly fits the bill. Of course, Inland Revenue (or the IRS, CRA, etc., depending upon where you’re from) would say that it’s not robbery if it’s lawful. As I see it, the fact that a law has been passed to allow robbery does not change it from being robbery. It’s merely institutionalised robbery. Read More
Four monster waves are about to crash onto the Fed's beach party and sweep away the unwary revelers.
Hey, is the water in the bay receding? Never mind, free drinks are on the Federal Reserve, so party on, life's a beach, asset bubbles will never pop, we're safe. Of course you are. The Fed is all-powerful and would never let a rogue wave turn all its precious phantom wealth into broken detritus. Read More
10.08.21- The funding challenges ahead
This article looks at the Fed’s funding challenges in the US’s new fiscal year, which commenced on 1 October.
There are three categories of buyer for US Federal debt: the financial and non-financial private sector, foreigners, and the Fed. The banks in the financial sector have limited capacity to expand bank credit, and American consumers are being encouraged to spend, not save. Except for a few governments, foreigners are already reducing their proportion of outstanding federal debt. That leaves the Fed. But the Fed recently committed to taper quantitative easing, and it cannot be seen to directly monetise government debt. Read More
Howdoes a fraud like Anthony Fauci find himself in the highest paid position in US bureaucracy? Well, Fauci’s career is a rather shocking testament to the reality of our government and our era – The more corrupt you are the more favors and promotions you will receive. Read More
Imagine you are on a cruise ship and you secured your valuables with the ship’s purser. And later you see the purser hurriedly getting on a lifeboat with canvas bags used for holding valuables. What kind of a signal would that send to you?
It would appear to me the ship is about to sink and the purser is trying to take everybody’s money with him as he rescues himself. Now recognize, the purser could say he was just making sure everyone’s valuables were saved should they survive the sinking or at least preserve passenger valuables for their heirs, in what would be plausible denial. Or who knows, maybe he will say it was just a drill. Read More
Across the advanced economies, central banks have rightly prioritized maintaining financial stability and supporting the real economy over fighting inflation with interest-rate hikes. But with financial fragility rife and public and private leverage at all-time highs, their next big test is coming.
Since early 2020, central banks across the advanced economies have had to choose between pursuing financial stability, low (typically 2%) inflation, or real economic activity. Without exception, they have opted in favor of financial stability, followed by economic activity, with inflation last. Read More
10.04.21- Who Owns the USA?
10.02.21- The Final Chapter Has Arrived!
If you told someone two years ago the world would look like it does today, they would have called you a nut job spewing science fiction with a dash of conspiracy theory! We use two years as a timeframe because if you recall, the overnight repo market blew its lid in late September 2019. And what a two years it has been since!
We knew at the time the Fed would be required to embark on their final pump job because credit was faltering badly. “Thankfully”, COVID-19 came along to shut down economies and thus massively reduced credit demand. Read More
A Chinese worker stands inside the Zhangbei Flexible DC Power Network Project that provides electricity. Power cuts in China are one of the factors driving up fears about inflation worldwide.
The U.S. may be heading into an “era” in which inflation remains significantly higher on average over the next decade, according to London-based research firm Capital Economics. Read More
In an interview I did last week with one of my favorite podcasts, Palisades Gold Radio, I talked about the rigged Keynesian system the Fed runs to help prop up capital markets by any means necessary.
In addition to frontrunning monetary policy moves in their own portfolios, which appears to be standard operating procedure at the FOMC (and Congress) nowadays, Fed governors are also subject to the constant psychological reminder that keeping the country’s citizens comfortable by keeping the appearance of order makes for a much nicer Tuesday at the office than shocking the system and its participants by announcing that today will be the day that the Fed plans on raising rates. Read More
Tuesday was ugly in markets. US equities tumbled around 2% to a two-month low and through key moving averages, with even the biggest names falling. US Treasury yields also continued to rise, with 2s little changed, 5s up 3bp, and 10s up 6bp, marking further curve steepening. The US dollar got another lift as gold and crypto saw another dip. Reflation? Stagflation? Devastation? Read More
Joe Biden is the worst president we’ve had since the last worst president we had: Barack Obama, who was the worst president since Jimmy Carter. It has escaped no one’s notice.
Covid lockdowns and mandates; the destructive, inhumane, callow, disgusting bug-out of Afghanistan; generational theft-level spending; and tyrannical diktats have touched everyone – except Hollywood and D.C., naturally.
Turn that flag upside down, Australia here we come. Read More
09.27.21- When the Tight Economic Rope Slackens (w/edit)
 Upon completing the article I realized that no forward look at the economy and financial markets from an inflationary/deflationary point of view would be complete without consideration of the Yield Curve. Here is its status at the time of writing. It is making a steepening hint this week along with the rise in bond yields.
That signaling is inflationary, at least for now. But in 2008 the curve morphed from an inflationary steepener to a deflationary one and that’s an important distinction. Read More
“Evergrande, a real-estate colossus in China, is collapsing. Don’t expect the collapse to be contained to China. The global macro implications are huge.” – Mike Shedlock
The U.S. economy is staring down the barrel of a financial shotgun thanks to the Chinese real estate bubble that just popped.
09.24.21- Welcome to the Central Bank Hotel, Once Inside You Can Never Leave
Central bank digital currencies are on the way. The German Central Bank just embraced a digital euro. Let's discuss the risks.
Fintech and Global Payments
Jens Weidmann, president of the Bundesbank, gave the opening speech at the digital conference “Fintech and the global payments landscape – exploring new horizons” Read More
This mega-liquidity suck has mopped up cash amounting to 10 months of QE.
The Fed announced today after the FOMC meeting that it doubled the per-counterparty limit on overnight reverse repos from $80 billion to $160 billion per counterparty. There have been many indications, including in the minutes of prior meetings, that the Fed would increase the per-counterparty limit. Read More
A Reuters article by Stefano Rebaudo argued that the Federal Reserve might welcome a “bond market tantrum” that pushes bond yields higher. But does the Fed really want higher interest rates? And what would that mean for the economy?
Despite the post-pandemic economic improvement and wide expectations that the Fed will begin tapering quantitative easing in the near future, bond yields have remained stubbornly low. Ten-year Treasury yields remain stuck just above 1.3%. Read More
Fed chairman Jerome Powell has decided the Fed ought to “review” its ethics policies after it was revealed that high-ranking personnel at the Fed were actively trading stocks even as the Fed was busy pulling the levers on monetary policy.
CNBC reported today:
Federal Reserve Chairman Jerome Powell directed staff to review the central bank’s ethics rules for appropriate financial activities after disclosures that several senior central bank officials made multiple multimillion-dollar stock trades in 2020, while others held significant investments…. Read More
Liquidity injections are like a drug, and the financial markets just can’t get enough of them. But as they were endlessly juicing the stock market, officials at the Federal Reserve broke one of the cardinal rules of drug dealing. You never get high on your own supply. It turns out that quite a few of the big dogs over at the Fed have very large investments which greatly benefitted from all of the cash that the Federal Reserve was endlessly pumping into the marketplace. If that sounds “extremely corrupt” to you, that is because it is extremely corrupt, and it is another example that shows why the Federal Reserve should be completely abolished. Read More
09.18.21- The Perfect Storm Makes Landfall
Gold dumps to 1746. Silver to 22.59. GDX to a “new low” of 30.59. SILJ to 12.43. Meanwhile, DXY rises to 92.96, its highest level since August 27. Stocks have come off slightly, with the S&P testing support at ~4440 and the Nasdaq 15000.
We can debate the reasons as to why. Take your pick: Far better than expected retail sales data, aided by higher prices, increasing the likelihood of a Fed taper. It was the recent Wall Street Journal article citing the probability of a Fed taper beginning in November that triggered the peak in stocks. Read More
09.17.21- The Funny-Money Game
The sense of general unease that I detect among those I meet and discuss economics and financial matters with is increasing —with good reason. Clearly, what everyone calls inflation, rising prices or more accurately currency debasement, will lead to higher interest rates, threatening markets which are unmistakably in bubble territory.
The consequences of rising prices and interest rates are still being badly underestimated. Read More
International Man: Every year, the international ruling class—the most influential world leaders, CEOs of big corporations, top academics, and even celebrities—come together at Davos. They discuss topics that interest them and prescribe their preferred policies.
What’s your take on the Davos crowd and what they are doing? Read More
09.15.21- The Fed Speaks Loudly
“Speak softly and carry a big stick” President Theodore Roosevelt on foreign policy.
In other words, let your actions, not your words set the tone.
It appears the Fed may be taking the opposite tack. Many Fed members are vocal about tapering soon, but there is reason to believe the Fed will not back their words with action.
Might the Fed be speaking loudly and carrying a feather? Read More
09.14.21- The Return of Stagflation
I have been writing this letter for 22 years. Sometimes I look into the future and other times merely try to explain the present. Today I’m going to look at several possible futures. There are forces at work in both Congress and the Federal Reserve that could take us down radically different paths. There are also changes in the Zeitgeist, the way we act and think both in and as a society, that are going to have major impacts.
What I am not doing today is predicting the future. I am looking at events and saying if “this” happens we need to be prepared for it. I’m increasingly concerned we are in an economic situation with almost no wiggle room. We had serious issues before the pandemic which haven’t gone away. Massive fiscal and monetary stimulus obscured this reality, but can’t do so forever. Read More
We know you're all just poor corrupt officials, but bleating excuses won't save you from the karmic payoff.
The Federal Reserve can be summed up in two famous lines from the classic film Casablanca in which the corrupt police official Renault is ordered to close Rick's cafe.
Renault: I'm shocked! Shocked to find that gambling is going on in here.
[The croupier hands Renault a wad of cash]: Your winnings, sir. Read More
Speaking at a meeting of central bankers at Jackson Hole, Wyoming, Federal Reserve Chairman Jerome Powell said a lot of words without exactly saying anything.
The Fed “doublespeak” was picked up by the American Institute for Economic Research (AIER):
ECB is second giant to taper. Bank of Japan already ended QE. Bank of Canada shed 15% of its assets. Bank of England & Reserve Bank of Australia are tapering. Reserve Bank of New Zealand quit QE cold turkey. Riksbank will end QE this year. What’s taking the Fed so long? Read More
09.08.21- The Fed Is Helping Facilitate Trailer Park Evictions
NPR highlighted the growing number of mobile home part evictions. According to the report, real estate investors continue to buy up mobile home parks across the US. They then raise lot rents and fees, and evict residents who can’t pay. Read More
“Gold is the primary store of value for those who mistrust the government, but silver remains the refuge of choice for most people because it is cheaper and more accessible.”
The aptly-named New York University professor William Silber wanted to title his book “Silber on Silver” – but his publisher instead had him settle for The Story of Silver: How the White Metal Shaped America and the Modern World. The wittiness of that remark in the acknowledgements shows the many instances of snark, irony, or amusing tales that are scattered throughout this excellent contribution to the history of monetary commodities. Always playing second fiddle to gold, silver’s status as asset and as money is as riveting as the more widely known history of gold. Read More
Recently here on Mises Wire, Sammy Cartagena wrote a brilliant article demonstrating that Two Percent Inflation Is a Lot Worse Than You Think. In it, he demonstrates that the manageable 2 percent inflation year over year we all have gotten used to is a whole lot less manageable than we tend to think. But in it, he also cited explaining that “over 23 percent of all dollars in existence were created in 2020 alone.” From that he explains that while future inflation is important, he is focused on past inflation for the sake of his article, which is where these two articles diverge because this will be questioning future inflation. Read More
The old joke goes: “How can you tell when a lawyer is lying? Their lips are moving.”
Now there is a new joke, according to Charles Hugh Smith.
“How can you tell when a big economic bubble is forming? When Wall Street tells Main Street, ‘It’s not a bubble.'”
Smith proceeds by leveling a harsh criticism of the present economic moment: Read More
09.03.21- Inflation is a monetary curse
Remarkably, in a speech on monetary policy given at the Jackson Hole conference last Friday, Jay Powell never mentioned money, money supply, M1 or M2. With money supply expanding at a record pace to fund both QE and intractable budget deficits the omission is extraordinary.
The FOMC (the rate setting committee) appears to no longer take the consequences of monetary expansion into account. But the fact is that rising consumer prices caused by monetary expansion have driven real rates sharply negative and are leading to pressure for higher interest rates. Read More
09.02.21- “Inflation,” Properly Defined
The use or rather misuse of language has always been an effective tool of politicians to enact their agendas. George Orwell’s “Politics and the English Language” brilliantly showed, in his day, how language was being manipulated for all sorts of totalitarian measures:
Political language — and with variations this is true of all political parties, from Conservatives to Anarchists — is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind. One cannot change this all in a moment, but one can at least change one’s own habits, and from time to time one can even, if one jeers loudly enough, send some worn-out and useless phrase — some jackboot, Read More
09.01.21- The Four Horsemen
Over the last few weeks, I’ve been outlining the clear evidence that stocks are in a bubble, arguably the largest stock market bubble of all time.
In truth, however, it’s not just a bubble in stocks, it’s a bubble in Treasuries, which the Fed has manipulated to absurd levels via over $2 trillion in Quantitative Easing (QE) during the last 18 months. Read More
You can summarize the current mood in Washington DC as “Please don’t let this be a return to the 1970s.”
For younger readers, that was a decade in which excessive government spending and money printing combined with inept foreign policy to create the impression that the US was fading into global irrelevance. Everyone everywhere dumped their dollars, inflation spiked, interest rates soared and geopolitical chaos of various forms ensued. Read More
Chase Bank has canceled General Mike Flynn's personal credit card, citing "possible reputational risk to our company."
Markets Are Focused On The Fed And Tapering, Not Jobs
Markets are not focused on jobs as much as it is about when tapering will begin. Some economists are going as far as calling the last "a remarkably strong jobs report." I beg to differ. Let's be clear, most of these are not new jobs but simply people returning to the slots made when Covid-19 disrupted the economy. A huge X factor here is of course how Covid-19 fear is handled going forward. Read More
08.27.21- Fed Up With The Fed's Abuse Of Power
One phrase describes the Fed's pillaging of the nation to benefit the few at the expense of the many: abuse of power.
To confess that the fate of the entire global economy now rests on the mumblings of a fossilized Politburo fanatically devoted to making the rich richer is to 1) state the obvious and 2) admit the extreme fragility of the global financial system. That it has come to this-- all global markets soar or collapse in unison based on the addled spew of the fossilized Politburo's chairman--is overwhelming evidence that 1) the system is broken and 2) the fossilized Politburo has way too much power and 3) the fossilized Politburo is abusing its power by enriching the already-rich, decade after decade, to the detriment of the bottom 90% and systemic stability. Read More
The Fed will trim back its stimulus, but it’s already too late, and it’ll be too little and too slow.
It’s mind-boggling just how many layers of stimulus were thrown out there, one layer on top of the other, $5 trillion by the federal government and $4 trillion by the Federal Reserve, all of it with follow-on effect as the trillions of dollars ricochet through the economy and the financial markets. And some of it hasn’t circulated yet and is just sitting there for now, such as some of the money sent to states and municipalities that are now floating in cash and that have redone their budgets, and they’re going to spend it eventually. Read More
08.25.21- Central Banks Cannot Really Taper In This Slowdown
Recent macroeconomic data from the United States should worry us. Amid the reopening and the biggest fiscal and monetary stimulus in recent history, and with all the possible tailwinds from policy decisions, consumer confidence has plummeted to the lowest level since 2016.
Retail sales have fallen sharply again in July, and the employment or industrial production data are far more than disappointing considering the level of stimulus and that GDP has returned to pre-pandemic level. Read More
Last year once I realized that the Covid campaign was a fear campaign and not a scientific or medical campaign, I understood that the operating agenda was not a public health agenda. It became clear that there was a profit agenda and also a control agenda in which civil liberties and their legal and constitutional protections were being cast aside.
Having studied at four top universities in days gone by when education, not propaganda, was education’s purpose, I am able to comprehend most scientific reports sufficiently to understand the gist of the reports, but in the case of Covid when in doubt I rely on virologists and medical school professors to vet or correct my conclusions. Read More
08.23.21- Why the Wheels Are Coming Off
Is that the scent of smoke? What's that red glare? Must be nothing.
Why are the wheels coming off the American Project? Afghanistan is front and center in the news flow for obvious reasons, but since I have no expertise on that nation or America's role there, I am stipulating these are general comments from a systemic perspective.
By the American Project I mean 1) global hegemony in both hard and soft power and 2) American Exceptionalism, the belief that America is not just uniquely strong but uniquely right in terms of holding the high moral ground. Read More
The same institution that's unable to run the Postal Service or Amtrak orchestrated our invasion and withdrawal of Afghanistan.
Another government failure, another outrage. This time the scandal is brought on by the less-than-orderly withdrawal of U.S. troops from Afghanistan and the realization that 20 years of military presence in the country achieved nothing but death and chaos. Observing another instance of large-scale mismanagement, I can't help being surprised that anyone is still surprised. Read More
You came in like a wrecking ball
“There was nothing that I or anyone else saw that indicated a collapse in 11 days.”
At some point ahead, if the Fed announces QE tapering at the September FOMC meeting --despite an evident economic slowdown, no fiscal stimulus, and slowdown and ‘reforms’ in China-- then the above words may come from the lips of Fed Chair Powell. At least we can assume that would be the case based on the market reaction to that implied policy path in the Fed minutes, as covered by Philip Marey here. Read More
08.19.21- Central Banks Are Now In The Endgame
Central bankers were handed the Midas curse half a century ago. Midas turned everything that he touched into gold– even his own food. Exactly 50 years ago (15 Aug, 1971) central bankers were handed a much worse curse by Nixon. But instead of turning everything into gold, their curse was to turn all real assets, including gold, into worthless paper, creating the perfect setup for this central bank endgame.
Nixon had of course not studied history. Because if he had, he would have understood that his lie was $100s of trillions worse than the Watergate lies: Read More
08.18.21- A System of Confidence
On Twitter earlier this week, someone sent me a note asking if this weekend's events represented "Peak America". I responded that "Peak America" actually came a long time ago. The fall of Afghanistan is just the latest milepost on the way down.
And what does this have to do with the precious metals? Everything! Why? Because America has the world's reserve currency, the world's reserve banking system, the world's reserve treasury markets, the world's reserve payments system...you name it, I could keep going. So as America declines, the financial power it wields declines with it. Read More
The U.S. Treasury publishes its balance sheet annually. The most recent, for fiscal year 2020, is so egregiously out of whack it might be hard to wrap your head around:
Total Assets: $5.95 trillion
All figures above have been rounded to the nearest billions. The net position also factors in -$3.1 billion in “unmatched transactions and balances,” which is odd. (Looks like everybody has a little trouble balancing the checkbook…) Read More
08.13.21- More Money Doesn’t Mean More Wealth
The Federal Reserve has targeted a 2% inflation rate for years, as though it’s a holy grail. As though 2% inflation was an economic panacea that would perfectly balance employment, business investment and bank lending.
Recently, the Fed has loosened the reins on inflation and let it charge ahead. Quite a bit – two consecutive months over 5%, two and a half times their self-imposed target. Read More
08.12.21- I Feel Like I Am Living In Crazytown
We haven’t had an extended bout of painful inflation like this since the days of the Carter administration, and our leaders in Washington have decided that the best way forward is to rapidly create even more inflation. They keep using words like “transitory” to describe the current inflation crisis, but then they turn right around and talk about the need to create, borrow and spend even more money. It is utter madness, but at this point there is nobody that is going to stop them. We are all passengers on a “highway to Weimar”, and those that have their hands on the wheel have gone completely nuts. Read More
Prices that Americans pay for everyday goods and services accelerated in July as pent-up demand for travel and restaurants kept inflation hot, but about where economists had expected.
The Labor Department reported Wednesday that its consumer price index rose 5.4% in July from a year earlier, in line with June’s figure and matching the largest jump since August 2008. Read More
Below we unpack the implications behind central bank gold purchases (rising), negative real yields (falling) and Stanley Fischer’s Fed-speak (cringing).
What Bankers Do, Rather Than Say
08.09.21- Our Enemy Is STILL the State
In The Great Fiction, author Hans-Hermann Hoppe starts where any discussion of government should begin, with the defining attributes of a state. Why this approach? Governments that populate the earth are all states, though there is no good reason they should be.
What are these attributes, exactly? The most salient feature of a state is its self-appointed monopoly powers. If it declares it can’t be sued, it can’t be sued. If it or its agents decide to tax its subjects, it will fleece them. If it decides to go to war, it will unleash its war machine. If it decides to outlaw market-derived money, which has been gold and silver, and replace it with easily-inflatable fiat currency, everyone must begin accepting the state’s money in trade. Any violation of these laws is subject to punishment, enforced by the state’s badge-carrying thugs. Read More
Two years ago, the debt ceiling was lifted. Lifting the debt ceiling to make room for more government spending has been pretty routine since since 1917.
Nobody knows, from sea to shining sea, why we are having all this trouble with our republic. — Tom McGuane
Can a people recover from an excursion into unreality? The USA’s sojourn into an alternative universe of the mind accelerated sharply after Wall Street nearly detonated the global financial system in 2008. That debacle was only one manifestation of an array of accumulating threats to the postmodern order, which include the burdens of empire, onerous debt, population overshoot, fracturing globalism, worries about energy, disruptive technologies, ecological havoc, and the specter of climate change. Read More
08.05.21- Currency Debasement and Cultural Degradation
08.04.21- What's Behind The Inflation Hall Of Mirrors?
The global economy may have finally run up against hard limits of "infinite substitution" and "infinite expansion" funded by central-bank free money.
We are in an interesting Hall of Mirrors moment: prices are rising, yet we're assured by the Federal Reserve that this inflation is "transitory," and other voices are insisting the primary forces of the economy (globalization, debt and automation) are all profoundly deflationary, meaning prices of everything will eventually plummet as supply will outstrip demand. At this same moment, others are declaring the start of a new secular inflation that cannot be controlled with Federal Reserve interest-rate manipulation / bond-buying. Read More
08.03.21- Inflation Is More Than a Bad Tax
08.02.21- One Lockdown From Disaster
The popular economic tune being played by the popular press drones on. You know the melody by now…
That the post-pandemic boom is alive and well. That growth is enduring. That blue skies are here to stay.
If you listen closely, however, several notes ring sour. Read More
07.31.21- The Latest Lie from on-High: An “Independent Federal Reserve”
Earlier in July, U.S. President Biden came away from a meeting with Fed Chairman Jerome Powell and calmly announced that in addition to inflation being “short term,” we should fear not, as Biden also “made it clear to Chairman Powell that the Fed remains independent,” but “will act as needed.”
Whewwww. Where to even begin in unpacking the lighthouse of reality behind so much verbal fog? Read More
As we pointed out earlier this week, 10 year real yields spent the past few days trading around all-time lows. However, due to data limitations, we can only measure this using TIPS from 1997 onwards. So what do other measures that go back further show?
That is the question posed by Deutsche Bank credit strategist Jim Reid who plotted three real yield series; Read More
Inflation has been on the rise for the past year and in the last few months it has accelerated. In June 2021, inflation, measured by the Consumer Price Index (CPI), hit the highest level since 2008. By inflation, economists refer to the increase in the general level of prices, which means that prices on average are increasing. The Bureau of Labor and Statistics (BLS) has a basket of goods and services that it tracks and uses to create a measure of the CPI. While inflation is the topic of the day in the news media and everyday conversations, many have not heard about its sneaky cousin, shrinkflation. Read More
Federal Reserve Chairman Jerome Powell continues to insist the surge of rising prices is “transitory. But if this is true, why are inflation projections for 2022 rapidly rising? It seems the markets aren’t buying the transitory theme.
As prices continue to skyrocket, Americans paying more and getting less. Nevertheless, Powell stuck to his guns during his most recent trip to Capitol Hill. Transitory is his story, and he’s sticking to it! Powell conceded inflation “has increased notably and will likely remain elevated in coming months before moderating.” But he continued to insist we’re really only seeing significant price pressures from a few sectors such as the auto industry and they will abate. Read More
Mainstream pundits sometimes accuse Peter Schiff of being a “stopped clock.” They admit he’s right occasionally, but only by virtue of sticking to the same narrative, talking about the malinvestments and misallocations in the economy and warning about an impending crisis. In this clip from his podcast, Peter said it’s the mainstream regulars on financial networks like CNBC who are the real stopped clocks.
Peter said you can never count on mainstream “financial experts” to warn you about an impending crisis. Read More
Long before meme stocks came along and reddit discovered what Zero Hedge readers had known since 2013, namely that to outperform the market all one has to do is go long the most shorted stocks, there were inverse VIX trades and the relentless moneymaking juggernaut that was shorting volatility, i.e. collecting stacks of cash in front of a dormant volatility steamroller. But on Feb 5, 2018 the steamroller woke up with a vengeance, and shortly after the close, the infamous volmageddon event took place when a handful of the most popular inverse VIX strategies crashed from near record highs to zero in a manner of minutes as ETN liquidation triggers were activated, sending the VIX briefly to record highs and wiping out billions in value and leaving countless retail investors stunned and facing total losses. Read More
Inflation in America continues to rise, and with it skepticism in Federal Reserve chairman Jay Powell’s insistence that increased prices are “transitory.”
This double whammy of consumer pain and declining institutional confidence increases the odds of another challenge to the Fed’s current plans: a change in leadership. Read More
After decades of living in a relatively low inflation environment, it is hard for most Americans to believe that things have gotten so bad so quickly. In fact, even though I write about this stuff almost every day, it is hard for me to believe it. We are watching prices spiral out of control all over the nation, and we know precisely who is to blame. During the pandemic, our politicians in Washington have been borrowing and spending money at an unprecedented rate, and this has pushed our national debt up to 28 trillion dollars. Meanwhile, the Federal Reserve has been pumping trillions of fresh dollars into our financial system, and this has resulted in the Fed balance sheet nearly doubling over the course of this pandemic. Read More
07.22.21- Powell Gave Congress Dovish Signs. Will It Help Gold?
Powell admits that inflation is well above the Fed’s target, but he still considers it transitory. Gold increased in response – only to fall again.
Last week, Powell testified before Congress. On the one hand, Powell admitted in a way that inflation had reached a level higher than expected and is above the level accepted by the Fed in the longer run:
Nations have often gone mad in a matter of months. The French abandoned their supposedly idealistic revolutionary project and turned it into a monstrous hell for a year between July 1793 and 1794. After the election of November 1860, in a matter of weeks, Americans went from thinking secession was taboo to visions of killing the greatest number of their fellow citizens on both sides of the Mason-Dixon line. Mao’s China went from a failed communist state to the ninth circle of Dante’s Inferno, when he unleashed the Cultural Revolution in 1966. Read More
07.20.21- The Federal Reserve And The Imbalances It Creates
Any one who has ever flown on a small aircraft should be familiar with an aircraft's weight and balance limits. I worked on St. Croix for a year, and flying to the island always required a short flight from San Juan, Puerto Rico. The plane was very small - it sat only five passengers, one of whom sat next to the pilot! There were times where the airline instructed people to leave their luggage behind with the promise that it would be delivered the next day. Typically, there was no issue with the plane's capacity to carry the weight; instead it was the result of the luggage having to be placed in a location that would upset the plane's limits on 'balance.' Read More
Emma’s Note: Despite the Fed’s reassurances, the inflation we’re seeing in the Main Street economy right now is not “transitory.”
Investors are looking for ways to get out of cash and into other assets to protect their hard-earned wealth.
Real estate, stocks, and collectibles are all seeing an inflow of money right now.
But so far, gold, the traditional inflation-hedge, hasn’t taken off. Read More
07.17.21- The Fed's "Inflation Bubble"
Prior to the Great War, the gold standard reigned supreme. The jury is still out on whether the dollar’s long run as the world’s leading reserve currency will last much longer. However, as we’ve discussed many times, our bet is that the US dollar will be the major casualty in an era of unbridled monetary and fiscal stimulus.
Watch this video on Could Money Be Worthless In Just Six Months, then please share with your friends and family on social media and use the caption: Could Money Be Worthless In Just Six Months. Read More
The Federal Reserve may need to buy a new dictionary.
Or maybe the press and public should ask more questions when the Fed uses certain words.
Last month, you heard that the 5% inflation rate was “temporary” or “transitory.”
In other words, it wouldn’t last. Read More
How does it feel to live in a country with double-digit inflation? On Tuesday, the Bureau of Labor Statistics told us that the consumer price index has risen 5.4 percent over the past 12 months, and such a high number shocked a lot of people. But in order to make a fair comparison to the past, we have to account for the fact that the way inflation is calculated has been changed literally dozens of times over the past several decades. According to John Williams of shadowstats.com, if inflation was still calculated the way that it was back in 1990, the official rate of inflation over the past 12 months would be about 9 percent. Read More
Consumer prices have been rising precipitously this year. If you annualize the Consumer Price Index through the first five months of 2021, you get a CPI increase of over 6%. Federal Reserve Chairman Jerome Powell continues to push the narrative that inflation is transitory, but not everybody buys into this storyline. On the Wolf Street Report, Financial Analyst Wolf Richter said Powell’s temporary inflation is turning into an “inflation spiral.”
Richter said some measure of inflation will likely tick down in the months ahead, but to steal Powell’s term, the relief will be transitory and only serve to offer false hope before inflation starts rising again. Read More
If there is one thing every honest money-saving advisor would agree on, it's that a payday loan is a bad idea. Taking a high interest loan backed by nothing but your word to pay off your current account to fuel consumption with no capital investment is just leading you on the road to ruin.
However this simple message of living within one’s means does not seem to have reached the gilded ears of central banks and governments around the world. As inflation rises (who could have guessed the borrowing binge of 2021 would have resulted in higher inflation?), both the EU and American governments are now caught between a rock and … well, a rock. Read More
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology.
Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here.
It’s going to be an exciting weekend. Read More
07.09.21- Can the Dollar Survive Both Cryptocurrencies and China?
In his book Denationalisation of Money, F.A. Hayek argued that governments have never devoted their power to providing proper money over time. They “have refrained from grossly abusing it only when they were under such a discipline as the gold standard imposed.”1
The gold backing of the US dollar as the global reserve currency was lifted in the early 1970s, and paper currencies, so-called fiat currencies, have since become the norm. Following this decision, the paper currencies have dramatically lost value against gold (figure 1). Since the turn of the millennium, this process has substantially accelerated. Read More
We just don't know. We just don't know what comes next. It is all a calculated guess. The US Constitution is silent. Even if, if, if, it is so very clear through professional forensic election audit results, that the presidential election of 2020 was stolen and President Trump actually won, there appears to be no obvious remedy stated in the US Constitution to right this wrong. We just don't know. Read More
While the Fed’s current tightening is not exactly a well-kept secret, stock and bond markets seem willing to ignore what the Fed’s left hand is taking away as the right hand is giving. Reverse repurchase agreements, which I have been tracking here, have exploded to a trillion dollars in money that the Fed is sucking out of the financial system.
According to John Mason at Seeking Alpha, total reverse repos on the Fed’s balance sheet actually just hit $1.26 trillion this past week: Read More
Socialist central planning has been elevated to a new art form based on control of the economy from the commanding heights of finance.
Central banks were once in the money business, in the sense of securing its availability, liquidity, and stable value. But the contemporary Fed never says a peep about the place where money arises and dwells — the financial markets — while gumming endlessly about the Main Street economy and the condition of and its targets for the components and constituents of GDP. Read More
The U.S. economy is at a fork in the road.
One route leads to the return of market fundamentals and sane stock valuations, at the cost of a historic market correction.
The other route leads to runaway hyperinflation that eats up the debt almost as fast as it devours the dollar’s buying power. That would likely cause the dollar to lose its hegemony as global reserve currency and bring about a simultaneous market collapse. Read More
07.02.21- The Bubble Epoch Gets Worse
Yes, it’s the age of miracles. The Bubble Epoch. The silly season.
And it just gets sillier and sillier.
Christine Lagarde, who holds the top spot at the European Central Bank (ECB), announced that she’s going to continue pumping up the money supply by 17 billion euros per week.
She says it is going to add 1.8% to Europe’s growth over the next two years. That is, somehow the fake money will be magically transformed into real wealth. Read More
Giant sucking sound of cash.
Back on June 9, when discussing the Fed’s gigantic cash-drain operation via overnight “reverse repos,” I mused in our illustrious comments: If the Fed at its June meeting doesn’t tweak its offering rate for overnight reverse repos and the interest rate on excess reserves (IOER), “my guess is that by June 30 (end of quarter), it” – the amount of overnight reverse repos – “could spike to $1 trillion.” The Fed then increased these two rates by 5 basis points. And today, that cash-drain operation shot up to nearly $1 trillion. Read More
06.30.21- Fed Chair Jerome Powell is Concerned Over the Rapid Rise in Retirements
Population-adjusted data shows a huge surge in retirements and that has the Fed concerned.
The lead chart is from the Role of Retirement by the Dallas Fed.
06.29.21- The Free Market is Dead
Unfettered markets have not been a reality in the past century. Or two centuries. Or even longer. We can go all the way back to the Panic of 1792 to see the US government helping out when things got really bad.
Last week, the Federal Reserve hinted it is becoming concerned with inflation.
This surprised many traders, who had been thinking the Fed wasn’t concerned at all about inflation. There were some dramatic moves in the currency, gold, and interest rate markets as a result.
What do I think? Read More
06.26.21-“IT’S A WAR” – The “Private” FED and Central Banks Are Already Running The US Government To Destroy The Economy!
The FED, “the money changers”, is a mafia creating chaos to distract you while they rob you of everything and become your rulers!
Central bankers are privatizing everything to gain central control of capital and political power. I think we now know from John Titus’ work who is writing Biden’s policies and executive orders – the Central Banks. I think we know who is paying Fauci and his friends to create chaos while the central banks pick our pockets and remove our political power. They are creating the downturn so they can come in to privatize everything by buying it with free money that they print. Read More
With US stocks back at all-time highs as the market seemingly shrugged off the FOMC's reaction to the latest inflation numbers, Hayman Capital's Kyle Bass returned to CNBC for an interview with the "Closing Bell" crew on Thursday, where he offered a dramatically different vision of the present economic scenario vis-a-vis inflation.
In an interview where he expounded upon his claim that the US is already grappling with real inflation rates above 10%, the billionaire investor proclaimed that "in every single aspect of life, I see inflation." Read More
They would like us to believe that what we can see happening right in front of our eyes is not actually real. Over the past year, our politicians in Washington have gone on the largest spending binge in U.S. history by a very wide margin, and the Federal Reserve has created the most enormous financial bubble of all time by pumping trillions upon trillions of fresh dollars into the financial markets. Of course this was going to cause very painful inflation, and prices are rising very aggressively all around us. Read More
The US has over $28 Trillion dollars in debt and it continues to grow at an alarming rate. Even before COVID-19, the problem was becoming unwieldy. Ironically, despite adding $4T+ in debt over the last year, the pandemic may have given the US Government short-term reprieve as it gave the Federal Reserve a green light to drop rates back to zero. Read More
Last week, the Federal Reserve announced it will maintain an interest rate target of zero to 0.25 percent for the rest of 2021. The Fed said it will also continue its monthly purchase of 120 billion dollars of Treasury and mortgage-backed securities.
Back in December 2015, just days before the Fed hiked rates for the first time since the global financial crisis, in its first tightening campaign since June 2004, we said that Yellen was about to engage in a great policy error, one which like the Ghost of 1937, would end in disaster...
... and sure enough it did, when after 9 rate hikes, Powell realized that a rate of 2.50% is unsustainable for the US economy which first cracked during the summer of 2019 repo crisis when the Fed cut rates three times, only to cut rates to zero from 1.75% in a matter of days after covid conveniently emerged on the global scene and led to an overnight shutdown of the US economy and "forced" the Fed to nationalize the bond market as well as inject trillions of liquidity into the market. Read More
06.19.21- Modern Monetary Theory Always Works. Once.
Marin’s Note: We are going to do something different with today’s missive. Today we will allow long time reader and esteemed colleague of ours (who wishes to remain anonymous), Era “the Nature Boy of Finance” Flair, our platform to make his comments. They are well thought out and his angle is worthy of consideration. Read More
Wilhelm Ropke said of economists, "They look at inflation through the wrong end of the telescope and deflation through a magnifying glass." Proof of Ropke's observation can be found by reviewing what the Federal Reserve did in the 1920s and what it is doing now. In both cases, the Fed - myopically focused on goods prices - convinced itself there was no 'inflation' even as its monetary policies fueled two enormous bubbles.
With America's entry into World War I, prices soared and continued to do so long after the Armistice. However, in 1920, the US economy entered an enormous deflation and prices plunged well into 1921 as the economy purged itself of the considerable war induced excesses. Not surprisingly, in the aftermath of prices soaring and then collapsing, economists began to consider stable prices as a sort of economic holy grail. Read More
More than twenty years ago when I was a young Army intelligence officer fresh out of the academy, my commander summoned me to his office one afternoon because he had a ‘special mission’ for me.
I was beyond excited.
My assumption was that it would be a clandestine assignment to lead one of our unit’s counterintelligence teams in the Middle East. Or perhaps it would be temporary duty as an aide to the commanding general who would be visiting soon. Read More
Ahead of tomorrow's FOMC decision, and in general, two clear camps are emerging when it comes to the increasingly acrimonious debate whether the current soaring inflation is "transitory" or not. In one camp we have the establishmentarians: those with little vision, limited imagination, and whose job precludes them from conceiving of any outcome but that accepted by the groupthink led by the Fed. As noted earlier, this now includes the vast majority of Wall Street... Read More
06.15.21- Thomas Jefferson vs. the Federal Reserve
The Federal Reserve is the engine that drives one of the biggest, most powerful governments in the history of the world.
Without the Fed, it would be difficult, if not impossible, for the government to fund its foreign wars, its massive, unsustainable social programs, the ever-growing police state, and the tangled web of corporate welfare programs. It’s almost certain none of this would exist as we know it today – not even close. The federal government would truly be limited. Read More
06.14.21- Answering The "$64 Trillion Question":
A structural inflation framework outlook
Now there could be a “second verse same as the first.” According to CNBC, the Fed appears to be preparing markets to taper its asset purchases. This process could start as soon as next week’s FOMC meeting. Read More
06.11.21- The Fed’s Sneaky Plot
For the past 22 years, every time the stock market whimpered, wheezed or whined, the Federal Reserve rushed to soothe the spoiled crybaby. There are two consequential results of the Fed as savior:
06.10.21- America’s Inflation Explained
YOUGHAL, IRELAND – “Pity the American small business owner… ” writes Dear Reader H.R.E.:
“I’m dealing with it as a landlord. Can’t get parts and materials and can’t get labor. Both cost more than ever. Plumbers at $300 per hour. AC guys closer to $500 per.”
Small Business Optimism Drops on Labor Shortage and Inflation Worries
The National Federation of Independent Business Optimism Index dropped two-tenths of a point to a reading of 99.6 in May. This followed three straight monthly increases but was the second straight month in which results undershot expectations. Read More
06.09.21- Janet Yellen’s at It Again
Ms. Janet Yellen is talking again. From comments Sunday:
“If we ended up with a slightly higher interest rate environment it would actually be a plus for society’s point of view and the Fed’s point of view.”
A higher interest rate environment would likely arise from a higher inflation environment.
Inflation is presently on the jump. Read More
“We want them to go back to” a normal interest rate environment.
Starting in 2018, President Trump harangued and hammered Fed Chair Jerome Powell to end Quantitative Tightening and to cut interest rates, and Powell buckled and did his infamous “180.” And now suddenly – unless this gets walked backed again tomorrow – we’ve got the opposite. Treasury Secretary Janet Yellen said in an interview with Bloomberg News on Sunday that higher interest rates would “actually be a plus for society’s point of view and the Fed’s point of view. Read More
06.07.21- Myths of the Mixed Economy
The planned economy was all the rage in 1937, when Prentice-Hall published a 1,000-page tome on The Planned Society: Yesterday, Today, Tomorrow: A Symposium by Thirty-Five Economists, Sociologists, and Statesmen. The “question that confronts us today is not if we shall plan, but how we shall plan,” wrote Lewis Mumford in the Foreword. All the contributors—Keynesian, socialist, communist, and fascist—agreed with that point, including such luminaries as Sidney Hook, Benito Mussolini, and Joseph Stalin. Read More
06.05.21- The Feds’ Bubble Will Pop
I picked a hell of a day to quit drinkin’
– Russell Casse in Independence Day
YOUGHAL, IRELAND – Bubbles, bubbles, bubbles.
Today, we look at another institution that has been zombified by the feds – the stock market.
The stock market is supposed to allow investors to exchange shares in profit-making, wealth-increasing, goods-and-services-producing businesses. Read More
Back in the day, farmers sometimes had to slam their mules between the eyes with a 2X4 to get their attention. Alas, that treatment is being administered to the Fed heads on practically a daily basis by the stock market gamblers, yet these stubborn inflation-deniers pay no attention at all.
In fact, they keep insisting there is no inflation problem, when a virulent monetary inflation thunders all around, and insist that no material financial asset bubbles are visible, when we are in the midst of the most unhinged speculative manias of all time. Read More
06.03.21- Biden and the Fed Are Creating an Inflation Crisis
The Federal Reserve Bank (the Fed) and the Biden administration are systematically undermining the stability of the American economy with a variety of unwise and destructive policies. The Fed and the administration defend these policies by denying obvious economic truths, which include their own inflation data.
Treasury Secretary Janet Yellen asserts that inflation is transitory and shortages are temporary. More than 300 American manufacturers have asked the Biden administration to end disruptive tariffs to ease shortages and reduce costs. Read More
06.02.21- Two Pins Threatening
“Powell Says Fed Policies “Absolutely” Don’t Add To Inequality”
- Bloomberg May 2020
The headline above is but one of countless times Fed Chairman Powell and his colleagues confidently said their policies do not result in wealth or income inequality. Their political stature and use of complex economic lingo give weight to their opinions in the media. Nevertheless, a deep examination of the Fed’s practices and their consequences leaves us to think otherwise. Read More
This month, we look at a number of dots, all grouped… like a constellation far out in space… as “The Great Reset.”
The various planets and stars seem so “far out,” we have a hard time believing that it will ever really affect our lives.
...A switch to windmills rather than internal combustion engines… eating bugs rather than steaks…
…getting permission to travel, rather than traveling freely… compulsory anti-racist training… gender studies for six-year-olds…
…government spending nearing 50% of GDP… Modern Monetary Theory (MMT)… and double-digit real inflation. Read More