The Unz Review: An Alternative Media Selection
A Collection of Interesting, Important, and Controversial Perspectives Largely Excluded from the American Mainstream Media
 TeasersAudacious Epigone Blog
Bursting the Big Fat Bubble
🔊 Listen RSS
Email This Page to Someone

 Remember My Information



=>

Bookmark Toggle AllToCAdd to LibraryRemove from Library • BShow CommentNext New CommentNext New ReplyRead More
ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
AgreeDisagreeThanksLOLTroll
These buttons register your public Agreement, Disagreement, Thanks, LOL, or Troll with the selected comment. They are ONLY available to recent, frequent commenters who have saved their Name+Email using the 'Remember My Information' checkbox, and may also ONLY be used three times during any eight hour period.
Ignore Commenter Follow Commenter
Search Text Case Sensitive  Exact Words  Include Comments
List of Bookmarks

COTW from Charles Pewitt:

If the so-called economy is “booming” according the corporate propaganda apparatus, why can’t the privately-controlled Federal Reserve Bank raise the federal funds rate above 3 percent? The answer is that the asset bubbles in stocks, bonds and real estate would immediately implode if the federal funds rate were to got to 4 percent, and that is 2 percent less than the normal fed funds rate of 6 percent.

The Fed attempted to gently increase the federal funds rate in 2018 with the stated intention of raising them four consecutive times in 2019. The result was one of the worst Decembers in the history of the American stock market. Instead of raising, the Fed has cut three times this year.

That the funds rate is headed to zero means we’re approaching the ultimate stress test for the global credit system. How does a system based on debt survive sustained nominal negative interest rates? In such a hypothetical scenario that will become all too real sometime in the next couple of years, cash under the mattress will generate a better real return than treasuries will. But the enormous asset bubble is sustained by credit, the credit is sustained by treasury debt, and the treasuries are sustained by providing a better return than cash. If cash provides investors a higher return than treasuries, investors will pull cash out of the system.

When a dollar is pulled out of the system, the total nominal value of the asset bubble declines by much more than one dollar. When that dollar was in the credit system, it was booked as an asset on the balance sheets of several institutions. I give the dollar to the branch bank, the branch bank gives it to an investment bank, the investment bank gives it to another investment bank, that investment bank gives it to a private company, that private company gives it to a supplier, that supplier gives it to a fund manager, that fund manager… at this point that single dollar is now counted as an asset by me, the branch bank, the two investment banks, the private company, the supplier, and the fund manager, even though there’s just one actual physical dollar in play.

If I’m not even going to get that dollar back when I withdraw my deposit from the branch bank, though, I won’t deposit the dollar in the first place. I’ll keep it under my mattress. I’m small potatoes, but the investment banks–and their clients–are not. For awhile, the investment banks will be able to put friendly pressure on their clients to make deposits with nominal negative returns, but that is not indefinitely viable.

However the situation resolves, the trifecta of free money, perpetual asset growth, and low inflation is coming to an end.

 
• Category: Economics • Tags: Economics 
Hide 29 CommentsLeave a Comment
Commenters to Ignore...to FollowEndorsed Only
Trim Comments?
  1. and low inflation is coming to an end.

    Again, this is stunningly wrong, as has been explained to you before.

    The notion that a stock market crash can *increase* inflation elsewhere because inflation is like water and has to fill the same volume, is just absurd.

    You are effectively saying that if the stock market goes down, and everyone feels a lot poorer, then everyone will spend a lot more because they feel poorer.

    Again, totally, completely wrong.

    • Agree: advancedatheist
    • Replies: @Anonymous
    Are you an idiot?

    It's not the consumer that will spend more it is the fed that will print money that will cause inflation.
    , @Charles Pewitt

    The notion that a stock market crash can *increase* inflation elsewhere because inflation is like water and has to fill the same volume, is just absurd.

     

    When the real estate bubble and the bond bubble and the stock market bubble implodes, the Federal Reserve Bank will go Bernanke Helicopter Money big time. That is a saying a lot, because for over ten years now we have seen monetary extremism of a sort never before seen.

    Inflation has been "booming" in health care costs and education costs and housing costs and the inflation of asset prices in the stock, bond and real estate bubble.

    Once the ruling class goes helicopter money, you'll see price inflation and the currency will drop like a rock.

    Monetary extremism of the kind currently ongoing was always going to bring on a currency collapse. So I say bring it on. There must be patriotic and redemptive retaliation -- legal -- against the plutocrats and upper middle class and others who have benefited from this rancid and rigged globalized central banker shyster system.

    Inflation in wages has been suppressed by the use of mass legal immigration and mass illegal immigration. Central bankers have used nation-wrecking mass immigration as a monetary tool to prevent the wage inflation that would normally occur during bouts of monetary extremism. Carney at the Bank of England came damn close to directly admitting it, but he shut up about it because the ruling class in England don't want to tell the truth too much.

    So, the implosion of the stock market bubble will cause inflation by the reaction of the globalized central banks when they double down or quadruple down on their already extremist monetary policies.

    The ruling class in the American Empire will order the Federal Reserve Bank to make 3 trillion dollar a year deficits possible and they'll destroy the purchasing power of the dollar and they'll let inflation storm up to keep their power. It won't work, the current ruling class of the American Empire is heading for the dodo boneyard of ruling classes.

    https://twitter.com/NorthmanTrader/status/1190332628899115008

    https://twitter.com/TheBubbleBubble/status/1118935868834832386
    , @Audacious Epigone
    You've explained why you think it is wrong. But as was mentioned last time, but exactly this happened in the seventies so it as not as though there is no precedent.

    What do you think will happen if the US dollar weakens significantly? Will that be good for US stock market indices? Because it will definitely lead to an increase in nominal consumer prices.
  2. Not sure why so many brilliant folks on the dissident right have decided they’re also wall street whizzes and professional economists too. It’s like when Dawkins stops talking bugs and becomes a theologian or when Chomsky left linguistics to become our foremost policy expert.

    But look, if you’re that confident that your prediction of obvious financial armageddon is that ahead of all the pros… I’ll go ahead and bet you a case of champagne that the global capital market is still functioning by the end of Kamala’s first term.

    • Replies: @dc.sunsets
    Logic is difficult for you, no?

    Ah, you're from the camp that says only microbiologists should talk about bacteria and viruses, only meteorologists should talk about weather, only auto mechanics should talk about cars, etc.

    I guess that leaves you with your mouth sewn shut.
    , @Miguelito
    Kamala Who?
  3. Another reason the FED can’t raise the rates very much is that the interest on the now-$23,000,000,000,000 national debt would become too big a portion of the budget. Right now, it is 6% of the expenditures, but at interest rates averaging only 1.1% or so.* Imagine rates averaging 6%, where they might float too on their own. The interest would be 1/3 of the budget expenditures. Because revenue is only about 3/4 of expenditures (causing that pesky extra Trillion bucks a year of deficit), you’d need to take in over 1/3 more money, just to have the same deficit.

    .

    * Where did I get this, you ask? Right off the back of the Federal 1040 Income tax instruction booklet (or the .pdf of it). See “Quick glance at the budget from US-Gov crack Green-eyeshade boys” and “Revisiting the importance of interest rates”.

    • Agree: Audacious Epigone
    • Replies: @Bill H
    Exactly right. That goes along with the new theory that the government does not need to collect taxes to operate because it can print money. At one time it was thought (correctly, actually) that the government printing money at will and operating at a large deficit would cause inflation.

    We now know that theory to be wrong because we have been printing money at will (called "quantative easing") and operating at a large deficit for years and there is no inflation.

    Right. Not sure how anyone can look at stock prices and housing prices today and say that there is no inflation, but...
  4. if private investors pull their money out, the government will put money in, by making up new money.

    Can that go on forever? No. But nobody knows when it will stop. It could be tomorrow, or 100 years from now.

    • Replies: @Audacious Epigone
    Modern monetary theory is what is waiting in the wings. I didn't mention it in the post because I cannot imagine the US dollar surviving an MMT regime, but of course I could be incorrect.
  5. @Achmed E. Newman
    Another reason the FED can't raise the rates very much is that the interest on the now-$23,000,000,000,000 national debt would become too big a portion of the budget. Right now, it is 6% of the expenditures, but at interest rates averaging only 1.1% or so.* Imagine rates averaging 6%, where they might float too on their own. The interest would be 1/3 of the budget expenditures. Because revenue is only about 3/4 of expenditures (causing that pesky extra Trillion bucks a year of deficit), you'd need to take in over 1/3 more money, just to have the same deficit.


    .

    * Where did I get this, you ask? Right off the back of the Federal 1040 Income tax instruction booklet (or the .pdf of it). See "Quick glance at the budget from US-Gov crack Green-eyeshade boys" and "Revisiting the importance of interest rates".

    Exactly right. That goes along with the new theory that the government does not need to collect taxes to operate because it can print money. At one time it was thought (correctly, actually) that the government printing money at will and operating at a large deficit would cause inflation.

    We now know that theory to be wrong because we have been printing money at will (called “quantative easing”) and operating at a large deficit for years and there is no inflation.

    Right. Not sure how anyone can look at stock prices and housing prices today and say that there is no inflation, but…

    • Replies: @Achmed E. Newman
    Yes, I agree with you, Bill, and the Noticer below, about inflation. I don't believe the BLS numbers one bit. Peak Stupidity has a whole topic key on Inflation (scroll down on that page).

    I want to write more about this, and perhaps include a link-bomb, but gotta go in a few minutes ...
  6. “The notion that a stock market crash can *increase* inflation elsewhere because inflation is like water and has to fill the same volume, is just absurd.”

    it’s accurate to some degree. the money has to move somewhere, just like water in a lake, it can’t just disappear. if the lake disappears, the water went somewhere. water wants to move in a particular direction, money is the same way.

    the main factor here is that the big money is not part of the M2 money supply. so when Federal Reserve was printing 80 billion dollars per month for years during Obama, that money was mainly getting transferred to big institutional and private players, who were mostly locking up the money in a vault, effectively. the term economists used to describe what the money is doing, is called velocity of money. and it’s velocity is near zero when it gets locked up in a vault by the big boys.

    so if the money gets created, then transferred from one place to another one time, but not really spent on buying up the majority of assets that the average person would be buying, then you won’t see much inflation at the street level, in CPI, and so forth.

    yeah, there’s actually a lot of inflation for the normal person. if you never have to eat food, use any medical service, send any kids to college, or buy any cars, or live in any house, then yeah, there’s not much inflation. if you eat or breathe, every use any medical service, ever have to buy house, ever hae to buy a car to drive anywhere, ever have to pay collect tuition, there’s a good amount of inflation, which CPI deliberately ignores. Federal Stafford loans, for instance, have created crushing tuition inflation. so the money supply there from the government has a lot of velocity.

    • Replies: @dc.sunsets

    it’s accurate to some degree. the money has to move somewhere, just like water in a lake,
     
    You're confused by the term, "money." We tend to conflate "money," "wealth," and nominal prices of assets. They are not the same, even though they behave the same under "normal" conditions.

    When the last trade of a stock rises by a dollar, that single transaction (which has the buyer removing the purchase price from the bank and the seller putting the exact same amount back into the bank, so there's zero net change in the banking system), the dollar increase adds to each share outstanding.

    From where did that "money" come? If you can't confront that it came from NOWHERE, then you cannot understand what our modern economy does. This is true for all homogeneous asset classes.

    This is also why people cannot figure out the inflation/deflation thing. They call what the Fed does (which is facilitate credit growth) "money printing" because it appears to have the same effect. But it's not the same thing as physically printing banknotes. Under normal conditions, the ability to borrow money (i.e., access to credit) is synonymous with monetary wealth. But during the rare instances when monetary policy and monetary behavior are outside the boundaries of normal, credit and banknotes behave differently.

    Think of it this way: In Wiemar Germany or Zimbabwe, because no one in their right mind lent money (they had small or non-existent credit markets due to a decided lack of trust), monetary expansion came in the form of printing banknotes. Each printed note (of typically ever-growing denomination) diluted the purchasing power of all previously existing notes. This is a typical monetary inflation via banknote printing.

    The banknotes, distributed, have physical existence. Once dumped into the economy, they stay there no matter what.

    Credit is different. Credit is quite literally an act of collective trust. Credit aggregates exist on a cloud of that trust, and the trust itself is under the control of no one. It is a fad, a fashion, no matter how long-lived.

    What is the difference between you holding a million dollars in hundred dollar bills, a bank balance of a million dollars or a stock portfolio worth a million dollars? The first is IN. YOUR. HANDS. When credit or banknote quantities rise, it dilutes the value of ALL THREE forms of monetary wealth. But if stocks enter a bear trend, even when you do NOTHING, the value of your stock portfolio can and likely will drop. It can drop 50%, 80%, even 99% (or 100% if the firms' common stock goes tits-up) and you didn't do one damn thing.

    What is your bank account worth, if banks hit a "rough patch" and their portfolios of loans drop in value so much that they cannot honor your demand for your demand deposits? That's euphemistically called a bail-in, not a bank run nowadays.

    In the event of a massive loss of confidence, the only form of money that is unaffected by your fellowmen's trust is your cash, if you have it in hand. But this is a rare event, and the rest of the time, holding banknote cash is stupid, stupid, stupid.

    We've had the largest credit creation mania and associated asset-price mania in recorded history. It's gone on and on and on like the Energizer Bunny, and no one knows when it will stop. It will stop, because these twin manias have the pathological effect of incentivizing capital consumption. Why husband and create capital when the Fed facilitates someone else's access to the ABILITY capital yields without any effort invested in CREATING capital?

    If you don't have to FIRST produce, in order to enter the market to consume, why produce at all? This system of perverse incentives is destroying economic production, whether we can see it or not. It has politicized everything, turning our society into a cannibal's feast of consuming each other via asset stripping. It cannot continue forever, but it will run until not only is the cupboard bare, the ability to restock the cupboard will be burned to the ground.

  7. “We now know that theory to be wrong because we have been printing money at will (called “quantative easing”) and operating at a large deficit for years and there is no inflation.”

    a lot of the money printed during QE, as well as a lot of the freed up money created by lowering the Corporate Tax Rate from 35% to 21%, was used to buy back stocks, which created EXACTLY the inflation effect some people wanted – the price of stocks went WAY UP, because so much money was chasing it.

    what matters is where the money is going, and it absolutely creates inflation in specific spaces. it didn’t make everything that the average person buys cost 5 times as much, but it easily made hundreds of stocks worth 5 times as much. you don’t get to record stock markets without massive inflation.

    at the same time, bonds became worthless as the Federal Funds Rate steadily went down, so that synergized with stock values – money was flowing out of bonds, just like water, and into stocks. this increased stock price inflation even more.

    finally, if there is a stock market crash, money will flow out of stocks, exactly like water, and into cash, money markets, and other cash like instruments. in the short term anyway, until the big players can decide what to do with the money, where to park it. treasuries may return as a more serious instrument for instance. but the conundrum is that governments can’t issue treasuries with worthwhile interest rates, because they have so much debt, they can’t afford to make those interest payments every month if the rate is like 5%, historical norms, as many people here have pointed out.

    • Agree: Audacious Epigone
  8. @Thomm

    and low inflation is coming to an end.
     
    Again, this is stunningly wrong, as has been explained to you before.

    The notion that a stock market crash can *increase* inflation elsewhere because inflation is like water and has to fill the same volume, is just absurd.

    You are effectively saying that if the stock market goes down, and everyone feels a lot poorer, then everyone will spend a lot more because they feel poorer.

    Again, totally, completely wrong.

    Are you an idiot?

    It’s not the consumer that will spend more it is the fed that will print money that will cause inflation.

  9. Unlimited money was a mistake

  10. The economy is perceived to be “booming” (the stock market is setting records) because companies are taking “free money” from the Fed to buy back stock. The stock market records have nothing to do with increased production, consumption, or improved economic efficiencies. That’s happening in China, not the United States.

    Said differently, how could a deindustrialized, financialized economy based on dying, opiate plagued communities be “booming”?

    Think not? Take a few trips outside of suburban sanctums to view the boarded-up houses and closed rusting factories.

    • Agree: RadicalCenter
  11. Along with the bad economic effects, negative interest rates have bad psychological effects on people. It encourages a “live for today” attitude. Normally people would think about the future and save and invest money for a rainy day, education to improve their job skills, their retirement, or to increase future income with dividends or interest. Negative interest rates discourage that type of long term thinking. During the Weimar hyperinflation when interest rates were effectively negative, people would go out and drink and party like in the movie “Cabaret” and the savings of the middle class were wiped out. In addition to negative interest rates, high taxes and the welfare state also discourage long term thinking because there is less reason to work hard if the money you make is taken away and you will be taken care of by the government if you don’t make enough to live on. If you have ever spent much time around the urban underclass one of the things that you notice is they never think about the future before taking an action and whether that action might have eventual negative results. You can think of the government as being an entity whose purpose is to slowly try to turn every person in the country into the equivalent of an obese ghetto black person who dropped out of school, does crack regularly, is jobless, and has had four children they can’t support.

  12. @Bill H
    Exactly right. That goes along with the new theory that the government does not need to collect taxes to operate because it can print money. At one time it was thought (correctly, actually) that the government printing money at will and operating at a large deficit would cause inflation.

    We now know that theory to be wrong because we have been printing money at will (called "quantative easing") and operating at a large deficit for years and there is no inflation.

    Right. Not sure how anyone can look at stock prices and housing prices today and say that there is no inflation, but...

    Yes, I agree with you, Bill, and the Noticer below, about inflation. I don’t believe the BLS numbers one bit. Peak Stupidity has a whole topic key on Inflation (scroll down on that page).

    I want to write more about this, and perhaps include a link-bomb, but gotta go in a few minutes …

  13. @Thomm

    and low inflation is coming to an end.
     
    Again, this is stunningly wrong, as has been explained to you before.

    The notion that a stock market crash can *increase* inflation elsewhere because inflation is like water and has to fill the same volume, is just absurd.

    You are effectively saying that if the stock market goes down, and everyone feels a lot poorer, then everyone will spend a lot more because they feel poorer.

    Again, totally, completely wrong.

    The notion that a stock market crash can *increase* inflation elsewhere because inflation is like water and has to fill the same volume, is just absurd.

    When the real estate bubble and the bond bubble and the stock market bubble implodes, the Federal Reserve Bank will go Bernanke Helicopter Money big time. That is a saying a lot, because for over ten years now we have seen monetary extremism of a sort never before seen.

    Inflation has been “booming” in health care costs and education costs and housing costs and the inflation of asset prices in the stock, bond and real estate bubble.

    Once the ruling class goes helicopter money, you’ll see price inflation and the currency will drop like a rock.

    Monetary extremism of the kind currently ongoing was always going to bring on a currency collapse. So I say bring it on. There must be patriotic and redemptive retaliation — legal — against the plutocrats and upper middle class and others who have benefited from this rancid and rigged globalized central banker shyster system.

    Inflation in wages has been suppressed by the use of mass legal immigration and mass illegal immigration. Central bankers have used nation-wrecking mass immigration as a monetary tool to prevent the wage inflation that would normally occur during bouts of monetary extremism. Carney at the Bank of England came damn close to directly admitting it, but he shut up about it because the ruling class in England don’t want to tell the truth too much.

    So, the implosion of the stock market bubble will cause inflation by the reaction of the globalized central banks when they double down or quadruple down on their already extremist monetary policies.

    The ruling class in the American Empire will order the Federal Reserve Bank to make 3 trillion dollar a year deficits possible and they’ll destroy the purchasing power of the dollar and they’ll let inflation storm up to keep their power. It won’t work, the current ruling class of the American Empire is heading for the dodo boneyard of ruling classes.

    • Replies: @dc.sunsets

    When the real estate bubble and the bond bubble and the stock market bubble implodes, the Federal Reserve Bank will go Bernanke Helicopter Money big time.
     
    Via what mechanism?

    Let's get literal here and stop confusing people (and ourselves) with sophistry.

    Will the Fed drop credit on people? How? When the bubbles burst, who will be lending against assets whose nominal prices are declining? Will the Fed resume directly buying debt? In the past, the Fed bought debt as its price remained in a bull market. Do you really think the Fed will be a buyer of debt when debt is in a bear market?

    Will the Fed drop actual $100 bills? Note to Charles: The Fed doesn't control the Bureau of Printing and Engraving, and neither can the Fed drop enough literal cash to matter, but above all, what would literally dropping banknotes on people do to the existing bond market?

    If bonds enter a bear market (they've been in a bull market since 1981, and no, Volker didn't orchestrate that, the market simply bottomed in 1981 and Volker jumped on board the train as it left that station) then anything the Fed does to attempt to stem the collapse in the broad money/wealth supply will simply panic the market even more.

    Once you have a metaphorical ocean of debt in existence, creating a dollar in new monetary wealth will destroy many multiples of a dollar in the existing ocean.

    All roads now lead to a collapse in the value of all that debt.

    It will be the greatest credit-collapse, monetary deflation in recorded history (because it is preceded by the greatest credit (and thus debt) buildup in recorded history.

    Once debt prices begin to decline in earnest, All the King's Horses and All the King's Men....

    The world goes by itself.
  14. @prime noticer
    "The notion that a stock market crash can *increase* inflation elsewhere because inflation is like water and has to fill the same volume, is just absurd."

    it's accurate to some degree. the money has to move somewhere, just like water in a lake, it can't just disappear. if the lake disappears, the water went somewhere. water wants to move in a particular direction, money is the same way.

    the main factor here is that the big money is not part of the M2 money supply. so when Federal Reserve was printing 80 billion dollars per month for years during Obama, that money was mainly getting transferred to big institutional and private players, who were mostly locking up the money in a vault, effectively. the term economists used to describe what the money is doing, is called velocity of money. and it's velocity is near zero when it gets locked up in a vault by the big boys.

    so if the money gets created, then transferred from one place to another one time, but not really spent on buying up the majority of assets that the average person would be buying, then you won't see much inflation at the street level, in CPI, and so forth.

    yeah, there's actually a lot of inflation for the normal person. if you never have to eat food, use any medical service, send any kids to college, or buy any cars, or live in any house, then yeah, there's not much inflation. if you eat or breathe, every use any medical service, ever have to buy house, ever hae to buy a car to drive anywhere, ever have to pay collect tuition, there's a good amount of inflation, which CPI deliberately ignores. Federal Stafford loans, for instance, have created crushing tuition inflation. so the money supply there from the government has a lot of velocity.

    it’s accurate to some degree. the money has to move somewhere, just like water in a lake,

    You’re confused by the term, “money.” We tend to conflate “money,” “wealth,” and nominal prices of assets. They are not the same, even though they behave the same under “normal” conditions.

    When the last trade of a stock rises by a dollar, that single transaction (which has the buyer removing the purchase price from the bank and the seller putting the exact same amount back into the bank, so there’s zero net change in the banking system), the dollar increase adds to each share outstanding.

    From where did that “money” come? If you can’t confront that it came from NOWHERE, then you cannot understand what our modern economy does. This is true for all homogeneous asset classes.

    This is also why people cannot figure out the inflation/deflation thing. They call what the Fed does (which is facilitate credit growth) “money printing” because it appears to have the same effect. But it’s not the same thing as physically printing banknotes. Under normal conditions, the ability to borrow money (i.e., access to credit) is synonymous with monetary wealth. But during the rare instances when monetary policy and monetary behavior are outside the boundaries of normal, credit and banknotes behave differently.

    Think of it this way: In Wiemar Germany or Zimbabwe, because no one in their right mind lent money (they had small or non-existent credit markets due to a decided lack of trust), monetary expansion came in the form of printing banknotes. Each printed note (of typically ever-growing denomination) diluted the purchasing power of all previously existing notes. This is a typical monetary inflation via banknote printing.

    The banknotes, distributed, have physical existence. Once dumped into the economy, they stay there no matter what.

    Credit is different. Credit is quite literally an act of collective trust. Credit aggregates exist on a cloud of that trust, and the trust itself is under the control of no one. It is a fad, a fashion, no matter how long-lived.

    What is the difference between you holding a million dollars in hundred dollar bills, a bank balance of a million dollars or a stock portfolio worth a million dollars? The first is IN. YOUR. HANDS. When credit or banknote quantities rise, it dilutes the value of ALL THREE forms of monetary wealth. But if stocks enter a bear trend, even when you do NOTHING, the value of your stock portfolio can and likely will drop. It can drop 50%, 80%, even 99% (or 100% if the firms’ common stock goes tits-up) and you didn’t do one damn thing.

    What is your bank account worth, if banks hit a “rough patch” and their portfolios of loans drop in value so much that they cannot honor your demand for your demand deposits? That’s euphemistically called a bail-in, not a bank run nowadays.

    In the event of a massive loss of confidence, the only form of money that is unaffected by your fellowmen’s trust is your cash, if you have it in hand. But this is a rare event, and the rest of the time, holding banknote cash is stupid, stupid, stupid.

    We’ve had the largest credit creation mania and associated asset-price mania in recorded history. It’s gone on and on and on like the Energizer Bunny, and no one knows when it will stop. It will stop, because these twin manias have the pathological effect of incentivizing capital consumption. Why husband and create capital when the Fed facilitates someone else’s access to the ABILITY capital yields without any effort invested in CREATING capital?

    If you don’t have to FIRST produce, in order to enter the market to consume, why produce at all? This system of perverse incentives is destroying economic production, whether we can see it or not. It has politicized everything, turning our society into a cannibal’s feast of consuming each other via asset stripping. It cannot continue forever, but it will run until not only is the cupboard bare, the ability to restock the cupboard will be burned to the ground.

  15. @Charles Pewitt

    The notion that a stock market crash can *increase* inflation elsewhere because inflation is like water and has to fill the same volume, is just absurd.

     

    When the real estate bubble and the bond bubble and the stock market bubble implodes, the Federal Reserve Bank will go Bernanke Helicopter Money big time. That is a saying a lot, because for over ten years now we have seen monetary extremism of a sort never before seen.

    Inflation has been "booming" in health care costs and education costs and housing costs and the inflation of asset prices in the stock, bond and real estate bubble.

    Once the ruling class goes helicopter money, you'll see price inflation and the currency will drop like a rock.

    Monetary extremism of the kind currently ongoing was always going to bring on a currency collapse. So I say bring it on. There must be patriotic and redemptive retaliation -- legal -- against the plutocrats and upper middle class and others who have benefited from this rancid and rigged globalized central banker shyster system.

    Inflation in wages has been suppressed by the use of mass legal immigration and mass illegal immigration. Central bankers have used nation-wrecking mass immigration as a monetary tool to prevent the wage inflation that would normally occur during bouts of monetary extremism. Carney at the Bank of England came damn close to directly admitting it, but he shut up about it because the ruling class in England don't want to tell the truth too much.

    So, the implosion of the stock market bubble will cause inflation by the reaction of the globalized central banks when they double down or quadruple down on their already extremist monetary policies.

    The ruling class in the American Empire will order the Federal Reserve Bank to make 3 trillion dollar a year deficits possible and they'll destroy the purchasing power of the dollar and they'll let inflation storm up to keep their power. It won't work, the current ruling class of the American Empire is heading for the dodo boneyard of ruling classes.

    https://twitter.com/NorthmanTrader/status/1190332628899115008

    https://twitter.com/TheBubbleBubble/status/1118935868834832386

    When the real estate bubble and the bond bubble and the stock market bubble implodes, the Federal Reserve Bank will go Bernanke Helicopter Money big time.

    Via what mechanism?

    Let’s get literal here and stop confusing people (and ourselves) with sophistry.

    Will the Fed drop credit on people? How? When the bubbles burst, who will be lending against assets whose nominal prices are declining? Will the Fed resume directly buying debt? In the past, the Fed bought debt as its price remained in a bull market. Do you really think the Fed will be a buyer of debt when debt is in a bear market?

    Will the Fed drop actual $100 bills? Note to Charles: The Fed doesn’t control the Bureau of Printing and Engraving, and neither can the Fed drop enough literal cash to matter, but above all, what would literally dropping banknotes on people do to the existing bond market?

    If bonds enter a bear market (they’ve been in a bull market since 1981, and no, Volker didn’t orchestrate that, the market simply bottomed in 1981 and Volker jumped on board the train as it left that station) then anything the Fed does to attempt to stem the collapse in the broad money/wealth supply will simply panic the market even more.

    Once you have a metaphorical ocean of debt in existence, creating a dollar in new monetary wealth will destroy many multiples of a dollar in the existing ocean.

    All roads now lead to a collapse in the value of all that debt.

    It will be the greatest credit-collapse, monetary deflation in recorded history (because it is preceded by the greatest credit (and thus debt) buildup in recorded history.

    Once debt prices begin to decline in earnest, All the King’s Horses and All the King’s Men….

    The world goes by itself.

    • Replies: @Charles Pewitt

    Will the Fed drop actual $100 bills? Note to Charles: The Fed doesn’t control the Bureau of Printing and Engraving, and neither can the Fed drop enough literal cash to matter, but above all, what would literally dropping banknotes on people do to the existing bond market?

     

    The privately-controlled Federal Reserve Bank electronically "credits" the banks -- the same banks, and some others, that own and control the Federal Reserve Bank. Electronic dollars are over 90 percent of the dollars in existence -- if you can call it that.

    Less than 10 percent of the dollars accounted for are real paper or cloth dollars.

    The last ditch monetary policy cash drop out of helicopters was a bit of fun that Bernanke came up with, there are multiple ways to distribute the cash, certainly.

    If bonds enter a bear market (they’ve been in a bull market since 1981, and no, Volker didn’t orchestrate that, the market simply bottomed in 1981 and Volker jumped on board the train as it left that station) then anything the Fed does to attempt to stem the collapse in the broad money/wealth supply will simply panic the market even more.

     

    Volcker most assuredly did set the stage for the Big Bond Bubble by moving the federal funds rate up to 20 percent in 1981. A private agent-- Fed Chair Volcker -- at a private banker consortium -- the Fed -- moved the federal funds rate to 20 percent and deliberately imploded all the asset bubbles and that killed the inflation that had been caused by prior decisions of the Fed. Once the asset bubbles were imploded and the inflation tamed and the economy contracted and the debts expunged or renegotiated, that was when the Big Bond Bubble kicked off.

    I say raise the federal funds rate to 20 percent like Volcker did in 1981, and implode all the asset bubbles, especially in stocks, bonds and real estate. Art market bubble needs to be imploded big time.

    I only care about monetary policy for its political and power interactions. The JEW/WASP ruling class of the American Empire has used monetary policy to buy off certain generational cohorts and to enrich themselves and to pauperize others.

    When this current asset bubble pops, the plutocrats and upper middle class will be legally but forcibly removed from the USA without any chance of going to another European Christian nation.

    White Core America is the new political party that will act like the Virginia Company did by muscling out the plutocrats and the corporations and by nationalizing the Federal Reserve Bank.

    White Core America will repudiate trillions of dollars of government and corporate debt and private debt.

    White Core America will be the modern Virginia Company that advances the interests of the European Christian ancestral core of the USA.

    DEBT JUBILEE FOR YOU AND ME!

    GO TO HELL YOU DAMN GLOBALIZERS!

    The Rancid Republican Party And Treasonous Trump Are Controlled By Shelly Adelson and Paul Singer and Norman Braman and Bernie Marcus and Seth Klarman and Les Wexner and other Globalizer Money-Grubber Goons.

    Global Politics Distilled For You:

    Debt and Demography

    Monetary Policy and Mass Immigration
    , @Charles Pewitt

    All roads now lead to a collapse in the value of all that debt.

     

    Accelerationism, as always.

    The plutocrats and the upper middle class and the government workers will be wiped out when the currency collapse wipes out the debt. Inflate away the debt; destroy the purchasing power of the debt; repudiate the debt; expunge the debt. I don't care, a political leader will come to power or in proximity to power or in an informal power sharing agreement, and the trillions upon trillions in debt payments expected to be siphoned out of the young will vanish.

    Monetary extremism was used to shut the mouths of White Americans born before 1965 so as to flood the USA with mass legal immigration and mass illegal immigration. I saw the globalizers do it and the greed of the White Americans born before 1965 is why the USA was flooded with foreigners.

    1965 Immigration Act; 1971 Nixon going off partial gold standard to total debt-based fiat currency system; Volcker getting the Big Bond Bubble started in 1981 with 20 percent federal funds rate.

    Young people will be able to get a fresh start with a new currency without any debt obligations crushing their future like a 2 ton millstone.

    Attention Mr. Sunsets:

    Debates or discussion of monetary policy are much needed and I appreciate your input and points.

    I think if the boobs in Andrew Jackson's time could understand central banker shysterism, then current age American boobs should be able to understand it too.
  16. When a dollar is pulled out of the system, the total nominal value of the asset bubble declines by much more than one dollar. When that dollar was in the credit system, it was booked as an asset on the balance sheets of several institutions. I give the dollar to the branch bank, the branch bank gives it to an investment bank, the investment bank gives it to another investment bank, that investment bank gives it to a private company, that private company gives it to a supplier, that supplier gives it to a fund manager, that fund manager… at this point that single dollar is now counted as an asset by me, the branch bank, the two investment banks, the private company, the supplier, and the fund manager, even though there’s just one actual physical dollar in play.

    If I’m not even going to get that dollar back when I withdraw my deposit from the branch bank, though, I won’t deposit the dollar in the first place. I’ll keep it under my mattress. I’m small potatoes, but the investment banks–and their clients–are not. For awhile, the investment banks will be able to put friendly pressure on their clients to make deposits with nominal negative returns, but that is not indefinitely viable.

    People buy bonds, driving their yields negative, because they expect the PRICE OF THE BOND TO RISE.

    It’s THAT. SIMPLE. No individual investor buys a 30 year T-bond for his portfolio and plans to hold it to maturity. Not a single man on Earth does that.

    Buying debt is always a play on price. As with IBM or MSFT, issues are bought with an expectation that the price will rise and the position will eventually be liquidated at a (capital gains) profit. This has been the case since 1981’s bond market low.

    I think you’re 100% correct about the “leverage” we see in “wealth” from borrowing/lending/spending a single dollar. This is what I’ve decried for two decades. It’s a game of “Monopoly(tm)” where everyone with property thinks he’s getting richer as the player who is also banker keeps writing “IOU-$500” on blank index cards and puts them into the game to be treated as money. As long as all the players agree that the clown’s IOU’s are trustworthy, they accept each IOU as $500. But what if someone questions this, and that QUESTION suddenly looks like it makes sense to other players? What’s the “banker’s” IOU-$500 worth if the other players decide he only can make good on half of it? What happens to the price of Boardwalk and Park Place when that VIEWPOINT spreads among players?

    All it is, is a change of mind.

    And unless all the players are really good friends, the game might end up with several of them physically attacking one-another.

    When the reconciliation phase of this 50 year (and counting) period of monetary, economic and political insanity arrives, it won’t be peaceful.

  17. I believe this interest rate manipulation is intended to target Trump supporters. Much of his base are boomers, older, middle class Americans whose retirement savings IRAs, TDAs etc., are being attacked through this method.

    Just my opinion, others might think differently…

  18. @dc.sunsets

    When the real estate bubble and the bond bubble and the stock market bubble implodes, the Federal Reserve Bank will go Bernanke Helicopter Money big time.
     
    Via what mechanism?

    Let's get literal here and stop confusing people (and ourselves) with sophistry.

    Will the Fed drop credit on people? How? When the bubbles burst, who will be lending against assets whose nominal prices are declining? Will the Fed resume directly buying debt? In the past, the Fed bought debt as its price remained in a bull market. Do you really think the Fed will be a buyer of debt when debt is in a bear market?

    Will the Fed drop actual $100 bills? Note to Charles: The Fed doesn't control the Bureau of Printing and Engraving, and neither can the Fed drop enough literal cash to matter, but above all, what would literally dropping banknotes on people do to the existing bond market?

    If bonds enter a bear market (they've been in a bull market since 1981, and no, Volker didn't orchestrate that, the market simply bottomed in 1981 and Volker jumped on board the train as it left that station) then anything the Fed does to attempt to stem the collapse in the broad money/wealth supply will simply panic the market even more.

    Once you have a metaphorical ocean of debt in existence, creating a dollar in new monetary wealth will destroy many multiples of a dollar in the existing ocean.

    All roads now lead to a collapse in the value of all that debt.

    It will be the greatest credit-collapse, monetary deflation in recorded history (because it is preceded by the greatest credit (and thus debt) buildup in recorded history.

    Once debt prices begin to decline in earnest, All the King's Horses and All the King's Men....

    The world goes by itself.

    Will the Fed drop actual $100 bills? Note to Charles: The Fed doesn’t control the Bureau of Printing and Engraving, and neither can the Fed drop enough literal cash to matter, but above all, what would literally dropping banknotes on people do to the existing bond market?

    The privately-controlled Federal Reserve Bank electronically “credits” the banks — the same banks, and some others, that own and control the Federal Reserve Bank. Electronic dollars are over 90 percent of the dollars in existence — if you can call it that.

    Less than 10 percent of the dollars accounted for are real paper or cloth dollars.

    The last ditch monetary policy cash drop out of helicopters was a bit of fun that Bernanke came up with, there are multiple ways to distribute the cash, certainly.

    If bonds enter a bear market (they’ve been in a bull market since 1981, and no, Volker didn’t orchestrate that, the market simply bottomed in 1981 and Volker jumped on board the train as it left that station) then anything the Fed does to attempt to stem the collapse in the broad money/wealth supply will simply panic the market even more.

    Volcker most assuredly did set the stage for the Big Bond Bubble by moving the federal funds rate up to 20 percent in 1981. A private agent– Fed Chair Volcker — at a private banker consortium — the Fed — moved the federal funds rate to 20 percent and deliberately imploded all the asset bubbles and that killed the inflation that had been caused by prior decisions of the Fed. Once the asset bubbles were imploded and the inflation tamed and the economy contracted and the debts expunged or renegotiated, that was when the Big Bond Bubble kicked off.

    I say raise the federal funds rate to 20 percent like Volcker did in 1981, and implode all the asset bubbles, especially in stocks, bonds and real estate. Art market bubble needs to be imploded big time.

    I only care about monetary policy for its political and power interactions. The JEW/WASP ruling class of the American Empire has used monetary policy to buy off certain generational cohorts and to enrich themselves and to pauperize others.

    When this current asset bubble pops, the plutocrats and upper middle class will be legally but forcibly removed from the USA without any chance of going to another European Christian nation.

    White Core America is the new political party that will act like the Virginia Company did by muscling out the plutocrats and the corporations and by nationalizing the Federal Reserve Bank.

    White Core America will repudiate trillions of dollars of government and corporate debt and private debt.

    White Core America will be the modern Virginia Company that advances the interests of the European Christian ancestral core of the USA.

    DEBT JUBILEE FOR YOU AND ME!

    GO TO HELL YOU DAMN GLOBALIZERS!

    The Rancid Republican Party And Treasonous Trump Are Controlled By Shelly Adelson and Paul Singer and Norman Braman and Bernie Marcus and Seth Klarman and Les Wexner and other Globalizer Money-Grubber Goons.

    Global Politics Distilled For You:

    Debt and Demography

    Monetary Policy and Mass Immigration

  19. @dc.sunsets

    When the real estate bubble and the bond bubble and the stock market bubble implodes, the Federal Reserve Bank will go Bernanke Helicopter Money big time.
     
    Via what mechanism?

    Let's get literal here and stop confusing people (and ourselves) with sophistry.

    Will the Fed drop credit on people? How? When the bubbles burst, who will be lending against assets whose nominal prices are declining? Will the Fed resume directly buying debt? In the past, the Fed bought debt as its price remained in a bull market. Do you really think the Fed will be a buyer of debt when debt is in a bear market?

    Will the Fed drop actual $100 bills? Note to Charles: The Fed doesn't control the Bureau of Printing and Engraving, and neither can the Fed drop enough literal cash to matter, but above all, what would literally dropping banknotes on people do to the existing bond market?

    If bonds enter a bear market (they've been in a bull market since 1981, and no, Volker didn't orchestrate that, the market simply bottomed in 1981 and Volker jumped on board the train as it left that station) then anything the Fed does to attempt to stem the collapse in the broad money/wealth supply will simply panic the market even more.

    Once you have a metaphorical ocean of debt in existence, creating a dollar in new monetary wealth will destroy many multiples of a dollar in the existing ocean.

    All roads now lead to a collapse in the value of all that debt.

    It will be the greatest credit-collapse, monetary deflation in recorded history (because it is preceded by the greatest credit (and thus debt) buildup in recorded history.

    Once debt prices begin to decline in earnest, All the King's Horses and All the King's Men....

    The world goes by itself.

    All roads now lead to a collapse in the value of all that debt.

    Accelerationism, as always.

    The plutocrats and the upper middle class and the government workers will be wiped out when the currency collapse wipes out the debt. Inflate away the debt; destroy the purchasing power of the debt; repudiate the debt; expunge the debt. I don’t care, a political leader will come to power or in proximity to power or in an informal power sharing agreement, and the trillions upon trillions in debt payments expected to be siphoned out of the young will vanish.

    Monetary extremism was used to shut the mouths of White Americans born before 1965 so as to flood the USA with mass legal immigration and mass illegal immigration. I saw the globalizers do it and the greed of the White Americans born before 1965 is why the USA was flooded with foreigners.

    1965 Immigration Act; 1971 Nixon going off partial gold standard to total debt-based fiat currency system; Volcker getting the Big Bond Bubble started in 1981 with 20 percent federal funds rate.

    Young people will be able to get a fresh start with a new currency without any debt obligations crushing their future like a 2 ton millstone.

    Attention Mr. Sunsets:

    Debates or discussion of monetary policy are much needed and I appreciate your input and points.

    I think if the boobs in Andrew Jackson’s time could understand central banker shysterism, then current age American boobs should be able to understand it too.

    • Replies: @dc.sunsets

    I think if the boobs in Andrew Jackson’s time could understand central banker shysterism, then current age American boobs should be able to understand it too.
     
    (Chuckling) I completely disagree, the quality of "boob" has declined so markedly that, no, today's boobs are not remotely capable of understanding what boobs 200 years ago grasped.

    I'd love to agree with your positions, but my grasp of (R)eality is fundamentally different from yours. It really doesn't matter which of us is right (if either of us is right, that is), because what will be will be.

    I'm an ant, riding on a leaf that floats down a wide river. But it's the only game in town, so I concentrate on enjoying the ride and the adventure, while living my life according to my own values (which, by definition, I believe are superior to all alternatives.) I've done my part. I raised great kids, who are extremely bright, conscientious and are raising kids of their own. I put of myself into actions of High European Civilization (both sculpture and music.) I seek continuous self-improvement. This is the sum of what any man can do.
  20. @Thomm

    and low inflation is coming to an end.
     
    Again, this is stunningly wrong, as has been explained to you before.

    The notion that a stock market crash can *increase* inflation elsewhere because inflation is like water and has to fill the same volume, is just absurd.

    You are effectively saying that if the stock market goes down, and everyone feels a lot poorer, then everyone will spend a lot more because they feel poorer.

    Again, totally, completely wrong.

    You’ve explained why you think it is wrong. But as was mentioned last time, but exactly this happened in the seventies so it as not as though there is no precedent.

    What do you think will happen if the US dollar weakens significantly? Will that be good for US stock market indices? Because it will definitely lead to an increase in nominal consumer prices.

  21. @MattinLA
    if private investors pull their money out, the government will put money in, by making up new money.

    Can that go on forever? No. But nobody knows when it will stop. It could be tomorrow, or 100 years from now.

    Modern monetary theory is what is waiting in the wings. I didn’t mention it in the post because I cannot imagine the US dollar surviving an MMT regime, but of course I could be incorrect.

  22. This is an interesting conversation. A couple of observations:

    1. parents purchase bonds for their children with no that they be used until well past twenty years or even longer.

    2. the fed operates on the premise that debt is how money flows period. An economy in which institutions are not borrowing is an economy in some level of stagnation.

    3. “1965 Immigration Act; 1971 Nixon going off partial gold standard to total debt-based fiat currency system; Volcker getting the Big Bond Bubble started in 1981 with 20 percent federal funds rate.”
    I used to contend this. Then I took a stroll into the history of the fed and they essentially took the US off that standard in 1916. Pres. Nixon made it official.

    4. If the real estate markets dips again, the fed will do what it has routinely done to in their view prevents runs on banks and slow a terminal end

    https://www.federalreserve.gov/monetarypolicy/bst_crisisresponse.htm

    https://www.federalreservehistory.org/essays/savings_and_loan_crisis

    with respect: Rest in Peace Pail Volker, Fed Chairman 1979.

  23. I agree with E.C. just above. This is a good conversation. It could just as well be under a Ron Paul post, as Dr. Paul has tried to explain all this stuff to people for 3 or 4 decades now. I appreciate the chance to chime in on economic matters here on A.E.’s blog too. All the rest of the stupidity in our society WILL STOP when the economic stupidity has reached its peak and the SHTF, one way or another*.

    Back to Ron Paul for a minute, his column has gotten lots of more comments than before recently. Of course, some of that is my arguing with some imbecile about homeschooling, and under 1/4 of them or so he’s got the Socialists who would rather spout nonsense than learn something, but it’s encouraging to see many others chime in under his Libertarian columns (meaning all of them).

    .

    * Unless we go full-on Communist after that, in which case Stupidity will be pretty much the point of it all.

  24. @Anonymousse
    Not sure why so many brilliant folks on the dissident right have decided they’re also wall street whizzes and professional economists too. It’s like when Dawkins stops talking bugs and becomes a theologian or when Chomsky left linguistics to become our foremost policy expert.

    But look, if you’re that confident that your prediction of obvious financial armageddon is that ahead of all the pros... I’ll go ahead and bet you a case of champagne that the global capital market is still functioning by the end of Kamala’s first term.

    Logic is difficult for you, no?

    Ah, you’re from the camp that says only microbiologists should talk about bacteria and viruses, only meteorologists should talk about weather, only auto mechanics should talk about cars, etc.

    I guess that leaves you with your mouth sewn shut.

  25. Once again, here are the rudiments of an idea I have to restore normalcy to the moetary system without too much collateral damage:

    I have been thinking about a plan to actually address the mounting and unpayable pile of debt that faces this nation. When it comes to retiring debt, there are only three possibilities: pay it off, default on it, or inflate it away. Every one of these options involves pain, self-sacrifice, and discipline, so it is no use looking for the easy way out. There is no easy way out. What we must ask ourselves is, “Which way of retiring the debt would be least disruptive to the lives of ordinary people while also allowing the nation to keep functioning and to get back on the right track?”

    I have concluded that inflation is the most benign of the three options, but inflation has certain pitfalls of its own that should be avoided if possible. We also desperately need to find a way to encourage savings and investment, which isn’t very compatible with an inflationary monetary regime. Additionally, we also need to find a way to stimulate employment so that we can rebuild our crumbling infrastructure. Is there some way to do all of these things at once? I believe there is if we manage the monetary easing so that it is tilted very much towards workers and savers, very much away from banks and Wall Street, and does not punish employers.

    The first part of the plan requires putting more money in the pockets of people who work; we need “QE for the little people.” Something in the nature of a reverse income tax, or something equivalent to it, is very much called for.

    I believe the quickest and best way to accomplish this is simply to mandate an increase in wages. Wages need to go up by a whole heck of a lot, probably doubled or tripled, and this should be required by law. “But doesn’t that severely punish employers and hurt profitability?” No, not the way I would do it.

    Under my plan, employers would continue to pay the same wages they are paying now. This would be the worker’s “nominal rate of pay.” The increase in wages would be contributed entirely by the federal government through some lending window that would write the money into existence. This would provide the necessary inflationary current to help retire private debt while leaving employers whole. Also, by connecting disbursement to employment, we avoid the socialistic nonsense of Universal Basic Income. If you don’t have a job, you don’t get the economic pop. This would massively stimulate job-seeking, especially if welfare benefits were gradually withdrawn at the same time. Additionally, workers would be highly motivated to seek out the employer offering the highest “nominal wage” available, so that they could get the most out of their federally provided bonus. It’s just like bowling: The more strikes you bowl, the more points you can pack into a frame. Thus, employers competing with each other for labor would have to offer the highest nominal wages they reasonably could.

    So, labor gets a big lift without employers being punished. No we have to address savings.
    The first part of the plan would be highly inflationary, since workers who suddenly find themselves with much more money to spend would be competing for the same supply of goods and services. Therefore, prices would necessarily rise, and probable rise by a lot. “But doesn’t this unduly punish the savers, the responsible people who avoided the worst excesses of the boom?” No, because we’d be paying them too.

    The second part of the plan requires that savers should receive a bonus as well. In addition to having a reverse income tax, we will have “reverse loans,” or in other words an inflation-indexed interest rate on all savings accounts which the banks would be required to pay. Any principal contributed to a savings account would be required to retain its purchasing power on a prorated basis. Savers would be kept whole and would have the confidence of knowing that they could never lose purchasing power even if they just parked their money in a bank. Thus banks, similar to the case of employers above, would compete with each other by offering interest premiums above and beyond the inflation index. Money would flow into the best performing, most profitable banks while the poor performers would go out of business. The resulting pool of savings would provide the investment capital needed for infrastructure projects and development.

    The second part of the plan would put the banks in a rather tight spot which, after two decades of free-wheeling crony capitalism, is just where they deserve to be. In order to be able to pay the inflation-indexed interest rate and the high premiums, banks would be forced to discipline themselves to only make performing loans. The credit ratings of both individuals and corporations would receive rather serious and unrelenting scrutiny, and the ability to maintain a high credit rating would once again become a fiercely guarded mark of honor.

    It goes without saying that under this plan, interest rates in the credit markets would shoot up to a Volcker-like 20-25%. Many firms (not private individuals) would liquidate due to being unable to service their borrowing costs. But this time, corporations and banks would not receive federal bailouts. They would be forced to sell themselves to their stronger competitors and their erstwhile employees would eagerly seek opportunities elsewhere.

    The high interest rates would be devastating for the stock market, which would be made the ultimate bag-holder in my new scheme. But that is the whole point. The purpose of the plan was to undo the effects of debt and financialization by tilting real economic power away from Wall Street and towards the productive economy. There would be tumbleweeds blowing down Wall Street after all this was done, since under the new regime public corporations would have to work very, very hard to convince anybody to take an equity stake in their concerns. Corporate boards would have to become much more engaged in the fundamentals of the companies they owned, and would become more paternalistic and less greedy. A whole new culture of economic discipline would be bred in the C-suits of America, for they would have no other choice.

    This plan aims to institute a virtuous circle that benefits labor, dissolves debt, encourages saving, punishes profligacy, and rewards self-discipline throughout the length and breadth of the economy. It aims to reverse the effects of the last two decades, which was the exact opposite of all of that. After a suitable amount of time has passed—say, 15 years—the provisions of this plan should be sunsetted and a gold standard reintroduced, so that citizens can continue to enjoy the disciplinary effects of sound money without the need for so much federal oversight of the financial system. In short, the plan will return things to normal, and then leave them there.

    And that is the best and most prudent policy we can have this side of the grave.

  26. I would add that id we are going to be serious about the overall economic outlook there are factors we ought to be paying attention to beyond investment critiques.

    actual GDP

    exports

    employment and wage growth

    size and growth of the private economy
    ——————————————————–

    As a US first supporter, I am concerned about the i pacts of the global economy. And I even would suggest that the power of the fed in an increasing globalized banking system might be limited.

    • Replies: @EliteCommInc.
    On employment my lean is more in line with

    https://www.infowars.com/expert-slams-trumped-up-jobs-report/


    Full time employment minus government jobs
  27. @Charles Pewitt

    All roads now lead to a collapse in the value of all that debt.

     

    Accelerationism, as always.

    The plutocrats and the upper middle class and the government workers will be wiped out when the currency collapse wipes out the debt. Inflate away the debt; destroy the purchasing power of the debt; repudiate the debt; expunge the debt. I don't care, a political leader will come to power or in proximity to power or in an informal power sharing agreement, and the trillions upon trillions in debt payments expected to be siphoned out of the young will vanish.

    Monetary extremism was used to shut the mouths of White Americans born before 1965 so as to flood the USA with mass legal immigration and mass illegal immigration. I saw the globalizers do it and the greed of the White Americans born before 1965 is why the USA was flooded with foreigners.

    1965 Immigration Act; 1971 Nixon going off partial gold standard to total debt-based fiat currency system; Volcker getting the Big Bond Bubble started in 1981 with 20 percent federal funds rate.

    Young people will be able to get a fresh start with a new currency without any debt obligations crushing their future like a 2 ton millstone.

    Attention Mr. Sunsets:

    Debates or discussion of monetary policy are much needed and I appreciate your input and points.

    I think if the boobs in Andrew Jackson's time could understand central banker shysterism, then current age American boobs should be able to understand it too.

    I think if the boobs in Andrew Jackson’s time could understand central banker shysterism, then current age American boobs should be able to understand it too.

    (Chuckling) I completely disagree, the quality of “boob” has declined so markedly that, no, today’s boobs are not remotely capable of understanding what boobs 200 years ago grasped.

    I’d love to agree with your positions, but my grasp of (R)eality is fundamentally different from yours. It really doesn’t matter which of us is right (if either of us is right, that is), because what will be will be.

    I’m an ant, riding on a leaf that floats down a wide river. But it’s the only game in town, so I concentrate on enjoying the ride and the adventure, while living my life according to my own values (which, by definition, I believe are superior to all alternatives.) I’ve done my part. I raised great kids, who are extremely bright, conscientious and are raising kids of their own. I put of myself into actions of High European Civilization (both sculpture and music.) I seek continuous self-improvement. This is the sum of what any man can do.

  28. @EliteCommInc.
    I would add that id we are going to be serious about the overall economic outlook there are factors we ought to be paying attention to beyond investment critiques.



    actual GDP

    exports

    employment and wage growth

    size and growth of the private economy
    --------------------------------------------------------

    As a US first supporter, I am concerned about the i pacts of the global economy. And I even would suggest that the power of the fed in an increasing globalized banking system might be limited.

    On employment my lean is more in line with

    https://www.infowars.com/expert-slams-trumped-up-jobs-report/

    Full time employment minus government jobs

  29. @Anonymousse
    Not sure why so many brilliant folks on the dissident right have decided they’re also wall street whizzes and professional economists too. It’s like when Dawkins stops talking bugs and becomes a theologian or when Chomsky left linguistics to become our foremost policy expert.

    But look, if you’re that confident that your prediction of obvious financial armageddon is that ahead of all the pros... I’ll go ahead and bet you a case of champagne that the global capital market is still functioning by the end of Kamala’s first term.

    Kamala Who?

Comments are closed.

Subscribe to All Audacious Epigone Comments via RSS