Category Archives: Debt

The Age of Fear: A Graduation Message for Terrifying Times, by John W. Whitehead and Nisha Whitehead

Some good advice, and not just for graduates, from John W. Whitehead and Nisha Whitehead at rutherford.org:

“Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.”—Hermann Goering, Nazi leader

With all that is crashing down upon us, from government-manipulated crises to the blowback arising from a society that has repeatedly prized technological expedience and mass-marketed values over self-ownership and individual sovereignty, those coming of age today are facing some of the greatest threats to freedom the world has ever witnessed.

It’s downright frightening.

Young people will find themselves overtaxed, burdened with excessive college debt, and struggling to find worthwhile employment in a debt-ridden economy on the brink of implosion. Their privacy will be eviscerated by the surveillance state. They will be threatened, intimidated and beaten by militarized police. They will be the subjects of a military empire constantly waging war against shadowy enemies and government agents armed to the teeth ready and able to lock down the country at a moment’s notice.

As such, they will find themselves forced to march in lockstep with a government that no longer exists to serve the people but which demands that “we the people” be obedient slaves or suffer the consequences.

It’s a dismal prospect, isn’t it?

Unfortunately, we failed to guard against such a future.

Worse, we who should have known better neglected to maintain our freedoms or provide our young people with the tools necessary to resist oppression and survive, let alone succeed, in the impersonal jungle that is modern America.

Continue reading→

If Not Now – WHEN?? by Dennis Miller

The Fed is never going to do anything about inflation. It can’t, the government can’t pay higher rates and the Fed has to keep buying the government’s debt. From Dennis Miller at theburningplatform.com:

My grandfather was a WWII Army Sargent, an uneducated farmer with a Ph.D. in common sense. One of the lessons he preached; the longer you ignore a problem, the more it will grow.

Fed Chairman Jerome Powell never met my grandfather.

This Schiff Gold article confirms my grandfather’s thinking: (Emphasis mine)

“During a webinar sponsored by the Economic Club of Washington DC, Powell said the economy can handle the current debt load. But he did warn that the long-term trajectory of the US budget is unsustainable.

‘The US federal budget is on an unsustainable path, meaning simply that the debt is growing meaningfully faster than the economy. And that’s by definition unsustainable over time. It’s a different thing to say the current level of the debt is unsustainable. It’s not. The current level of debt is very sustainable….’

Powell said the US government will eventually have to ‘get back to a sustainable path.’

‘That is something that is best done in very good times when the economy is at full employment and when taxes are rolling in. This is not the time to prioritize than concern.’

…. Newsflash – this will never happen.

Of one thing you can be certain – politicians will always find a reason to borrow and spend money.

…. Powell is right when he says the federal budget is on an unsustainable path. He’s wrong to imply anything will ever be done about it. The powers that be will stay right on that unsustainable path to the bitter end. And it will be a bitter end.”

Continue reading→

The ‘Take This Job and Shove It’ Recession, by Charles Hugh Smith

A lot of people are walking away from the unsatisfying job, tax donkey, and debt slave merry-go-round. From Charles Hugh Smith at oftwominds.com:

o hey there Corporate America, the Fed and your neofeudal cronies: take this job and shove it. This time it really is different, but not in the way the Wall Street shucksters are claiming.

Conventional economists, politicos and pundits are completely clueless about the unraveling that’s gathering momentum beneath the superficial surface of “reflation” because they don’t yet grasp we’re entering an unprecedented new type of recession: a ‘Take This Job and Shove It’ recession which is unlike any previous downturn.

Long-time readers know I’ve addressed the emergent class structure and systemic decay of the socio-economic order for many years. Just as a quick refresher, here are a few of the dozens of essays I’ve written on these topics:

America’s Nine Classes: The New Class Hierarchy 4/29/14

The Managerial/ Professional Class Is Burning Out 3/28/16

America’s Metastasizing Class Wars 8/27/20

This Is How It Ends: All That Is Solid Melts Into Air 9/10/20

This Is Why Inflation Will Rip Everyone’s Face Off 9/17/20

What the chattering class of apologists, toadies, lackeys, factotums and apparatchiks missed about the pandemic lockdown was the tidal change in perceptions of work and life enabled by a withdrawal from the deranging frenzy of work: once people had time to reflect on their lives, mortality, goals, identity and the soaring costs and dwindling rewards of their efforts to “get ahead” via slaving away in a dead-end job / career, the tune that began to haunt their subconscious ruminations was Johnny Paycheck’s timeless classic, Take This Job And Shove It (2:31).

Continue reading→

US Core Consumer Prices Explode Higher At Fastest Pace Since 1981, by Tyler Durden

Inflation is in the ascendancy, thanks to nonstop debt monetization since the end of 2019. From Tyler Durden at zerohedge.com:

After March’s blowout 0.6% MoM surge in headline CPI, analysts expected a modest slowdown MoM, but surge YoY due to the base-effect comps from April 2020’s collapse. However, it appears analyst massively underestimated as headline CPI surged 0.8% MoM (4 times the +0.2% expected) and exploded 4.2% YoY. That is the biggest YoY jump since Sept 2008 (and biggest MoM jump since June 2008)

Source: Bloomberg

Core CPI was expected to rise by the most this millennia, but it was hotter than that. The index for all items less food and energy rose 3.0% over the past 12 months; this was its largest 12-month increase since January 1996… and the MoM jump of 0.92% is the biggest since 1981

Source: Bloomberg

Continue reading→

Jim Grant: The Fed Can’t Control Inflation, from SchiffGold

It’s a comforting notion to many people, the idea that wise bureaucrats can manage something as complicated as the economy. Too bad they can’t do it. From Jim Grant at schiffgold.com:

 

Federal Reserve Chairman Jerome Powell insists inflation is “transitory.” As prices have spiked throughout the economy, Powell’s messaging has essentially been, “Move along. Nothing to see here.”

Peter Schiff has been saying the central bankers at the Fed can’t actually tell the truth about inflation because even if they acknowledge it’s a problem (and it is) they can’t do anything about it.

In a recent talk, Jim Grant, investment guru and founder of Grant’s Interest Rate Observer, echoed Peter, saying the Fed can’t control inflation.

During a webcast sponsored by State Street SPDR ETFs, Grant said he thinks “there’s a gale of inflation of all kinds in progress,” adding that he believes it will take the Fed by surprise and “overwhelm our monetary masters.” Grant said, inflation is “clear and present and will manifest itself in our everyday lives.”

That sounds like the exact opposite of Powell’s “transitory” mantra.

Peter has said that once the Fed is forced to admit that inflation isn’t transitory, it will be too late to take action. Grant made a similar prediction, saying inflation will “catch the Fed flatfooted. In response it will “prevaricate” – meaning speak or act in an evasive way. In fact, that already seems to be the central bank’s strategy.

The question is can the Fed actually control inflation. Grant doesn’t think so.

I think the Fed is under the misconception that it controls events. Sometimes, events control the Fed, and I wouldn’t be surprised if this was one of those times. The Fed thinks that not only can it control events, but it can measure them. It believes it can pinpoint the rate of inflation.”

Continue reading→

The Raptures of Hyper-Complexity, by James Howard Kunstler

Hyper-complexity is this case means Rube Goldbergesque. From James Howard Kunstler at kunstler.com:

Looks like The New York Times will have to recalibrate its president-o-meter. For five months they’ve been styling Joe Biden as the reincarnation of FDR, but he’s looking more and more like the second coming of Millard Fillmore — who came to leadership of the dominant Whig Party at exactly the moment it flew up the wazoo of history and vanished, ushering in a civil war.

FDR, you remember, was faced with a momentous systems failure, a crisis we came to call the Great Depression. I’m not sure we actually learned the lesson of that, despite thousands of books and PhD dissertations on the subject. The lesson: financial systems tend to expand and complexify at a more rapid rate than the larger economic systems of which they are a component. Their abstract operations seek to hide risk in hyper-complexity until hazard comes a’callin’ and then you discover that the actual money is not there.

The difference then (1929 – 1941) was that the greater US economy was fully outfitted for industrial production when its finance sector blew up. There was something solid underneath all that financial abstraction. We were all set up to manufacture products of value, many of them based on inventions developed here: cars, movies, airplanes, radios, you-name-it, new and exciting things that people wanted to buy. Our factories were all pretty much up-to-date and state-of-the-art then, too. Our oil supply, including the industry that pumped it out of the ground and moved it from points A to B, was the envy of the world. We had raw materials up the ying-yang. The whole kit was humming magnificently when Wall Street blew up, and next thing you know unemployment goes to twenty-five percent and nobody has any money and the luckless are building cardboard shanties in Central Park.

Continue reading→

Keep It Simple: Gold vs. a Mad World, by Matthew Piepenburg

Everybody should own some precious metals, not as speculations against currencies, but as protection—a medium of exchange and a store of value—should fiat currencies collapse. From Matthew Piepenburg at goldswitzerland.com:

Psychologists, poets and philosophers have written for centuries that many who have eyes refuse to see, and many who can think, refuse to think clearly–all for the simple reason that some truths, like the sun, are just too hard to look straight into.

Or as others have said more bluntly: “Truth is like poetry—everyone [fricking] hates it.”

When it comes to bloated markets, debt orgies and helicopter money, the rising fun of such “stimulus” is embraced, yet the template for its equally market-tanking, social-destroying and currency-debasing consequences are simply ignored.

The same is true when it comes to the “great inflation debate,” which is simply no longer a debate but a neon-screaming reality playing out in real time and growing more pernicious before eyes otherwise blinded by calming Fed-speak and bogus inflation scales.

Each passing day, the evidence of the inflationary cancer beneath the smiling surface of our still rising markets and “recovering/opening” economy increases, and thus, like it or not, the inflation topic just won’t and can’t be over-stated enough.

In short: Here I go again with the inflation thing…

From the Grocer to Buffet: Inflation is Obvious

Extreme US “stimulus,” vaccine rollouts, Europe’s eventual reopening, and rising commodity costs are accelerating the inflationary tailwinds which everyone from grocery store clerks and home builders to Warren Buffet can no longer deny or ignore.

As facts rather than theories confirm, commodity prices have surged from steel to copper, or corn to lumber while precious metals steadily rise against COMEX price fixers, CPI lies and other unsustainable boots to the neck of a coiled gold market positioned for big moves into late 2021 and beyond.

Continue reading→

The Inflation Monster Has Been Unleashed, by Bruce Wilds

Given the copious amounts of debt the Federal Reserve has monetized, rising prices are inevitable. From Bruce Wilds at brucewilds.blogspot.com:

The monster known as inflation has been unleashed upon the world and will not easily retreat into the night. This is reflected in soaring commodity and housing prices. Due to the stupid and self-serving policies of the Fed, we are about to experience a massive shift in the way we live. Bubbling up to the surface is also the recognition the Fed has played a major role in pushing inequality higher. This means that inflation is about to devour the purchasing power of our income and the savings of those that have worked hard and saved over the years.

Over the months we have watched Fed Chairman Jerome Powell time and time again cut rates and increase the Fed’s balance sheet. This has hurt savers, forced investors into risky investments in search of yield, damaged the dollar, encouraged politicians to spend like drunken sailors, and increased inequality. The greatest wealth transfer in history has already begun and the next crisis will only accelerate the process. Sadly, the same policies that dump huge money into larger businesses because it is an easier and faster way to bolster the economy give these concerns a huge advantage over their smaller competitors.

For decades the American people have watched their incomes lag behind the cost of living. To make matters worse, the official numbers of the so-called Consumer Price Index (CPI) have been rigged to understate inflation and not to reflect the true impact it was having on our lives. Want to know where the real cost of things is going, just look at the replacement cost from recent storms and natural disasters. Currently, the government understates inflation by using a formula based on the concept of a “constant level of satisfaction” that evolved during the first half of the 20th century in academia. This has skewed expectations and led many people to think inflation is not something they need to worry about.

Continue reading→

What Will You Do When Inflation Forces U.S. Households To Spend 40 Percent Of Their Incomes On Food? by Michael Snyder

Perhaps we’ll eat less, or eat lower quality food. Inflation is showing up at the grocery stores big time, and it doesn’t look like it’s going to be “transitory.” From Michael Snyder at theeconomiccollapseblog.com:

Did you know that the price of corn has risen 142 percent in the last 12 months?  Of course corn is used in hundreds of different products we buy at the grocery store, and so everyone is going to feel the pain of this price increase.  But it isn’t just the price of corn that is going crazy.  We are seeing food prices shoot up dramatically all across the industry, and experts are warning that this is just the very beginning.  So if you think that food prices are bad now, just wait, because they are going to get a whole lot worse.

Typically, Americans spend approximately 10 percent of their disposable personal incomes on food.  The following comes directly from the USDA website

In 2019, Americans spent an average of 9.5 percent of their disposable personal incomes on food—divided between food at home (4.9 percent) and food away from home (4.6 percent). Between 1960 and 1998, the average share of disposable personal income spent on total food by Americans, on average, fell from 17.0 to 10.1 percent, driven by a declining share of income spent on food at home.

Needless to say, the poorest Americans spend more of their incomes on food than the richest Americans.

According to the USDA, the poorest households spent an average of 36 percent of their disposable personal incomes on food in 2019…

As their incomes rise, households spend more money on food, but it represents a smaller overall budget share. In 2019, households in the lowest income quintile spent an average of $4,400 on food (representing 36.0 percent of income), while households in the highest income quintile spent an average of $13,987 on food (representing 8.0 percent of income).

Continue reading→

Here’s How ‘Everything Bubbles’ Pop, by Charles Hugh Smith

The bubbles won’t pop all at once, but once they get going, it should be a wonder to behold. From Charles Hugh Smith at oftwominds.com:

But weirdly, and irrationally, bubbles pop anyway.

At long last, the moment you’ve been hoping for has arrived: you’re pitching your screenplay to a producer. Your agent is cautious but you’re confident nobody else has concocted a story as outlandish as yours. Your agent gives you the nod and you’re off and running:

Writer: Two guys start a cryptocurrency as a joke to parody the crypto craze, and they name it KittyCoin. It goes nowhere but then the greatest speculative bubble of all time takes off, it’s the dot-com and housing bubble times 100 but in everything, and within a couple months the entire economy is dependent on this bubble, and the bubble is dependent on KittyCoin, which has shot up 15,000 percent in a few weeks. A celebrity CEO who’s been promoting KittyCoin is invited to host a failing TV variety show, and now the whole economy depends on KittyCoin soaring even higher.

Producer: So it’s ‘The Big Short’ plus ‘Network’.

Writer: Something like that, only zanier.

Producer: I get the zaniness but it’s so implausible — it’s preposterous.

Writer: It’s an absurdist comedy.

Producer: But it ends with everyone being wiped out.

Writer: OK, a tragi-comedy.

And here we are, in the Greatest Bubble of All Time (GBOAT) hanging on the thin thread of speculators rotating out of one bubble into another even more improbable bubble. If there is no heir-apparent for the rotation, then players rotate back into an asset that already reached bubblicious heights and is awaiting the next booster.

The Everything Bubble is one for the ages, but alas, even the most glorious global Tulip Bulb manias crash back to Earth. So how do Everything Bubbles end? Like every other bubble ends:

Preposterous moves to implausible which moves to plausible which moves to inevitable. In other words, bubbles inflating to even more outlandish valuations are no longer merely plausible, they’ve become inevitable: the Federal Reserve will continue printing money forever, Americans have trillions of dollars in stimmy and savings they’re itching to spend, and so on.

Continue reading→