Category Archives: Debt

Fed’s Lowest Lowball Inflation Measure “Core PCE” Spikes Further. Highest 3-Month Rate since 1982, by Wolf Richter

Don’t worry, inflation is transitory, even if there’s no end in sight to the monetary policy that’s producing it. From Wolf Richter at wolfstreet.com:

“Way above target”: Fed Chair Jerome Powell.

As push came to shove toward the end of the FOMC press conference on Wednesday, Fed Chair Jerome Powell, fidgeting on the hotseat of inflation and struggling with “transitory” and “temporary,” admitted that the recent rate of inflation was “not moderately above” the Fed’s inflation target but “way above target.” Today, the inflation measure that the Fed uses for this inflation target, annual “core PCE,” spiked further.

The Fed uses the “core PCE” inflation measure because it is the lowest lowball inflation measure that the US government provides. It excludes food and energy, which can be volatile, and it is structured differently than the Consumer Price Index, and it is nearly always below “core CPI.”

This Personal Consumption Expenditures price index without food and energy jumped by 0.45% in June, from May, after having jumped by 0.5% in May, 0.7% in April, and 0.4% in March, according to the Bureau of Economic Analysis today. This lowest lowball inflation measure available in the US was up 3.5% from June last year, the highest year-over-year rate since May 1991:

Continue reading→

Countdown To The Next Lockdown: Biden Says “In All Probability” US Will See More Restrictions, by Tyler Durden

If at first, second, third, etc. you don’t succeed, try the same thing again. The difference this time is that people see through the bullshit and they’re completely fed up with it. From Tyler Durden at zerohedge.com:

By now the narrative has gotten so absurdly grotesque and stupid, it’s as if a platoon of monkeys or, worse, woke SNL writers put it on the back of a shampoo bottle.

Today, when we discussed how US consumers have already burned through almost all of their savings from Biden’s fiscal firehose…

… just as the next burst of inflation is about to come and unleash a stagflationary recession or worse, we said that “there is just one event that could short circuit what appears to be a near-certain recession heading into 2022 and mid-term elections which would be devastating for Democrats faced with an imploding economy: another multi-trillion stimulus, just enough to kick the can by another 4-6 months. But for that to happen, the US economy needs to be shut down again which will only happen only once there is enough covid Delta-variant fearmongering. Which should also explain everything that’s happening right now.”

Well, guess what: after the CDC’s legendary flipflop which has steamrolled the credibility of “science”, and concurrent narrative whiplash it has made even the head of ultra-left liberals spin, today the president who earlier needed an aide to tell him he has “something” stuck to his chin, laid out the Delta endgame when he said that the US will, “in all probability,” see more guidelines and restrictions amid rising coronavirus cases…

Continue reading→

The Latest Lie from on-High: An “Independent Federal Reserve”, by Matthew Piepenburg

Central banks are never independent from the governments that create them. From Matthew Piepenburg at goldswitzerland.com:

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?

When it comes to market analysis, no one wants to hear political opinions within finance reports, left or right.

We get this.

Thus, rather than run the risk of offending the left, right or center, I’ll be frank in confessing my foundational view that nearly all politico’s (and Fed Chairs) have been universally comical when it comes to math, history or blunt-speak.

In short, the math, facts and warning signs rising by the hour (and outlined below) make it easy to be an equal-opportunity cynic when it comes to fiscal leadership or political “truth.”

So, let’s get back to Biden’s recent observations…

Deconstructing Biden-Speak

As for inflation being “short-term,” we’ve written ad nauseum about our stance on this fiction many times elsewhere.

But as for Biden’s declaration about the Fed being “independent,” let me wipe the coffee I just spilled on my shirt and speak plainly: That’s a lie.

First of all, if the Fed were as “independent” as Biden claims, then how can Biden be so certain they “will act as needed”?

Aren’t “independent” actors supposed to act as they, rather than the politicians, decide or “need”?

Continue reading→

David Stockman on Why Money Printing Doesn’t Generate Economic Growth

How can the simple act of printing out scrip or making an electronic bookkeeping entry generate anything real, like increased productivity or real economic growth? From David Stockman at internationalman.com:

Fed stimulus

To understand the Fed’s culpability for the inflationary disaster afflicting the American economy, it is necessary to start with the Big Lie that underlies all of its destructive machinations: the claim that market capitalism gravitates toward cyclical instability, recession and chronic shortfall from its potential Full Employment path.

From this presumption, there flows an alleged requirement for continuous central bank “stimulus.” Deft action by the central banking arm of the state is purportedly needed to compensate for the inherent prosperity-retarding imperfections of the free market.

If Fed policy has actually been reducing cyclical instability and pushing the $21 trillion US economy ever closer to its Full Employment potential, then productivity growth should be rising over time commensurate with the Fed’s more aggressive deployment of its “stimulus” policies.

In this context, it should be noted that productivity growth is a purer measure of monetary policy impact than total real GDP growth. That’s because the latter is in part driven by long-run demographics and the annual growth of the labor supply.

Continue reading→

One Lockdown from Disaster, by MN Gordon

The next lockdown may well be the knockout blow to the economy. From MN Gordon at economicprism.com:

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.

The Commerce Department reported on Thursday that second quarter gross domestic product (GDP) increased at an annualized rate of 6.5 percent.  This may sound good, initially.  But economists with Dow Jones had estimated an 8.4 percent Q2 GDP increase.  Once again, extreme fiscal stimulus, at the expense of a long term debt burden, drifted off key.

The monetary policy refrain was also lacking.  This week, at the Federal Open Market Committee meeting press conference, Fed Chair Jay Powell remarked that, “we’re some way away from having had substantial further progress toward the maximum employment goal.”

Thus the Fed will continue to hold the federal funds rate near zero and will continue creating credit from thin air at a rate of $120 billion per month to purchase Treasuries and mortgage backed securities in the amounts of $80 billion and $40 billion, respectively.  By now these damaging actions have become exceedingly mindless.  The aim for maximum employment will ultimately prove to be a shortsighted calamity.

If the economy was really strengthening, the Fed would be tapering back these security purchases and even normalizing its balance sheet.  At the very least, it would be talking about tapering.

But the economy’s not really strengthening at all.  Rather, the economy and financial markets, handicapped by extreme intervention, are entirely dependent on this monetary stimulus.

Continue reading→

Save, Invest, Speculate, Trade or Gamble? by Doug Casey

The way you deploy your money will determine the quality of your retirement and probably the rest of your life as well. From Doug Casey at internationalman.com:

save, invest

For some time, I’ve been saying that the economy is in the “eye of the storm” and that when it emerged, the weather would be far rougher than in 2008. The trillions of currency units created since 2007, combined with artificially suppressed interest rates, have papered over the situation. But only temporarily. When the economy goes into the trailing edge of the hurricane, the storm will be much different, much worse, and much longer lasting than what we experienced in 2008 and 2009.

In some ways, the immediate and direct effects of this money creation appear beneficial. For instance, by not only averting a sharp complete collapse of financial markets and the banking system, but by taking the stock market to unprecedented highs. It’s allowed individuals and governments to borrow more, and live even further above their means. It may even create what’s known as a “crack-up boom”.

However, a competent economist (as distinguished from a political apologist, many of whom masquerade as economists) will correctly assess the current prosperity as an illusion. They’ll recognize it as, at best, a natural cyclical upturn – a “dead cat bounce.”

What we’re really interested in, however, are not the immediate and direct effects of QE— “Quantitative Easing”, and ZIRP—Zero Interest Rate Policy. As much as I love the way they fabricate these acronyms and euphemisms, what we’re really interested in is their indirect and delayed effects. In particular, how do we profit from them? What is likely to happen next in the economy? Which markets are likely to go up, and which are likely to go down?

Continue reading→

Here’s Why the New COVID Relief Program Will Turn the Working Class into Serfs… by Chris MacIntosh

When you rely on the government, it can exact just about any price it wants. From Chris MacIntosh at internationalman.com:

New COVID Relief Program

“This work was strictly voluntary, but any animal that absented himself from it would have his rations reduced by half.” 

George Orwell, Animal Farm

Everything is now political.

ESG, climate change, racism, gender, vaccines. Ask yourself why is it that  all of these things are non-negotiable? Why can’t they be discussed? Why is there no room for dissent, questioning, and discourse?

Something is amiss. Think about it.

The pointy shoes at the IMF tell us that the pandemic will cost the world $28 trillion by 2025, which means it’ll be much, much more.

The truth is the pandemic isn’t the cause. The lockdowns, however, are.

Understanding what exactly this “pandemic” is, is really critical to understanding everything taking place globally and in financial markets both now and in the future.

This virus is statistically as dangerous to the population as a bad flu. “No, not possible, Chris. Look at the response by governments. Surely that’s disproportionate.” Yes, it is, but there is a reason.

To understand the answer to this more fully we need to go back to 2008 and then walk forward tracking the unfolding events.

Following the housing crash and subsequent banking crisis QE was brought in as the tool to “fix” what could have and should have been fixed by letting the banks fail and putting on trial and jailing Wall Street bankers as well as regulatory agencies who were all willfully and knowingly involved in a massive fraud.

The economy has been hanging by a thread ever since.

Then in 2019 the money market seized up with the overnight lending rate shooting up, causing the pointy shoes at the Fed (and the ECB in coordination with the BOE, too) to step in to “fix” it.

They printed upwards of 100 million smackaroos PER NIGHT.

Continue reading→

In a Hall of Mirrors You Have To Break Some Glass To See Clearly, by James Howard Kunstler

Perhaps the biggest driver of vaccine refusal is not their demonstrated dangers, but rather the full court press by people and institutions that lost whatever trust they had with the public long ago, particularly the government. From James Howard Kunstler at kunstler.com:

I’ll tell you what’s really funny: the new Sam Harris “Making Sense” podcast with Dr. Eric Topol, veep of Scripps Research. These two just can’t make sense of why the folks outside their Southern California smuggery bubble have any reservations about getting vaxed-up against Covid-19. It’s like a mental illness to them — all these selfish, Trump-driven, flag-smooching ignoramuses beyond the pale of Wokery, who are putting at risk their science-loving betters in the PhD hives of the New Normal, while that King Kong of Covid variants (code-name Delta) rages through the hillsides and canyons beneath Mulholland Drive. The insolence! Can’t these morons just follow simple instructions (available 24/7 at CNN)?

Okay, here’s why, Sam and Eric: Because every institution in American life has squandered its credibility in the service of a political program that seeks to destroy whatever used to be worth caring about in Western Civ, including free thought, free speech, free inquiry, free movement, truth, beauty, and the right to resist official coercion. Half the country has no trust in the government’s public health apparatus, led by the — shall we say — slippery Dr. Anthony Fauci. Should they believe NPR? The New York Times? CBS-News? Should they follow every bob and judder of Rachel Maddow’s Adam’s apple? Should they swallow every globule of obvious horse-shit served up by Jen Psaki?

Hey Sam and Eric, have you followed what went on in the US Department of Justice and the FBI the past five years, these supposed redoubts of rectitude? The manufactured “Russian Collusion” hoax? The official lying to FISA courts? The malicious prosecutions? The transparently seditious activities of CIA agent Eric Ciaramella & Co.? The hiding of Hunter Biden’s evidence-stuffed laptop?  The enlistment of Facebook, Twitter, and Google in suppression of the news and censorship of opinion? Do you expect people to believe that the basement-haunting “Joe Biden” won an election with those slim victories in the Wokester-controlled, fraud-drenched city precincts of Philadelphia, Atlanta, Milwaukee, and Detroit? Or that Merrick Garland and Christopher Wray wouldn’t lie about it?

Continue reading→

The Death of Truth & the Rise of Centralized Government Control, by Matthew Piepenburg

Being criminal enterprises, governments destroy trust. From Matthew Piepenburg at goldswitzerland.com:

As I write this from a France making ever more bold moves toward forced vaccination, one can’t help but ponder the broader issues of centralized government control, regardless of one’s take on vaccine or no vaccine.

Focusing on financial rather than viral data, the evidence of centralized state control over natural market forces in the stock and bond markets is becoming increasingly incontrovertible.

We’ve written elsewhere about the death of logic and the madness of crowds. It should therefore come as little surprise that the death of truth is yet another casualty of the increased central control we are experiencing in global markets.

Debt Crisis Disguised as a Health Black Swan

Long before COVID reared its highly controversial head (from viral source debates, baby-with-bathwater policy reactions, censored science as to vaccine efficacy and safety, distorted math on infection rates vs death rates, and centralized government control by officials acting “for your own safety” vs. Constitutional and legal issues of individual choice), the global financia

Continue reading→

We Can Have Low Interest Rates Or Robust Growth. But Not Both. By Daniel Lacalle

A naysayer economist is saying that you can’t have your cake and eat it, too, in a world that believes you can have your cake, eat it, have it again, and eat it again. From Daniel Lacalle at mises.org:

Central banks should know by now that you cannot have negative interest rates with low bond yields and strong growth. One or the other.

Central banks have chosen low bond yields at any cost, despite all the evidence of stagnation ahead. This creates enormous problems and perverse incentives.

It is not a surprise that markets have bounced aggressively, driven by the tech sector, after a slump based on concerns about the pace of economic growth. Stimulus package effects are increasingly short, and this was pretty evident in the poor figures of industrial production and the ZEW survey gauge of expectations. The same can be said about a weakening ISM index in the United States. United States ISM Services PMI came in at 60.1, below expectations (63.5) in June, precisely in the sector where the recovery should be strongest.

Interestingly, European markets declined sharply after the European Central Bank sent the ultimate dovish message, a change in its inflation target that would allow the central bank to exceed its 2 percent limit without change of policy. What does it all tell us?

Continue reading→