Category Archives: Economics

Image

Unemployment Vanquished

governor tarkin reduced unemployment alderaan to 0

We Have Entered the Eye of Davos’ Storm, by Tom Luongo

Will we have elections next year if it’s clear the Democrats will be routed, even with all the help they’ be getting from the illegal aliens they’re letting in? From Tom Luongo at tomluongo.me:

Congress recessed for the summer passing neither the infrastructure nor spending bills that were the focus of all of Washington’s attention for weeks thanks to Krysten Sinema from Arizona. She personally torpedoed the Biden Administration’s signature piece of legislation that took months to wrangle to that point and then gave the whole thing a big John McCain-like thumbs down.

The debt ceiling suspension put in place under Trump has not been renewed. We are currently more than $6 trillion over it as I type this.

Fungal President Joe Biden stopped looked up from his jello cup long enough to implore Congress to extend the eviction moratorium for those behind on rent and mortgage payments which has been in place for more than a year. Estimates are 6.5 million people will now face eviction who are behind on their rent.

U.S. tax-cows have drawn down their savings at an alarming rate while facing this eviction cliff. But, hey, your per child tax credit is now showing up as a monthly check as long as the Post Office stays on the job. By the way, they are refusing to go along with Biden’s plans for forcing all government employees be vaccinated against a virus which isn’t killing anyone anymore.

Continue reading→

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→

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→

Game Over, by Sven Henrich

Central banks have put themselves in a bind from which they cannot extricate themselves. From Sven Henrich at northmantrader.com:

Game over. Occam’s Razor: The simplest explanation is often the best one. Central banks will never extract themselves. Whether they ultimately end QE is besides the point. They won’t reduce their balance sheets. They can’t. Powell’s “performance” yesterday was not an accident. He’s been running on the same theme of offering absolutely zero specifics. Why? 3 reasons: 1. There are none as there is no plan. 2. To maintain flexibility and not to be held accountable or anything 3. To not upset markets.

We saw this recently when he actually got challenged on MBS and QE. He couldn’t and wouldn’t offer a rationale as to what is actually economically accomplished by it:

More importantly.

He doesn’t know. And why would he? There is zero precedent for this much combined liquidity from the fiscal and monetary side along with a rapid economic reopening with consumers’ pockets stuffed with free money from the government.

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→

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→

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→

Bond Market Has Been Clueless about Inflation for Decades, Now More so Than Ever. The Meme the Drop in Yields = End of Inflation is a Fantasy, by Wolf Richter

Bonds are probably the worst investment out there, but even if they’re not, they certainly make the top three. From Wolf Richter at wolfstreet.com:

Even before QE, the 10-year yield lagged years behind CPI, up and down. And now, the Fed manipulates the market with QE.

The 10-year Treasury yield was 1.75% at the end of March, but by July 19, it had dropped to 1.19%, and on Friday it closed at 1.30%. This drop in the yield occurred even as inflation spiked. On a month-to-month basis for the past three months, and annualized, the Consumer Price Index spiked by 9.5%, the red-hottest since 1982. Year-over-year, CPI in June jumped 5.4%.

But the new meme now is that the drop in the 10-year Treasury yield is telling us the spike in inflation is nothing to worry about, and that by next early year, CPI will be at 1% or 1.5% or whatever. The meme now is that the bond market is right and CPI is wrong or something.

Historically, for much of the time, the 10-year yield is higher than the rate of annual CPI, meaning the “real” 10-year yield (after inflation) is positive. But there are periods when the 10-year “yield” is below CPI, for a negative real yield. Currently, with the 10-year yield at 1.3% (black line) and annual CPI at 5.4% (red line), the 10-year “real” yield is -4.1%, the most negative since June 1980:

Continue reading→

%d bloggers like this: