From The Babylon Bee:
WASHINGTON, D.C.—In a statement given this week, House Speaker Nancy Pelosi said she feels for Americans struggling with prices at the pump and offered a suggestion for how to cope by becoming a millionaire through insider trading.
“If you want to avoid suffering from high gas prices, the solution is simple,” she said. “Just get elected to Congress and spend decades trading stocks based on insider information only Congress is allowed to have! Easy!”
“You’ll even have money left over for ice cream and to bail your spouse out of prison if they get a DUI!”
Republicans condemned Pelosi’s callous statements, contesting that Americans should instead pull themselves up by their bootstraps and work harder, and maybe meet with a few ExxonMobil lobbyists for some extra cash.
“Pelosi’s advice is sound, but we’ve found this approach only works for one out of every 350 million Americans,” said local Democratic strategist Yance Parmesan. “For everyone unable to enrich themselves as a career politician, we recommend you just ask Biden for a gas card or buy an electric car. Simple as that!”
At publishing time, gas prices rose even higher, forcing Pelosi to get a second job delivering pizzas.
A quick preview of what happens next: nothing good. From Doug Casey at internationalman.com:
International Man: In addition to stocks, it seems that almost every asset class is also crashing.
What’s your take on the markets, and where do you think it’s headed?
Doug Casey: Let’s take them in order of size and importance.
The biggest market is bonds. It’s especially dangerous because it’s the most overpriced. Bonds are a triple threat to your capital. First, because of the inflation risk, which is huge and growing. Second, is the interest rate risk; I expect rates to double, triple, or quadruple from here, going back to or above the levels of the early 80s. The third is the default risk, which applies to everything except US Government debt. AAA corporate debt hardly exists anymore.
Interest rates have skyrocketed in the last year, with mortgage rates going from under 3% to over 6%. 30-year treasury bonds still only yield 3.25%. But with inflation running 10, 12, or 15% and going higher, long-term Treasuries have a lot further to fall. I remain short T-bonds.
Everybody’s paying attention to the stock market because they’re fully invested. The meme stocks, SPACs, and tech stocks have all collapsed. The big ones are down 25%, and many are down 80 or 90%. It’s not over yet. People still feel that they can buy the dips. They’re hurting, but they’ve been paper-trained over a couple of generations to believe the Fed will kiss everything and make it better.
Posted in Economics, Business, Financial markets, Debt, Investing, Economy, Collapse, Currencies, Governments, Banking
Tagged Gold mining stocks, interest rates
Interest rates are going up, and given the long swings in the bond market, they’ll probably be going up for many years. From Nick Giambruno at internationalman.com:
Although many don’t realize it, interest rates are simply the price of money.
And they are the most important prices in all of capitalism.
They have an enormous impact on banks, the real estate market, and the auto industry. It’s hard to think of a business that interest rates don’t affect in some meaningful way.
Today, we are on the cusp of a rare paradigm shift in interest rates. Such changes take decades—or even generations—to occur. But when they do, the financial implications are profound.
Interest rates rise and fall through decades-long cycles, as seen in the chart below.
That makes sense, as debt is naturally cyclical. It allows people to consume more than they produce now. But it also forces them to produce more than they consume later to pay it off.
Interest rates last peaked in 1981 at over 15%. Then, they fell for 39 years and bottomed in July 2020 at around 0.62%.
The red line marks the long-term average of 5.6%.
Every great wave of innovation has a lot of failures and a few great companies that capitalize on the innovation. Don’t let the recent weakness in cryptocurrencies prompt you to throw out the investment baby with the bathwater. Odds are that some cryptos will emerge from the carnage and over the long term will be stellar investments. From Simon Black at sovereignman.com:
A collapse of financial asset prices and the value of currencies against real goods is the inevitable outcome of fiat debt creation without restraint by central banks. Be prepared. From Dr. Joseph Mercola at theburningplatform.com:
- Financial experts and insiders have, for well over a decade, warned that a collapse of the U.S. currency is a mathematical inevitability, and this collapse will have global ramifications, as the dollar is the world’s reserve currency
- U.S. inflation is currently at 8.6%, but in some markets, it’s in the double digits. Used car sales, for example, have seen an inflation rate of 22.7% in the past 12 months. Globally, food prices increased by 29.8% between April 2021 and April 2022
- In 2011, George Soros stated that economic collapse is “foreseen” and that authorities were simply buying time before the inevitable collapse. Now that we’re in the economy’s final death throes, those who have been aware of the trajectory for well over a decade cannot admit it, because then they’d have to explain why they didn’t act to stop it. Admission would also expose the central bank system as the fraud that it is
This bear market won’t be over until “buy the dip” is regarded as a bad joke among bedraggled stock speculators. From Wolf Richter at wolfstreet.com:
Still way too much wild craziness, including the ultimate bag-holder gamble: Why the bottom isn’t anywhere near.
I went out looking for blood in the streets Friday evening after the sell-off to see if markets had hit bottom, but there wasn’t any blood. There was instead chatter about the next rally, about what to buy and when. And there was the relentlessly exuberant pump-and-dump meme-stock crowd hoopla-ing DVD rental company Redbox Entertainment, one of the infamous SPACs, and video-streaming service Chicken Soup for the Soul Entertainment, which is going to acquire Redbox, in an utterly ridiculous crazy-wild game with a deadline (we’ll get there in a moment).
That this game is even played – that this utter nuttiness in the markets continues – indicates that there is still way too much exuberance, way too much liquidity, way too much craziness. And the bottom isn’t in until this kind of craziness is snuffed out.
The two biggest interrelated economic stories are debt and the debasement of fiat currencies. From Alasdair Macleod at goldmoney.com:
Initiated by monetarists, the debate between an outlook for inflation versus recession intensifies. We appear to be moving on from the stagflation story into outright fears of the consequences of monetary tightening and of interest rate overkill.
In common with statisticians in other jurisdictions, Britain’s Office for Budget Responsibility is still effectively saying that inflation of prices is transient, though the prospect of a return towards the 2% target has been deferred until 2024. Chancellor Sunak blithely accepts these figures to justify a one-off hit on oil producers, when, surely, with his financial expertise he must know the situation is likely to be very different from the OBR’s forecasts.
This article clarifies why an entirely different outcome is virtually certain. To explain why, the reasonings of monetarists and neo-Keynesians are discussed and the errors in their understanding of the causes of inflation is exposed.
Finally, we can see in plainer sight the evolving risk leading towards a systemic fiat currency crisis encompassing banks, central banks, and fiat currencies themselves. It involves understanding that inflation is not rising prices but a diminishing purchasing power for currency and bank deposits, and that the changes in the quantity of currency and credit discussed by monetarists are not the most important issue.
Posted in Banking, Business, Collapse, Currencies, Debt, Economics, Economy, Financial markets, Governments, History, Investing
Tagged Keynesian economics, Monetarism, Monetary debasement, Monetary inflation
The Fed has robbed savers, driven U.S. manufacturing to places like China and Mexico, facilitated the government’s debt binge, and debased the dollar’s purchasing power. Other than that, it’s done a great job. From David Stockman at lewrockwell.com:
Recently, it was reported that US industrial production rose in April for a fourth consecutive month, and owing to a jump in auto assemblies was up 1.1% from March and 6.4% versus prior year. So the usual suspects were out beating the Wall Street tom-toms about economic strength and no recession on the horizon.
But as demonstrated in the chart below, what we are mainly getting once more is born-again production, not net growth. That is, remove the April 2020 Lockdown swoon and scroll back to the interim high in December 2014 and what do you get?
Well, what you get is a piddling 0.26% per annum growth rate over the past 7.5 years. And for want of doubt, dial back to the pre-crisis peak in November 2007 and you get a per annum growth rate of just 0.21% over the past 14.5 years.
US Industrial Production Index, November 2007-April 2022
So, no, the US industrial economy is not strong—it’s been flatlining for the better part of the current century. And that’s something new under the sun, not in a good way.
Posted in Banking, Business, Debt, Economics, Economy, Energy, Financial markets, Governments, History, Investing, Labor
Tagged Federal Reserve policies, Growth, industrial production, Monetary inflation
From The Babylon Bee:
CHERRY HILL, NJ—According to data analysts on Wall Street, as “timid beta-males” are selling off their stock portfolios in a panic over the tanking economy, women are coming out of the woodwork to snap up the cheap stocks now that everything is on sale.
“Hey Janie, did you see the price of Target stock?” asked Sissy Mixon excitedly to her friend over the phone. “It’s on sale for, like, 25% off! EEEEEE! I love Target!” Missy quickly hit buy on two shares of TGT at $304.92, so she could save even more money.
“Now that I own a piece of Target, every time I go shopping there I’m basically paying myself!” Missy explained to reporters.
According to sources on Wall Street, market recoveries are driven almost entirely by savvy housewives looking to snap up a bargain. “I don’t really know what ‘Riot Blockchain’ is, but it’s, like, 300% off! Whatever it is, I’m buying it!” Missy insisted.
Missy’s husband Sam tried to explain to her—as he always does—that buying things on sale doesn’t constitute saving money. “She doesn’t seem to get it,” he said.
At publishing time, Sam threw another $1000 into Dogecoin as he knows it will hit $1.00 eventually.
Posted in Humor, Investing
The Fed cannot fix the enormous problem of monetary inflation it created without throwing the American and probably the global economy into a depression. From David Stockman at zerohedge.com:
Authored by David Stockman via Contra Corner blog,
The 10-year UST yield has crossed the 3% mark. So you’d think this was a sign that a modicum of rationality is returning to the bond bits.
But not really. That’s because inflation is rising even faster than interest rates, meaning that real yields on the fulcrum security for the entire financial system are still dropping ever deeper into negative territory. Thus, at the end of March the inflation-adjusted (Y/Y CPI) rate dropped to -6.4% and even with the rise of nominal yields since then it still stands close to -6%.
Here’s the thing, however. For the past 40-years the Fed had been driving real yields steadily lower, although even during the money-printing palooza of 2009-2019, the real yield entered negative territory only episodically and marginally.
But after the Fed pulled out all the stops in March 2020 and commenced buying $120 billion per month of government debt, the bottom dropped out in the bond pits. Real yields plunged to territory never before visited, meaning that unless inflation suddenly and drastically plunges, the Fed is still massively behind the curve.
The fact is, there is no chance of staunching inflation if real yields remain mired deep in negative territory. Yet if the nominal yield on the UST should rise to 5-7%, and thereby marginally enter positive real yield territory, there would be carnage on Wall Street like never before.
Posted in Banking, Business, Currencies, Debt, Economy, Financial markets, Governments, History, Investing
Tagged interest rates, Monetary inflation, U.S.bonds