Why Bonds Are Behaving Like Risky Assets

“When the [credit] delusion breaks, people all with one impulse hoard their money, banks all with one impulse hoard credit, and debt becomes debt again, as it always was.  Credit is ruined.”

– Garet Garrett, 1932, A Bubble that Broke the World

Down, Down, Down

Third quarter 2022 ends today [Friday].  We’re entering the year’s home stretch.  Thus, we’ll take a moment to observe where money and markets have been, so we can conjecture as to where they’re going.

To begin, United States stock markets are in an epic battle between bulls and bears.  For most of the year, the bears have been delivering heavy blows.  But the bulls have not taken their punches lying down.  Here’s a quick review of the three major U.S. Indexes…

After peaking out on January 4, 2022, at 4,814.62 the S&P 500 declined 24.46 percent to an interim bottom of 3,636.87 on June 17, 2022.  The DJIA fell approximately 19.71 percent over this time.

The NASDAQ’s decline commenced on November 22, 2021, at a peak of 16,212.23.  It then cascaded to an interim bottom of 10,565.14 on June 16, 2022, for a top to bottom decline of 34.83 percent. Continue reading

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Facing Down a Wrath of Biblical Proportions

“The LORD sends poverty and wealth; he humbles and he exalts.” – 1 Samuel 2:7

Holy Roll

An enterprising entrepreneur did a comedic graphic of Federal Reserve Chairman Jerome Powell captioned: “IN JPOW WE TRUST.”

You may have seen it.

The image shows Powell flamboyantly wearing a preacher’s robe and making an esoteric hand gesture with his right hand.  His face is grimacing like he’s passing a kidney stone.

His left hand holds up what appears to be an outwardly facing bible.  The scriptures are sparse and hardly legible.  But if you zoom in you can make out important prophecies like, “STOCKS ONLY GO UP,” “RECESSION CANCELLED,” “MONEY PRINTER GOES BRRRRRRRR.”

An American dialect of French is also used in several instances to express what happens to market bears and those who short stocks.  It’s the sort of thing best reserved for locker room talk. Continue reading

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Central Planners of the World, Unite!

Federal Reserve Chair Jay Powell wants a swift decline in the rate of consumer price inflation.  He isn’t getting what he wants.

According to the Bureau of Labor Statistics, consumer price inflation, as measured by the consumer price index (CPI), increased at an “official” annualized rate of 8.3 percent in August.

This exceeded Wall Street’s consensus expectations of 8.1 percent.  What’s more, it crushed investor hopes a ‘Powell pivot’ would come sooner rather than later.  On Tuesday, the Dow Jones Industrial Average (DJIA) crashed 1,276 points on the news.

Powell, a central planner, wants consumer price inflation to be about 2 percent.  Instead, he’s got something that’s over 400 percent higher.  What’s going on?

If you want to understand what’s up with raging consumer price inflation and Fed monetary policy, you must understand this.  Right now, in the United States as in most of the world, we have a scam currency that’s controlled by central planners.  Specifically, we have what Karl Marx envisioned in Plank No. 5 of his Communist Manifesto:

“No. 5.  Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.” Continue reading

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The Politics of Control and Economic Oblivion

A recent White House fact sheet declares that President Biden has delivered on promises to cancel $10,000 of student debt for low- to middle-income borrowers.  Who’s he really delivering for?

Without question, the student debt crisis is a disgrace.  There are roughly 45 million student loan borrowers who owe on the order of $1.6 trillion.  Most of this debt is from federal student loans.

Thus, the federal government is responsible for this mess.  It supplied the credit.  In turn, massive amounts of federal student loans inflated a higher education bubble and an industry of entitled, fake intellectuals.

The business model generally requires signing credulous 18-year-olds up for massive amounts of government backed student loans.  These young adults have been told since before they could count that college was the magical path to a bright future.  But as tuition costs ran higher, propelled by more and more student loans, the value proposition no longer penciled out.

To be clear, cancelling student debt rewards a corrupted education industry much more than it rewards overindebted students.  It allows colleges and universities to perpetuate an inflated product. Continue reading

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