Choking On the Salt of Debt

Roughly three years ago, after traversing between Los Angeles and San Francisco via the expansive San Joaquin Valley, we penned the article, Salting the Economy to Death.  At the time, the monetary order was approach peak ZIRP.  We found the absurdity of zero bound interest rates to have similar parallels to the absurdity of hundreds upon hundreds of miles of blooming crop fields within the setting of an arid desert wasteland.

Given today’s changing financial conditions, namely the prospect of a sustained period of rising interest rates, we’ve taken the opportunity to refine our analysis.  What follows is an attempt to bring clarity to disorder.

The natural starting point for the topic at hand is from a place of delusion.  That is, the popular delusion that central planners can stimulate robust economic growth by setting interest rates artificially low.  The general theory is that cheap credit compels individuals and businesses to borrow loads of cash – and consume it.

Over a sample size of five to ten year, say the growth half of the business cycle, central bankers can falsely take credit for engineering a productive economy. Continue reading

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Are the Voices in Fed President Kashkari’s Head Speaking Lies?

The government continues its approach towards full meltdown.  The stock market does too.  But when it comes down to it, these are mere distractions from the bigger breakdown that’s bearing down upon us.

The average working stiff has little time or inclination to contemplate gibberish from the Fed.  They’re too worn out from running in place all day to make much of it.  This fact accounts for the limited inkling the populace has for why there’s a great prosperity imbalance between wage earners and the creams.

If there was a better understanding of the scope and scale of the orchestrated larceny being conducted, practitioners of mass money debasement would be tarred, feathered and paraded down Main Street.  This seems a small penalty for turning markets into casinos and debasing the rewards of an honest day’s work.  Instead, they preserve their misplaced stature through the backwards process of taking the absurdly simple and twisting it up into the inordinately complex. Continue reading

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Oil Mania Redux

By now, late September of 2018, it has become increasingly evident that something big is about to happen.  What exactly that may be is anyone’s guess.  But, whatever it is, we suggest you prepare for it now…before it’s too late.

Several weeks ago, if you hadn’t heard, an undisclosed rich guy enthusiastically bid up and then bought Norman Rockwell’s portrait of John Wayne for a cool $1.49 million at the 12th Annual Jackson Hole Art Auction.  According to auction coordinator Madison Webb, “There was a really positive energy in the room.”

Indeed, it takes a lot of really positive energy – and a healthy bank account – to shell out that sum of money for a painting of “The Duke.”  Still, positive energy, like good weather, can quickly turn negative.  Soon enough, we suppose, the purchaser’s excitement will retreated to a serious case of buyer’s remorse.

Of course, we could be wrong.  The buyer could have a special liking for old John Wayne movies.  Perhaps he’s a collector of Norman Rockwell paintings.  Or maybe he won the lottery and is compelled to burn through his winnings in odd and outlandish ways. Continue reading

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The Burden of the American Worker

There’s great elation flowing from the various economic bureaus down through President Trump.  They bring a message of good news.  If you haven’t heard, here in the USA, we live, work, and play in the dazzle and delight of an economy where GDP growth exceeds the unemployment rate.

The last time we drank of elation this cool and sweet was the pre-iPhone stone ages.  Back when George Dubya was President.  And when Lehman Brothers was still one of the titans of Wall Street.

Indeed, getting back to this agreeable place has been a long, hard trudge along the road to happy destiny.  But step by step, day by day, a paradise lost has been returned to Eden.  Thank you, Ben Bernanke.

By all official accounts, things have never been better.  GDP, according to the Bureau of Economic Analysis, is growing at an annual clip of 4.2 percent.  The unemployment rate, as reported by the Bureau of Labor Statistics, sits at just 3.9 percent.  But that’s not all…

Pot stocks have become the new bitcoin.  The Dow Jones Industrial Average, after a six month hiatus, is marking new all-time record highs. Continue reading

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