Walking the Path of Self Destruction

Central planners have destroyed the future.  Today we walk the path of their self-destruction…

If you recall, fiscal and monetary policies employed to counter the effects of government mandated lockdowns were supposed to stimulate a self-sustaining economic boom.  Instead, these policies of extreme intervention have stimulated chaos and destruction.

The official inflation rate, as measured by the government’s consumer price index (CPI), is rising at an annualized clip of 5.4 percent.  But that’s nothing.  Alternative inflation rates, which better reflect what consumers are actually experiencing, are double and triple the official CPI.

At the same time, the economy appears to be slowing down…

According to the Atlanta Fed’s GDPNow forecasting model, as of October 19, real gross domestic product (GDP) growth in the third quarter of 2021 is estimated to be just 0.5 percent.  This is down from 1.2 percent on October 15, 6 percent in late August, and 14 percent in May. Continue reading

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Are You Prepared for the Mass Repricing of Goods and Services?

Rising consumer price inflation is not going away.  This, of course, is counter to the “transitory” argument made by Federal Reserve Chairman Jerome Powell earlier this year.

Powell’s cohort, Atlanta Fed President Raphael Bostic, recently admitted inflation is not transitory.  This admission comes with assurances the Fed will properly manage it.  We have some reservations.

The effects of rising consumer prices range far and wide.  For one, the pinch rising prices put on consumers is extraordinarily disruptive.  It acts like a hefty tax…eroding family budgets that are already stretched.  In this ongoing staglation, personal income gains lag far behind rising consumer prices.

Industrial materials and consumer goods companies also feel the pinch.  They can pass on some rising prices to consumers.  They can also absorb through lower profit margins some short term price increases.  But there are natural limits to what price increases can be absorbed and passed along. Continue reading

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How to Fight the Investment Enemies Now Mobilizing

Default averted!

That was the dispatch made by the popular press on Thursday following word there would be a short-term debt limit extension.  But was a default really averted?

Was a default averted when Nixon closed the gold window and put the world on an irredeemable paper standard?

Naturally, Wall Street didn’t bother considering the long-term effects of Washington’s policies of infinite debt – or the soft inflationary default Congress is engineering.  Instead, Wall Street did what it loves to do most; it bid up the major stock market indexes.

What a difference a week makes.  September may have been painful for stocks.  But the first week of October has been all pleasure.

Once again, Washington has a plan to keep the money spigots flowing.  It’s roughly the same plan that’s been in operation for the last 50 years.  The playbook is real simple: kick the can down the road.

Wall Street generally favors this plan.  More debt, both public and private, has loosely translated to higher stock market indexes.  And higher stock prices make everyone believe they’re getting rich. Continue reading

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Winnie the Pooh’s Adventures In Fairyland

Up until the Evergrande Group began stiffing creditors, Xi Jinping had it made.  But being a communist dictator is serious business.  And when the Ponzi finance structure underlying your country’s second largest property developer begins cascading down it’s no laughing matter.

One of the gravest moments for any communist dictator is when his nation’s fortunes deviate from the course of the five year plans put in place to rule over it.  Playing god to 1.4 billion people only halfway works, so long as the people’s reality somewhat parallels the official communist party line.  Otherwise, force and fear are required to maintain the lies.

“A man’s heart deviseth his way: but the Lord directeth his steps,” noted King Solomon (Proverbs 16:9).  The good Lord, in heaven above and on the earth beneath, has a keen sense of humor; particularly, when serving up a slice of humble pie.

Xi Jinping, through happy accident, timed his entry into the world stage most perfectly.  A 20 year economic boom had taken the People’s Republic of China to a new place of global prominence.  Yet rather than basking in the glory of his predecessors successes, Xi took to flexing his muscles abroad, and censoring and surveilling his citizens at home. Continue reading

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