How Beijing Uses Fake Money to Cannibalize the U.S. Transit Market

One of the more remarkable achievements of fake money creation is that it distorts and disfigures the world in odd and uncanny ways.  Dow (not quite) 27,000.  Million dollar shacks.  Over $13 trillion in subzero-yielding debt.

You name it.  Any and every disfiguration is possible with enough fake money.

However, when it comes to the full range of ways fake money distorts the economic landscape, asset price inflation is merely a cheap facade.  The real, mega disfigurations pile up in the arena of international trade.  What’s more, they extend well beyond a gaping trade imbalance.

Currency wars, competitive devaluations, and the race to the bottom are all hazards formed out of the confluence of fake money, foreign exchange markets, and international trade.  So, too, the impetus for tit for tat trade tariffs and trade wars ties back to the deceit and deception of fake money.  Still, these facets aren’t the half of it.

To better understand what exactly fake money has wrought, a brief detour is in order.  You see, a world under the influence of fake money is a strange and curious place.  The clearest path between two points is not always a straight line. Continue reading

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Feeling the Heat of a Civilization on the Downside

Today we begin with a list.  A partial list.  And in no particular order…

Angela Merkel.  Donald Tusk.  Mario Draghi.  Donald Trump.  Jerome Powell.  Shinzo Abe.  Haruhiko Kuroda.  Theresa May.  Boris Johnson.  Mark Carney.  Xi Jinping.  Emmanuel Macron.  Vladimir Putin.  Justin Trudeau.  Juan Trump.  And many, many more…

These central planners – though they may not know it – are facing a no-win situation.  They’ve extrapolated the past and are attempting to preserve the status quo into the future.  Yet their efforts to perpetuate the upward growth curve of their countries and unions are useless against the relentless turn of history.

The political, financial, economic, and social foundations that have been in place over the last 75 years – and perhaps, over the last 220 years – are breaking down.  And no policy directive, no interest rate adjustment, no trade tariff, no five year plan, no extraordinary measures, no green new deal, and no technocratic prevarication is going to stop it.  Big Government doesn’t stand a chance. Continue reading

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Fed Chair Powell’s Plan to Pickle the Economy

The Dow Jones Industrial Average made another concerted run at the elusive 27,000 milestone over the last several weeks.  But, as of this writing, the index has stalled out short of this psychosomatic barrier.  By our estimation, this is for the best.

While not always apparent, the stock market generally maintains a loose connection to the underlying economy.  Over long multi-decade periods, as measured by the price-to-earnings (P/E) ratio, it will undulate between stages where it’s cheap and stages where it’s dear.  Eventually, however, the stock market reverts towards its mean P/E ratio – always overshooting and undershooting as it cycles about.

One of the unintended consequences of fiscal and monetary intervention is that it distorts this relationship.  Stimulus intended to juice the economy has the effect of juicing financial markets.  Sometimes these inflationary policies have the effect of completely disconnecting the stock market from the economy. Continue reading

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Elizabeth Warren’s Plan to Bamboozle American Voters

The run-up to the presidential primaries offers a funhouse reflection of American life.  Presidential hopefuls, hacks, and has-beens turn to focus groups to discover what they think the American electorate wants.  Then they distill it down to hollow bumper stickers.  After that, they pump their fists and reflect it back with mindless repetition.

Change We Can Believe In.  Feel the Bern.  Make America Great Again.  Sí Se Puede.  Fighting for Us.  Compassionate Conservatism.  A Stronger America.  Ross for Boss.  Morning in America.  Not Just Peanuts.  Nixon’s the One.  Dean Scream.  And much, much, more…

The mantras are both idiotic and comical.  They provide political lemmings with something to believe in.  They also provide incisive observers with a unique prism into the menaces of tomorrow.

For example, presidential candidate Elizabeth Warren’s slogan is: “Warren Has a Plan for That.”  An official t-shirt, adorned with this slogan, will set you back just $30 bucks.  And you can pick up a slogan emblazoned tote bag for $35.  What a bargain! Continue reading

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