The Fed and Obama’s MinWage

Most people still don’t get it.  Let me sniff the white board marker a bit and lay it out for you.

There are lots of stories around about the future of the minimum wage lately.  Take this one which appears on the Dallas News site about what it could do for your city.

Meantime, “Sky is Falling!” Media is warning of $30 pizzas if the minimum wage goes up and yada, yada, yada.

Time for a little economic reality:  If you don’t love wage hikes, you must love economic Depressions.

The big game, as least as it stitches together from out here in the woods, goes something like this:

    • Bang on interest rates to get them to come down (check, done.)
    • When rates come down, hold them there long enough to refinance the national debt at something approaching 2% interest, or less (in process, check.)
    • Once the rates are down on the national debt, raise the minimum wage for some federal workers and promote the bejeezus out of it so a few cities will adopt it.  (in process, check.)
    • Now, begin to raise central bank (federal reserve) interest rates. (next month)
    • The generally rise of wages will offset the cost of living increases that will come with the Fed rise (we’ll see, but this is why crack head economics is such a fun sport).
    • As wage pressures rise, bond yields will have to rise and Net Present Values of bonds will decline (see Coping section rant to follow).
    • The money from rising wages coupled with disintermediation from bonds, will drive a stock market bubble.
    • When the stock market bubble that no one expects takes place, cash in the gains the insiders will have made and go massively short.
    • Then collapse the market wiping out the savers who made it past 2009’s collapse.
    • Then, buy up all the collapsed assets for pennies on the dollar (Ure’s truly may upgrade his home and airplane in here) and then start a march to War.
    • The war planning and build out, along with robotic frenzy, and not to mention the already existing analog to the old Civilian  Conservation Corp (which is now AmeriCorps) will be well ensconced and ready to put people to work on infrastructure.  Just like we “got it on the cheap” during the last Depression, we will get thing “on the cheap” in the Depression of 2018/

    In  the meantime, the financial charlatans will mislead everyone, which will help reduce assets of average Americans because we know that a good depression involves two things:

    You can’t have a Depression that simply destroys debt.  It will – by definition – destroy savings as well.  Who do you think bankrolls debt, if not savers?

    You see, this is the big picture stuff that no one likes to talk about because it’s really all in your face and the scare talk about the minimum wage is just another way to keep bond values high and prevent the flushing of large NPV’s into things like R&D, Research, Infrastructure, and long-term  plant and equipment – like the stuff we will need for the 2025 wars.

    If you want to be scared about this fall, you’re welcome to be.  In fact, thank you.

    Allow me to introduce myself.

    My name is “The Counterparty.”

    Housing Data

    Hot off the press release:

    BUILDING PERMITS
    Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,119,000.  This is 16.3 percent (±1.1%) below the revised June rate of 1,337,000, but is 7.5 percent (±1.4%) above the July 2014 estimate of 1,041,000.
    Single-family authorizations in July were at a rate of 679,000; this is 1.9 percent (±1.0%) below the revised June figure of 692,000.  Authorizations of units in buildings with five units or more were at a rate of 412,000 in July.
    HOUSING STARTS Privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,206,000.  This is 0.2 percent (±15.2%)* above the revised June estimate of 1,204,000 and is 10.1 percent (±10.8%)* above the July 2014 rate of 1,095,000.
    Single-family housing starts in July were at a rate of 782,000; this is 12.8 percent (±9.8%) above the revised June figure of 693,000.  The July rate for units in buildings with five units or more was 413,000.
    HOUSING COMPLETIONS Privately-owned housing completions in July were at a seasonally adjusted annual rate of 987,000.  This is 2.4 percent (±13.4%)* above the revised June estimate of 964,000 and is 14.6 percent (±11.5%) above the July 2014 rate of 861,000.

    Single-family housing completions in July were at a rate of 627,000; this is 1.4 percent (±10.9%)* below the revised June rate of 636,000.  The July rate for units in buildings with five units or more was 350,000.

    Hardly the end of the world, eh?

    Tomorrow on the Peoplenomics side, we will look at container counts through ports and other real indicators of what’s going on in ‘Merica. 

    Soft Markets

    Chinese Stocks fell more than 6% overnight.  You can pencil in your own Elliott count over here, but looks like a….naw, you wouldn’t care.

    CPI and Fed Minutes tomorrow. 

    Dow futures down 50’ish and S&P futures down 5’ish which, not to repeat myself, is not a world ender.

    Things That Matter Little

    Yeah, makes for flashy television coverage but tell me again how the Deadly Shrine Blast in Thailand matters to our economic outlook?

    A Question for My Bro-in-Law

    Retired Ranger and SF’er Panama Bates will get a question as soon as he drops by this morning.

    It’ll go something like this:  “Panama you see where two women are graduating Ranger School?  Can I reference them on my site as the real Darby Queens?

    Eight ladies started the class.  Two Rangers completing.

    Meantime, “terrifying” doesn’t exactly describe the Boston Dynamics robot described over here.  Just shoot the extension cord.  D’uh.

    Political Correctness Dept.

    If you’re a gay couple thinking of eloping to Kentucky, seems like that might be a little premature just yet as things are in legal limbo.

    Why a gay couple would chose Kentucky baffles me.  Seriously, Kentucky?   Mitch McConnell country?  Hello?

    Comments

    The Fed and Obama’s MinWage — 5 Comments

    1. Every thing is manipulated this guy is sharp

      Former Assistant Treasury Secretary Dr. Paul Craig Roberts has repeatedly called the global economy a “house of cards.” Currently, demand for physical gold and silver is spiking even though prices are falling. What does this mean? Dr. Roberts says, “Some people clearly understand it, and that’s why the demand of gold and silver is so high that it often cannot be met. Right now, for example, the U.S. Mint has suspended all sales of Silver Eagles simply because they cannot get enough silver to manufacture the coins to meet the demand. We see that the gold trusts are being depleted. We see extraordinary amounts of withdrawals from the Shanghai Gold Exchange. So, we know the demand for gold and silver is very, very high. Some people know that, but the financial press operates to disguise what’s going on. The financial press says the reason the demand for coins is so high is the price is falling. What made the price fall? Only two things can cause the price of gold to fall. One has to be a great increase in supplies . . . but that’s not what’s happening it’s the opposite. . . . The only other thing that could cause the price to fall is a massive decrease in demand. We are seeing a massive increase in demand. The paper market is driving down the price and it’s fraudulent. All these stories are coming out in the press that gold is not money. It’s a pet rock. . . .”

      https://www.youtube.com/watch?v=Ru9mtz9-3ls

      • Gold is simply a store of wealth. It really is a dead asset much like cash in the bank if it were not being debased.

        Actually owning something that creates wealth is a far better investment option. Gold is a great store, but that is all it is.

    2. Dude, as much as we would like to rely on old perceptions of what a “country” place Kentucky ought to be, it has not been spared the wider predilections of society in general. Not going into whether it’s a good thing or a bad thing – it is what it is. We are just as screwed up as everyone else, only our taxes aren’t quite as high as everyone else. Regardless of which side you fall on this, the clerk is wrong in so many ways – it’s her job to issue licenses based on State Statute, not personal belief. In fact, to carry that thought just a little further, we have based our constitution on the federal government’s, so there is a separation of church and state. If she wants the job she needs to do it, otherwise go home and pray for another job that pays as well and comes with benefits.

    3. “…current class started in April with 381 men and 19 women…By the end of the 62-day course, only 94 men and two women met all the requirements.” Source CNN

      Not bad numbers I’d say for the women who most likely had to deal with a lot of testosterone fulled stupid during the training. As female Army vet, I am glad they are letting women finally enter Ranger school. Would have loved to try in my youth. My assumption since the time I served in the early 80’s is that the narrow minded leaders are afraid of just how good a female combat soldier would be when fighting for a legitimate cause. Sure may not be able to carry as much weight easily BUT the true test is the adaptability, courage, intelligence, fighting skill and endurance. Look at the Kurdish women fighting, deadly and still feminine! I think the closed minded male leaders are afraid of losing their “power” if too many women were trained and legitimately take their roles.

    4. A couple of thoughts –

      So you don’t think/believe that ‘unrest’ in south-east Asia doesn’t affect the rest of the world (even if you restrict it to economics)? Regardless of me knowing the local situation in the region (I don’t), I do know that the area – Thailand, Cambodia, and a most memorable country – Vietnam – are affected greatly by the goings-on in China – which I think/believe are of interest to you. From small beginnings do great events arise . . .

      Which brings me to Kentucky and a certain Mrs. Davis – who I have read was elected to her position in the local county government and thus cannot be easily removed from her post. Her objections are based on the theory that it is her (God-given) right to ignore instructions issued by the governor of Kentucky since she disagrees personally with the policy.

      Since she seems determined to raise her objection to the level of civil disobedience – as an elected official she should be willing to accept the consequences – while impeachment is a long drawn out process – there are ‘other remedies’ such as fines, lawsuits, and prison – not to mention intense examination of how she conducts ‘business’. (She has relatives working for her – that lovely term ‘nepotism’ comes to mind.)

      She doesn’t have the ‘gravitas’ of King Canute telling the ocean not to advance – but she will have the same result of the sea advancing regardless.