We will “roll backwards” this morning. There is much to think about as the Summer Doldrums begin to swirl between the ears.
Sure, a bit of tiredness this morning. But, is it a precursor (“earthquake tireds”) or just the result of taking Sunday off from my “High Photon Diet?” (Down 10-pounds, thanks for asking!)
Social Media Enables MMT?
My first observation dates back to President Truman. Famed for looking for the “One-Armed Economist.” Because, when came to policy, Truman griped (paraphrasing here) “They say on the one hand, do “X”. Then they say on the other hand, do “Y” – usually the exact opposite policy.”
Not surprising that Truman would make such a common sense observation. He was born in the “Show Me State” – in Lamar, Missouri; a small-town even by small-town standards with just 4,330-people. Middle America still had common sense, back then – 1884 to 1900 encompassing his childhood years. But, I digress.
Two Schools of Economic Thought
Economists fall into two general categories. The “neoclassical” and the “Keynesian-Institutionalist-Marxists.”
The poster boy for neoclassical types is Adam Smith. He figured investors were rational, that government had only a “rule-making role” and should stay out of markets, and that when you look closely, people tend to “Get what they deserve.”
Truth is, I’m a neoclassicist.
The other poster boys (and it’s almost a Most-Wanted list of grifters, in my view) are promoters of unrest and agitation. They want to “take and redistribute” and failing that in sufficient measure, they will cook the books by “making up money.” Or, in the case of Marx, just stealing the means of production.
Government is almighty, in their view. They self-righteously argue that people must always be cooperative in order to survive and thus, they hold being uncooperative is de facto irrationality.
Thorstein Veblen is one of the main apologists for the Institutionalist wing of such insanity. And here, a simple search for “Veblen quotes” reveals the bankruptcy of the Keynesian-Institutionalist-Marxist view:
- Conspicuous consumption of valuable goods is a means of reputability to the gentleman of leisure.
- Invention is the mother of necessity.
- The outcome of any serious research can only be to make two questions grow where only one grew before.
These Keynesian types believe in outsize, bloated, paternalistic government. And, they are the backbone of what the (not really) Federal Reserve is up to now: Destroying America’s money by simply printing up more.
It makes as much sense for you to take a 10-spot out of your wallet and mark it up with an extra zero. Yet, as the Fed is now “making up M1 (cash and equivalents) at a nearly 100% annual rate, guess what? They are managing to pass their crooked money!
BadBux: The World’s Catching On
Sadly, for the financial lefties, not everyone in the world is so stupid. There are pockets (much of the world) where “You get what you deserve” and “Money must be sound” still works. This “Everyone finishes the same” and insane levels of left-wing political correctness spew keeps sucking in the “superficial thinkers” though.
Obviously, neoclassical smart doesn’t play in America. More government – and a heavier thumb on the economic scales is what we’ve been reduced to.
The Natural Consequence? Alasdair Mcleod wrote a predictive piece over on GoldMoney recently that makes sense: Has the Fed begun the process which will collapse the dollar – and Western financial institutions along with it?
Still, why a “hyper-bubble” is still possibly in our future, the mechanics of how it could operate are coming clearly into view: Since there is no check on government largess – and facing demands for hand-outs, Congress features prominently as a co-conspirator – we see than even the sketchiest of stocks may be “bid up to the Moon” by runaway scrip printing.
In more rational times, America held (at least in theory for a while) to the idea of balanced budgets. However, Keynesian-Marxism supporters used the “just try financial heroin” approach. America was hooked since before World War II. And despite the abject failure of the Johnson Great Society to end poverty and lead equality, minorities in America have been sold a bill of goods. Welfare programs follow the Marxist model: Feed the stomach and demand followership. Rather than feeding minds and stay out of the way.
And here’s why Modern Monetary Theory gets its present “Rocket-Booster Stage” – from Social Media.
You see, at the macro level, we have two camps in America: Learn and Earn versus the Free Lunchers. And who do you suppose (not being serious about Life, work, and getting ahead) are the fodder for the lefties of the Keynesian-Veblen-Marxist sort?
Why Social Media, of course!
Social Media is the “fun house mirror” of economics. Rabble-rousers on the left have really gotten into an “ownership position” from which they set-about censoring even the president of these (once) United States. The dictatorial powers of social media need to be reined-in. Because they are starting to contaminate our thinking as a Nation. Even recent Supreme Court decisions have likely been influenced by Social.
I have been forecasting the restriction, regulation, and licensing of the Internet since writing “Broken Web” in 2012. The picture hasn’t improved. The web is still a dangerous place. Ideas are not discussed on rational grounds; everything is about volume and hysteria, nowadays.
It’s also evident – the bankruptcy of “Modern Monetary Theory” (“It’s OK to make-up money – people will just believe the fairytale…) in other stories as well.
Still “Stupid in Seattle”
One of the best articles I’ve read in a long-time is Andy Ngo’s Pulitzer-level piece this weekend in the NY Post “My terrifying five-day stay inside Seattle’s cop-free CHAZ .”
Which points out the crooked media duality of the communist-Antifa insurrection in Seattle: All fuzzy and nice by day – packaged for TV. Commies have always owned the media. But when the camera crews leave at night, the reality comes around: Clearly, Seattle is going down the Venezuelan socialist path. Enabled by an old-line Seattle liberalista/democrat family’s offspring – the present Mayor of Seattle.
The “shock list” for us? #1: Why aren’t heavily Seattle-invested companies (Microsoft and Amazon come to mind, Boeing is collapsing on its own) seeing that they are building the future on quicksand up there?
#2: We can not understand why property owners in this insurrection zone haven’t filed a class-action lawsuit (Vanna says “Big Money! Big Money!” ) for violation of “equal protection statutes” and fraud? The victims paid city taxes, right? While the cops will still go to “safe neighborhood” calls, they won’t put down Washington’s mee-too-revolutionaries print of Venezuela. It’s ridiculous.
Except, you see, it’s not. Because when the federal government does get involved in punishing rioters, here comes the press – like this story in Politico – setting the foundation for the hype-to-come that the FedGov should sit idly by while insurrectionists promote treason.
One can almost line up the Venezuelan decline with today’s ‘Merica: When oil ran into trouble in the late 1970’s, it set off a major decline. Venezuela’s per capita income declined 40% from 1978 to 2003. In our view, as companies wake up to the “uprising in Seattle” their financial well-being may lead them to leave the once “Jet City.”
The real-life insanity is also spreading into virtual realms as “Fortnite Removes Police Cars With Eye On US Race Protests: WSJ.
Now that we have our first two “deal points” out of the way, onto actual data:
CFNAI – Recovery of Sorts
The Chicago Fed National Activity Index is really not surprising:
Led by improvements in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +2.61 in May from –17.89 in April. All four broad categories of indicators used to construct the index made positive contributions in May, and all four categories increased from April. The index’s three-month moving average, CFNAI-MA3, moved up to –6.65 in May from –7.50 in April.
On June 8, 2020, the National Bureau of Economic Research determined that the U.S. economy had reached a business cycle peak in February 2020. The CFNAI-MA3 first pointed to an increasing likelihood that a recession had begun in March 2020, as initially reported in the April 20, 2020, CFNAI release.
Which leaves the market looking like this – based on early futures: Think we’ll go up or down from here?
Dow futures, bought up with some of that “FFM” (Free Fed Money) leave us wondering when market operators will again use CV-19 to drive down markets as the possibility of a Second Lockdown are still out there.
Here’s one that could blow up – begging the question about whether the Global Trade Wars are still on: With Ties In The Balance, EU And China Hold Tense Summit.
How to deal with Antifa? Russia Jails 2 Anti-Fascists, Closing Terror Case Plagued by Torture Claims.
Say, wasn’t Roosevelt a democrat? New York City To Remove Roosevelt Statue Over Racism Concerns.
And while people may not be stashing “cash” (because it is only paper, after all) they may see more value in metal stashing. See COVID-Crunch? Fed Begins Rationing Coins As Americans Horde Cash for more details.
Cloudy week ahead here in the Outback...kids in the PNW report it’s back to April-type weather up there. But we can’t help but notice “Arctic Temperatures Hit Record High in Russia Amid Heat Wave.”
Is there a Pole shift coming?
Write when you get rich,