It was more of the same this weekend: The major money center banks of the world and the monetary policy folks getting together at Jackson Hole Wyoming. A fitting place where the world Hole figured prominently has to be one of the finest winks out there from Universe.
That aside – and while the banks were floating ideas like having monetary authorities buy up bonds (to put their interest rates up)…the real useful (and dare I say actionable) part of the Monetary Symposium was the speech and this roadmap present by Fed head Janet Yellen:
As any Fool can see,, the divergence into the future is nothing short of remarkable. Worse, if the actual interest rates follow along the lower edge of this ranging forecast, a lot of terrible thing begin to happen.
Terribly did I say? Let me give you a little taste:
- Insurance companies could begin to blow up. That’s because they typically have invested in real estate (large commercial buildings and such) and in case you have missed it, there is a major decline underway in the amount of Class A space really needed to house our hollowed-out economy.
- Not only do insurance companies face the long-term real estate problem, but they could have large outflows coming along at a time when they would be hard-pressed to make ends meet. A big natural disaster or major gray-killer (mutant vir4us of some kind) could bring settlement demands on Life policies.
- Then there are the money-center banks. While we still hold there is a 50-75% chance of a blow-off top in stocks to come (since hot money has to go somewhere and Europe and Asia aren’t it), the money center boyz don’t really add much in the way of value. With interest rates depressed (and you notice where the new factories are being built *not here in the USA!) the money center banks have run off to their old (very bad) habit of trying to make enough money to keep Empires afloat by playing craps…no make that derivatives. The economic problems of America started when interstate banking was re-allowed and it’s something of a no-no to mention that fact.
- Since money center banks have big customers, they are called SIFIs – Strategically Important Financial Institutions. These institutions claim Too Big To Fail (TBTF) status and no one to date has been willing to call their bluff.
Now against this background, let’s see how the Fed is trying to cope: They are printing huge amounts of money – some of which is leaking into the banking system.
How much is :huge amounts?” Let’s look at the present print rate as disclosed in the Fed H.6 Money Stocks report:
If you have had enough coffee, you might be wondering “Gee, with M2 going up 7.5^ an annualized, where is the inflation? I mean prices are only up 2% or so…”
And the right question that would be. The FACT is that the Fed is making up money because we are already in a periodical long wave economic depression.
It just doesn’t show unless you know where to look.
So let’s do that: What are some of the B IG SIGNS that we are already in a Greater Depression and are just too dumb to admit it to ourselves yet?
- Secular Politics: The election this year casts Donald Trump as Herbert Hoover. And on the born-again Socialist side, Hillary Clinton is working toward being the modern analog to Roosevelt.
- Long Term Monetary Collapse, Bond Bubble. Go ahead, look at the long term chart of the 10-year bond if you doubt me. We have been in falling rates since the mid 1980’s…so half of an extended economic long wave more than 30-years now.
- Collapse of Inflation Expectations. Gold and silver should be at record highs. But they are not simply because expectations of future inflation are so low.
- Concentration of Power in the SIFIs. There will likely come a bail-in where all US savers with more than XXX dollars will have a portion of it impounded to pay down the national debt. That’s because when the government has to pay real rates again (something over 3% which is still absurdly low by historical levels) we will be screwed into bankruptcy.
- The Modern Civilian Conservation Corps is still unrecognized. That’s the AmeriCorps side of National Community Service. It doesn’t pay a lot, but it does give people some income and does a bit of good in local communities. The parallels to the Civilian Conservation Corps of the 1930’s or the parallel Works Progress Administration (WPA) is remarkable. Government doesn’t make a big deal about these programs today because it’s another tip-off we’re in a Depression that the Fed is desperately trying to “paper our way through.”
- Job Sharing Is Here: Again, people are not connecting the dots with this Great Depression phenomena. But it was true back then that there wasn’t enough work to go around. So lots of 40 hour jobs were turned into 20-hour gigs. Fast forward to this morning and we are reading how Amazon is testing the 30-hour work week for some of its tech staff. Under emphasized in most reports: Amazon has 60,000+ robots picking stock and such. But the robots are coming and they will blow up the economy.
So how’s the papering-over doing?
OMFG…horribly. Let’s look at the Velocity of Money at M2 to find out, shall we? Think of this the same way you would look at inventory turnover in a manufacturing company.
Turning inventory 10 times a year would be great. Turn it less than 3 times a year…and lower, well, then it’s a train wreck. Hold up the train wreck slide, would’jah?
So that’s what we are waking up to this morning.
But it is not all bad news… in fact, I MAY have figured out the one place that would be bail-in resistant for when the time comes. More research to do, though, but if it comes together, it will be in the Wednesday Peoplenomics.com report.
We now return you to the regularly scheduler morning drivel flow with the remi8nder from the late Marty Zweig “:Never fight the Fed!” Amen, Mary…sleep well.
If you haven’t read Martin Zweig’s winning on Wall Street your financial education has a big hole in it.
Problem is that these days it’s easier to whine about things than figure out the game and go make some money.
Mylan is Still Wrong
When I read how Mylan to Launch Generic Version of EpiPen for $300 I think to myself this is a piss-poor response to public outrage and holding people’s health hostage. Seems to me the cost should be about what EpiPens go for in Canada or the third world. One the order of under $100.
This is Mylan pouring Astoglide on consumers.
Marketing 602 Class Problem: Pretend you are Mylan. What is the maximum price reduction needed to “sell” to the FDA and congressional types and still keep very good margins on the product?
Especially since Mylan has already bought the key deciders.
Oh, really? You don’t think they are bought?
Yes, as Pogo might have put it: :We is haplessly f*cked when we can’t tell the Truth, most especially to ourselfs.”
NEWS FLASH: A political contribution is just a bribe with its clothes on. WhoTF doesn’t get this?
But you see, it will get Mylan off the Hook and Hillary into the Oval Office. We are soooo stoopid…Let me make you some fluoridated coffee…
Another Obama Lie
The US will never give up stewardship of the Internet. Promised you-know-who.
Remember that one? LOL.
Add it to the scrap pile of President Useless which includes a Peace Prize (ask Syria about that one), Choose Your Own Doctor and…oh, you know the list. Too long for this morning…
How much more damage c an he do between now and January?
Even the Wall Street Journal is calling it an “Internet Giveaway to the U.N.”
Say, what happened to protect America from all enemies foreign and domestic, huh?
See the NY Post for this one: “Anthony Weiner sexted busty brunette while his son was in bed with him.”
Meantime, we keep asking where are Huma’s and Cheryl Mills tax returns? Where are the med records?
Apparently, anyone with lots of money (or more than me) must be a psychopath? Not that I doubt it, mind you. Why just look at that other George fellow…psychopath there, fo sho’…
March of Domestic Terrorism
When is anyone going to call out Black Lives Matter as a domestic terrorism group? When I read Black Lives Matter Vows to Destroy the “Nuclear Family” I gotta ask where is the Department of Just Us and the Lynch Mob?
From the Nat. Wx Svc: The National Hurricane Center has issued a Tropical Storm Watch for parts of the North Carolina coast. NHC is also monitoring Tropical Depression 9, which is entering the Gulf of Mexico. Read More >
(That pop-up storm here at the ranch yesterday had nothing to do with my experiments in the lab…honest! Timing was coincidental!)
Personal Income and Expense (rewritten from Grimm):
Personal income increased $71.6 billion (0.4 percent) in July according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $60.1 billion (0.4 percent) and personal consumption expenditures (PCE) increased $42.0 billion (0.3 percent).
But what about Personal Savings?
Personal outlays increased $41.6 billion in July. Personal saving was $794.7 billion in July and the personal saving rate, personal saving as a percentage of disposable personal income, was 5.7 percent.
`Personal saving is personal income less personal outlays and personal current taxes.
Personal outlays is the sum of PCE, personal interest payments, and personal current transfer payments.
But every time I try to tie back the numbers to something that balances, it blows up. So either I’m no good at math or the numbers are….naw, must be my math skills.
Meantime, the Futures point to a modest increase at the open. A fine time to enter a short side trade, I’m thinking…we shall see.