Make-Up Money Monday

Reinforced with a modest plate of leftover meatloaf and a scrambled egg, Mr. High Protein Brain is eyeing the EU (Ure-Up around here) with just a tab more than his usual amount of skepticism this morning.

Do they really believe that Making Up Money (quantitative pleasing) really constitutes sound economic policy?

Here’s where we are – from a skeptics point of view:

First the mechanics:  The EU will be making up $60-billion a month until the trillion Euro mark.

The effects of this ought to be similar to here:  Domestic markets (e.g. within the EU) should appear to go up in price to locals because there will now be more money around the system chasing after this, that, and what-have-you.

Things made in Europe should drop slightly in world markets because this should drop the value of the Eurodollar (making up money weakens it).

And this means the US dollar will go where?  (Green start for “UP, George, because all currency values are relative and it’s how the world is ruled and why markets are entraining globally, as you’ve been saying for years…”)

Right.

So, gold took some of its hit on Friday, down about $30 an ounce.

Also, the Dow didn’t go down Friday because America is run by scoundrels and crooks – that hasn’t changed.  It just takes fewer of those upgraded dollars to buy the Dow so it looks like the market went down. 

And in Ure-Up this morning, the markets are actually down because people on The Continent aren’t completely stupid, although that’s a close call.

This leaves the US markets to be about flat to up a tiny bit today, as a dead cat bounce from Friday comes along.

Having a rain soaked cat sitting on my foot reminds me the world of finance is likely to purr along for a while longer, but keep an eye on April 26th as the next “likely panic and collapse” date since that will be 55-days from the S&P’s most recent high on March 2 (closing basis).

Of course, if the US Fed announces a further round of stupidity easy money, then our Dow and S&P will appear to go up, since it will then take more of our watered down money to buy the indices.

You see, no matter how they try to bury economic reality, it still leaks.  As of this morning $1 worth of goods purchased in 1913 will cost you $24.26.  That’s according to the Minneapolis Fed inflation calculator over here (right side of the page).

That means two things.

First, it means that the dollar has only 4.123 cents of purchasing power compared with 1913.

Second, it means that economists trip over one another trying to say that it’s somehow necessary because we need to maintain the economy for political reasons.  The only Federal Reserve requirements are for maximum employment and growth.  There’s no mention of money holding any purchasing power levels, whatsoever.

It doesn’t happen quickly.  Last year (relative to 1913) a dollar’s worth of goods cost $23.96, so the rate of price inflation (money watering) works out to 1.2%.

It’s the biggest secret in finance (Money loses its purchasing power) and with it the biggest lie (Prices go up).

Investing is really very simple, once you’re onto it.  And somewhere between terrible and incomprehensible  if you’re not.

A “Penny saved is a penny earned” works only in  a fixed-exchange currency regimen.  And that train pulled out of the station when Nixon closed the gold window at the Fed.

The Nixon Shock was a series of economic measures undertaken by United States President Richard Nixon in 1971, the most significant of which was the unilateral cancellation of the direct convertibility of the United States dollar to gold.

While Nixon’s actions did not formally abolish the existing Bretton Woods system of international financial exchange, the suspension of one of its key components effectively rendered the Bretton Woods system inoperable. While Nixon publicly stated his intention to resume direct convertibility of the dollar after reforms to the Bretton Woods system had been implemented, all attempts at reform proved unsuccessful. By 1973, the Bretton Woods system was replaced de facto by a regime based on freely floating fiat currencies that remains in place to the present day.

So not only did republicans screw the nation’s money over (and set the stage of China’s growth, outsourcing, and dumping-ground for US Treasuries, which are being used back on us to buy real estate and free trade zones in places like Idaho, but they also still haven’t repented for Watergate, Kissinger and Vietnam.

It’s OK, though.  Democrats have soiled the nation’s highest office just as thoroughly, so if you’re like me – Equal Opportunity Disgusted – welcome to another Monday.

Speaking of Dems and Disgusted

We might as well have George’s Daily Clinton bash about here.  Darrell Issa is wagging about how she might face criminal charges over her self-censoring of emails

The head of the Benghazi probe says there are huge gaps in the email records, as well.. but you’d expect that, just based on party affiliation.  For now, looks like dueling sock puppets of the ultra-rich trying to distract the public.

Is O’Malley Any Better?

Not if he doesn’t cowboy up on Hillary’s emails.  But, as the NY Times notes, he hasn’t gotten into it yet.  Which means another politicians making noises like “Rarrk, puck, puck, puck…” (or however chicken spell their language.)

Reader aren’t mincing on O’Malley:  Several comments in our discussion area have called him a terrible taxer in Maryland during his guv daze.

Although just chatting with you about it, I’ve concluded that the Democrats are the “Four-Oh Party:”

“Obama, Oh-Hillary, O’Malley, Oh shit!”

The republicorps meantime would be the 3-R Party:  “Rich, Richer, Richest.”

Hemlock or Heroin, ain’t it?

Buying Yourself

I’ve always liked companies that buy-back their own shares.  Reason?  Heads of the company look around, see what is the best possible use of a little spare change and do what?

In the case of GM, that would be buying themselves back to raise shareholder values.

Still, driving our 10-year old Lexus, I just can’t quite get myself excited about this buyback until GM comes up with a better ride at a better price-point with longer-term values…and that might mean departing from the 100,000 miles or disposable model.  True, they are making progress, but want to match a 2005 Malibu against a 2005 Lexus?

Buying a car is like getting married…both should be taken for serious test drives and long-term results projected.  (I’ll get slammed for that, I’m just sure; truth is my car-picking and wife-picking are about equal…I’ll let you ponder that, but I did own a Ford Falcon and a Maverick Grabber, lol.  Maybe we do get smarter as we age…on all fronts.).

To Market, To Market

Thanks to Daylight Time, are you late for work?  You can sleep in until Thursday, because no big data until then – Retail Sales are due then.

The Baltic Dry Index is still low at 565.

Minutes before posting the futures still flat…and so’s the rest of today by the look of it.

Friday’s drop in Consumer Debt (-1.2% in non-revolving and +4.2% in credit cards) no doubt had something to do with the drop in markets Friday.  Watch the proprietary school stocks…they might keep dropping a good bit…

Recycled News

MH-370 missing.

Adventures of the Global Caliphate

While the rest of the world continues in denial, ISIS has executed another batch of oil guards in Libya.  Check the map, see where Iraq is and where is Libya?  Repeat after me: “Global Caliphate.”

Overland from Mosul to Libya is about 1,200 miles, or about as far as from NYC to Wichita, Kansas.