The next couple of months should go in economics history books. Because, near as we can figure it, the US Fed (which didn’t change rates Wednesday, and barely even changed their press release) does not have an infinite capacity to Make Up Money.
Although the official Fed Balance Sheet won’t be out until after the market closes, we have to wonder – with reports saying the Fed has piled $4-trillion into the economy) largely to buy U.S. bonds we assume – we sense the country is now like the ancient mystery school drawings; a snake swallowing its own tail.
There is some reason for hope – at least over the holidays – that the end is not yet here. However, as a thought experiment, think about what it’s like in a near-zero interest rate environment, if you were to “borrow money from yourself.”
Let’s say you have $20 in your pocket that you need that you need to pay someone.
What do you do?
You make up another $20-bucks out of thin air. How? Why simply borrow it from yourself. Now, with $40 (half of it made up) you can pay off the 20 owed and still have money left over. Whee!!! Mugabe Economics, here we is…
Why, just this morning, the Fed’s Repo Depot announced $68-billion: Golly, that’s only 681-thousand times what we made last year (*reportable). And that’s before lunch!
Only one glitch. Pretty soon, you’re up to your ass in paper, and since you’re looking like a financial nut-case (oh, and your president is being impeached and you’re in a trade war) no one with half a brain will borrow money from you.
Well, except maybe for a few folks in the EU who have negative interest rates. A whole other delusional scam: They start with $20 to lend out, offering to pay back $19…and are then surprised when no one jumps at the prospect. .
Which is why, in the meantime, the rich and powerful world-wide are using Bitcoins to skirt money laundering. Which keeps that bubble at $7,117 as of earlier this morning. Notwithstanding scams of the rich and famous, we are holding to our prediction of sub-$4,000 BTCs are ahead for 2020 because at some point, the US will have to devalue the dollar.
You see (and this is not something many people talk about) one reason for the dramatic rise in stock prices may indicate a kind of in your face inflation that no one wants to admit to.
Inflation hits everything differently, of course…which is why this morning’s Producer Price Index is so interesting. It adds some context to the odd CPI report Wedneday.
Wait! Did the man say Odd? Well, yes. You see, food at home was up only 1%, but food away from home was up something like 3.2%. The difference? Labor. The economy – overheating from too much Fed making up money – is, IMHO evidencing the possible start of wage-driven inflation.
The way I figure it, you can’t have socialist outposts upping the min-wage without impacts. The SF min-wage is $13, though San Jose is $10.30. Seattle is $9.47, while the national-federal is rate $7.25. Laughably, D.C. has a min-wage of $13.25…which is still too much for congresspersons! NYC is $15…Chicago is $10.50…
Point is, food away from home is likely impacted more recently by the evolving higher minimum wages in big cities.
All of which is a lead in to the Producer Prices just out:
“The Producer Price Index for final demand was unchanged in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices increased 0.4 percent in October and fell 0.3 percent in September. (See table A.) On an unadjusted basis, the final demand index advanced 1.1 percent for the 12 months ended in November.
After the data, Dow futures down 35.
Tomorrow, Retail Sales figures will begin to hint at future developments. Our sense is that since most people are up to their eyeballs in televisions and phones, there’s little (except replacements and upgrades of technology) left to drive the economy ahead…but that’s the kind of thing that will make 2020 a horse race.
Google Year in Search
Since you, too, seem to be one of those “data-driven people” here’s the top news search results from Google’s “Year in Search” report just out:
We’re amused that Time’s “person of the year” (the robo-climate kid) didn’t make the list. (WTG!) [Sometimes I’m just perverse, like that. ] (Like you haven’t noticed!)
Anyway,. Details of the report are over here…and we just wonder how a closing days of the Roman Empire would have looked from this level… Looks to us like a country half-full of fat,.self-important, Hollywood-centric, crazy people. Your take may differ.
Attention Earth! We pointed out earlier this week famine’s on the horizon due to global cooling implied in the latest Solar Cycle Progression out from NOAA. To show you have screwed up the planet is, consider back-to-back these two stories: “Why The Famine In South Sudan Keeps Getting Worse” and then “From Famine To Feast: Angelenos Save Animals Facing Food Shortage .” Is it just me, or are we all somehow effing crazy, anymore?
Meanwhile, as we await The Big Chill Putin Adviser Vows to Highlight Climate Activists’ Demands.
Reality Doesn’t Search well: Global cooling: 1.5-million hits. Global warming 102-million hits.
Headline du jour New Zealand volcano still seismically active. They need help figuring that out?
Look for anti-mask-wearing laws as Airport and Payment Facial Recognition Systems Fooled By Masks and Photos, Raising Security Concerns. Side issue: If a mask can hide your IRL identity, what not ban made-up web names and other identity hacks?
(While we’re at it, let’s make use of fake caller ID a felony too…damn tele-scammers…)
Bad Government: Again, the Brits go to the poll UK election 2019 underway as voters head to the polls. Government didn’t like the leave the EU vote, so they’re making the vic’s vote again. Sheesh.
No, it’s Not a Joke
Someone asked if the Peoplenomics reports on “building a time machine” were a joke…seems inquiring minds want to know.
The answer is no, it most definitely is not. Already this morning, one more necessary piece to the puzzle (which we’re not sure is solvable, BTW) was added: A Wavetek 273 programmable sweep generator. Which will make sense to subscribers who are following along. Problem is most sweep generators (simple, analog) tend to be low to high affairs and for reasons outlined in the report yesterday, we need high to low for the research….
Tech DNA trivia: Wavetek begat Acterna which became part of JDSU which became….(was it VIAV and LITE? The brain-freezes…)
Subscribers can tinker with the ideas in the report using an online sweep generator like the one over here: Starting frequency 160, ending 132, time 13, exponential, hold tone at end, and sine or triangle waveform. Start volume 100, end 40. Turns out we’re short of cantors in Texas.
OK, back to the lab…the laser scatterometer sub-problem next…not as good as the John Titor IBM parts…but odd parts do seem to be needed in these kinds of adventures.
Write when you get rich,