Market Fails: Trump to Reprise Hoover? CPI Holds

Sure, Florida is an awful mess this morning in the wake of the hurricane hit Wednesday.  The storm is moving off to the northeast, vastly diminished.

But we may have a bigger problem:  The Market.  Which blew through 800+ points yesterday for reasons that aren’t clear-enough to be apparent to the MSM.

As you know, our view around here has been – since 1999, or thereabouts, that America is now “in the Zone” of a Second (and as my deflationist pal Jas calls it, the Greater) Depression.

President Trump is calling-out the Federal Reserve for raising – and planning to raise – too much, too fast.

We have two charts (courtesy of our subscribers who keep the lights on around here) explain recent economic history very clearly.

When this site was founded in the late 1990’s, we forecast rather urgently in September of 1999 that we expected a phenomenon we called “Death By Dot Coms.”  That forecast, unfortunately, came to pass over the following three years as the markets peaked in the spring of 2000/Y2K and then (aided by “terrorism”) declined into 2003.  Look at the left-hand side of this chart and you can see how things rolled out:

(Due to time constraints of publishing to a schedule, I didn’t change the 24,444 number to this morning’s earlier reading of 23,548 – but you get the idea!)

This chart reveals several other things.  The first of which is that when the country really was on the verge of slipping into a long wave economic collapse, no other sites were mentioning the “peculiarity” and the “coincidence” of  massive terrorism coming along at 9/11/2001 which served multiple purposes covering up the Tech Wreck, but three mattered the most:

  • It covered-up (by news distraction) the loss of $4 to $8-trillion in American’s net worth lost to the Internet “Tech Wreck.”
  • It provided for an “instant mass employment program” in the form of TSA and massive “security state” programs – most of which continue to this day…
  • And it assured with has a “salable proposition” for storming into the Middle East – Again.

We all know wars don’t last forever (except in Afghanistan, perhaps) so in order to get the secular economy going again, the Federal Reserve looked “the other way” and began to orchestrate (via Alan Greenspan’s Housing Bubble) the No Doc Loan fiasco that ultimately blew-up in the middle of the above chart.

Which, by the way, is based on an Aggregate of three primary US markets:  The Dow, the S&P 500, and the NASDAQ.  Conventional (stock-peddler) hype doesn’t use the more-honest assumption that people might have funds in all three.  Rather, in the wake of 2003, the better-performing indices were cited as reasons to invest.

Back at the middle of the chart, then:  What the Fed did was to “make up money” to buy-back debt from over-extended banks when the Housing bubble collapsed in 2008-2011.  Notice, though, toward the right-hand side of the chart, how the markets sailed effortlessly higher.

Ever wonder why?

Because money was cheap.  We had made up bundles (to buy up the bad debt from housing) and a good bit of that “leaked” into the financial markets.

Which brings us to the right-hand side of the chart which suggests that the market has peaked and the way is now clear to collapse.

Frankly, I think we may have one more move up.  The reason is in my read of history, when I line up this “aggregate” approach to markets since 2009 – when the Gigantic Stealth Inflation” began with the market lows of 1920-1921, here’s how the comparison runs:

As we look at those two parallel red lines in the middle of the circled area, there’s a case that we could end the decline – down only somewhat further from here.  Then, a real smoker of a rally into perhaps May of next year.  But then – say in the fall of 2019 – we come to the area where we will have rhymed about all that history suggests and down we will go.

There are a number of ways this could play out.  An alternative is we don’t bounce for a wave ii rally in here, and the world simply ends going into the spring.  We don’t think that’s too likely.

Yes, the hurricane has made a terrible mess.  And yes,, maybe some of the decline was insurance companies unloading some assets to pay for rebuilding to come.

But, in the end, the great strength of capitalism is that it’s dandy as an economic growth engine.  Nothing has ever beaten it, despite what the digital Bolsheviks may claim about their beloved (corrupt, broken, failed) socialism.  Anyone who can’t see through their BS and remember the Soviet Collapse and how Venezuela is now third-world, should leave political commentary to the grown-ups with wider perspective.

Whichever way it rolls (on down from here) or we get that one “last bite of the apple” and run up; into next year, the longer view is running its course.

My colleague and friend Ehor and I worked out a model in early 2001  that posited that the long wave of secular economics is driven by something called “currency debasement.”

The idea was – and it’s still valid – that ANY fiat currency will, over time, bec ome debt-logged to the point where people lose faith in the money.  To be sure, making up digital tulips (in the form of Bitcoin and klingons) doesn’t argue so much that digital credits can be an honest alternative, so much as they reveal a deepening distrust of the fiat Federal Reserve Notes.

In fact, this morning when I went to the Minneapolis Fed Inflation Calculator (applet bottom right of that page) I noted that $1 worth of goods in 1913 would today based on “inflation” cost $25.35.

Well, it doesn’t take a genius to divide $25.35 into $1 and announce for the world to read that the current dollar has just 3.94477317554241 percent of its 1913 value.

While many, particularly liberals, admire the economic hyperbole of John Maynard Keynes who played a starring roll in the leftovers from the first market Crash, in our view he was a liar and sell-out to the Powers That Be for the following reason:

He crookedly held that Inflation was the “general rise of prices.”  THAT is misleading.

Anyone with even basic economic sense knows it to be a half-truth at best.  The more HONEST statement would be “Inflation is the result of the government loading accumulated debt into a fiat (made-up) currency.  Such that prices seem to go up because is take more fiat/scrip to buy the same goods as money’s purchasing power is watered-down.

Notwithstanding this clear view of how real inflation is money’s purchasing power being axe-murdered with more carnage to come due to excessive spending by a totally inept and corrupt Congress, which – not Trump – writes and passes the Federal Budget –  we still have to sort through how to move from here.

We will get into this as we do twice weekly for our Peoplenomics subscribers ($40/bucks a year) on Saturday.

In the meantime, the parallels with the 1920’s continue to astound us.  No, it’s not just the sexual minorities (real and manufactured) that echo the 1920’s flappers.  Nor is it the harmony between Prohibition and the cannabis revolution of today.

It’s so many other things, as well.  Here’s a snip from a March 2018 Peoplenomics report to give you a better sense of how the eras are rhyming:  (Peoplenomics Subscribers can find this in the Master Index under Issue 862-B  March 17, 2018)

Amazing Echoes of the Twenties

As we head into the coming week, there are certain rhymes with the 1928 period that are almost shocking.

One of these is that in Washington DC, The Evening Star was reporting a showdown between government regulators and “10-cent Jitney” operators – and it’s something that echoes the regulatory run-ins of Uber and Lyft that I just had to share it with you.

The story goes like this:

“Within four hours after the Diamond cabs of the Independent Taxi Owners’ Association had introduced to Washington a unique form of cheap rushhour service for Government worker* the Public Utilities Commission made its first definite move to exert control and supervision over what It construes as an unauthorized public carrier [ service.]

The commission decided, after careful deliberation, to serve notice on the individual drivers of the Independent cabs to show cause why they started a common carrier business without first having obtained its permission as required by the public utilities act.

This will have the effect of forcing the taxi operators to appear before the commission, a step that they have thus far deliberately avoided, feeling that the commission had no jurisdiction over them or the type of service they proposed to give during the morning rush hour.

Acts on Counsel’s Advice.
The commission’s action was taken at the regular semi-weekly meeting following advice from Ringgold Hart, assistant corporation counsel, that the service started by the cabs today constitutes a public carrier service and is contrary to the rules and regulations of the commission. The commission also had before It at the time official reports from seven of Its inspectors who rode in the cabs this morning soon after they began operation from 12 designated public hack stands to downtown office buildings.

These reports contained the name of the driver, his address, number of his permit badge, the route followed, the time of suiting from the hackstand. 1 the time of arrival of the cab at its destination and the number of passen. gers carried on the trip. ,

It was explained at the commission that the notices would not be served on all of the drivers who operated the 10-cent cabs, but only those seven in whose vehicles the commission’s Inspectors rode and collected evidence against.

The notices to the drivers will be drawn up by Corporation Counsel William W. Bride, who is the commission general counsel, and served on them either late today or tomorrow by attaches of the commission. No time limit has been set for the drivers to answer the notice.

May Issue Warrants.
Should the drivers refuse to respond voluntarily to the commission’s orders Earl V. Usher, its executive secretary, said that warrants would be issued for their appearance in court. Prosecution could be instituted, he pointed out. under section 85 of the public utilities act. which prescribes a penalty of a fine of S2OO for each offense for the failure of a public utility to obey the orders of the commission.

Engineer Commissioner William B. Ladue, a member of the commission, explained after the meeting that the cabs, in the opinion of the commission, had inaugurated a common-carrier service without the approval of the , commission, and had. therefore, clearly violated the public utilities act.

The commission now, he said, intends to force them to comply with the law. “We are going to call upon the taxi drivers to show cause why they have failed to comply with the law.” declared Col. Ladue. “If they refuse to do so then we will decide upon another notch course of action. What that might but has not yet been determined. Our lawyers will decide that.”

Transit Lines Seek Protection.
There had been indications that steps would be taken as soon as ths| taxis began the jitney service to institute injunction proceedings, but till procedure was abandoned temporarily in favor of what the commission’s counsel had advised would be a more  logical course of action at this time.

The question also was unsettled as to whether the commission should establish a precedent and take legal action or whether it should be done by the transit companies, the parties injured by the 10-cent taxi service.

The transportation companies, however, have indicated to the commission that they expect that body to protect them from the “unfair competition” which they claim the cheap-rate taxi service constitutes.

The new 10-cent taxi service was started as planned at 8 o’clock this morning by approximately 100 Diamond cabs, which operated under no fixed schedules from 12 different public hack stands to various designations in the vicinity of Government buildings

Burden on Drivers.
The venture, on the other hand, proved to be a financial burden to the taxi drivers, who ran their cabs with only one and sometimes only two or three passengers over a route which ordinarily would have netted them 75- cents.

The public, it seemed, was somewhat apprehensive that the authorities might interfere and only the Government workers with buoyed courage apparently rode to work in a taxicab for a dime.

The taxi operators, however, were not discouraged as the result of the first day’s business and they have a feeling that there will be a material Increase just as soon as their unsettled status is adjusted

At the close of the first day’s operation. Harry C. Davis, general manager of the independent association, issued an optimistic statement thanking the public for its co-operation and placing the blame for the few number of fares hauled on the Public Utilities Commission. “On behalf of the owner-drivers of the Diamond cabs, which today started a new and cheap transportation service, I wish to express our gratitude for the cordial reception given by the public,” said Davis’ statement.

Drivers Feared Arrest.
“Threats emanating from the offices of the Public Utilities Commission that some of our drivers might be arrested should terv attempt to opevate at…

(Continued on Page 2, Column M)

Remember, now, this is a 1928 showdown.

But it seems to me a firm echo of depressionary times.  It’s when people assess ways they can make additional income to make ends meet when they are squeezed on the income side of the household budget by tight corporate managements while on the other side, bills have to be paid.

Putting cars to work is very much like trying to spread-around operating costs.

Another indication of this as an ongoing – recurrent – social phenomena may be found in the week’s headlines:

Uber’s Biggest Rival Is Experimenting With All-You-Can-Ride Monthly Subscriptions .”

And  “Ride-hail apps like Uber and Lyft generated 65 percent more rides than taxis did in New York in 2017 .”

The more things change…

OK, back to point.  Want you to know there are tons of parallels, though.

Just like Hoover was dinking with trade deals, so too, Trump has been doing this and the trade tinkering was what lit-off the international part of the Great Depression.

This is not to say Trump has much choice, either.  But it strongly suggests to us that even if the democrats don’t win a majority of either house this fall, they have a better-than-even chance of finding an FDR reincarnation to run in 2020.

And if Trump doesn’t find a way to keep the economy “out of the ditch” that, dear reader is where we could very well be headed.

Remember, this is not “me predicting.”

It’s History Replaying.  Will Trump (who the haters & bashers have been under-estimating like crazy) fall into the FDR-type trap?  Well, THAT ought to be interesting as hell…

Sorry to be so long-winded, but most of the other “news” of the day (like “Man shot cousin over potato chips, but tried to tell different story, authorities say“) doesn’t matter of whit in the longer-term and if you haven’t figured that out by now, be gone and never visit here again.  This is a grown-up place where we don’t cotton to the conventional wisdom because we’re more interested in facts and data.  Thank you.  No use for webolutionaries and socialist-media zombies.

Meantime, CPI is OK

Just out from the Labor Department:

he Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in September on a seasonally adjusted basis after rising 0.2 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.3 percent before seasonal adjustment.

The shelter index continued to rise and accounted for over half of the seasonally adjusted monthly increase in the all items index. The energy index declined 0.5 percent in September after rising in August. The food index was unchanged in September, as an increase in the index for food away from home offset a decline in the food at home index.

The index for all items less food and energy rose 0.1 percent in September, the same increase as in August. The shelter index increased 0.2 percent, and the indexes for apparel, motor vehicle insurance, recreation, and airline fares also rose. The medical care index increased as well, though its components were mixed. The index for used cars and trucks, which fell sharply, and the new vehicles index were among the indexes that declined in September.

The all items index rose 2.3 percent for the 12 months ending September, a
smaller increase than the 2.7-percent increase for the 12 months ending August. The energy index rose 4.8 percent over the last year, a notably smaller increase than the 10.2-percent increase for the 12 month period ending August. The index for all items less food and energy rose 2.2 percent for the 12 months ending September and the food index increased 1.4 percent; these were both the same rate of increase as for the 12 months ending August.

After the data, The Dow futures were “only” down 128, so maybe we’re due to turn back up for a wave ii.  Remember, options expire next week and prices at option expiration are usually such that the most people lose the most money on their hedges…  should be interesting to see.

Condolences to people who’ve had their lives wrecked by weather. Our prayers and best wishes fror those who found themselves in Ma Nature’s way…

At click-time, Dow’s down 76…Turn-around Thursday anyone?

‘Moron the ‘morrow...’

27 thoughts on “Market Fails: Trump to Reprise Hoover? CPI Holds”

  1. A timing service I subscribe to flashed a SHORT TERM BUY SIGNAL last night. This is its first long or short buy or sell signal since the LONG TERM buy signal in 11/16 at the beginning of the Trump rally, so it requires my attention since it has been a profitable indicator. Good thing it’s not a gym day so I can be present at the opening. The long term buy signal has not changed which is a positive supporting indication. Since it is a short term buy signal, I would be looking at TQQQ.

      • Hi Bob: Down $1.47 per share for the day with TQQQ. It was a wild ride today, but you got to go with your indicators. My charts did not signal a corresponding buy signal, but they were not extremely negative, & a $1.47 is not a lot to make up in a 3x ETF, assuming it goes up. Will see what happens tomorrow. I prefer not to hold a 3x ETF over the weekend, especially if I am in a loss position.

  2. Almost 20 years on the bubble. Amazing!

    Remember, the housing bubble wasn’t just the fault of Andrea’s husband. The progressives (“everyone’s entitled to own a house”), mortgage originators, bond underwriters and brokers, real estate agents, home builders, building supply companies, etc. all loved it.


    • Imho crypto is The only way the puppeteers can keep the scam of unsecured money alive.
      Its only a number now.. But we can hold a coin or paper as proof..

  3. “when the country really was on the verge of slipping into a long wave economic collapse, no other sites were mentioning the “peculiarity” and the “coincidence” of massive terrorism coming along at 9/11/2001 which served multiple purposes covering up the Tech Wreck”

    It seems like that is how it always goes. If society and the economy are on a downward spiral some traumatic event happens to draw The people together. Wars follow famine economic down turns etc. I see several reasons. Elimination of population, increased manufacturing..
    In South America there are some tribes that during times of famine droughts etc. Bury those that they see as non beneficial to the group alive. Usually the very young and the very old. The sacrificed spirit is to bring abundance to the tribe.
    Then you have the revolutions. I bought a box of old books in the eightiesin there was a small leather notebook. I was going to use it for a log book(one of my hats was driving big rig locally for our local govt.) in this note book was a neatly typed diary. It seams that the Czar realized that the poverty in Russia was causing a lot of discontent. Because of the failed crops and farming catastrophic events he sought help from the USA. In turn the call for help went out and the YMCA asked local farmers to volunteer to teach the Russian farmers our modern farming methods. Unfortunately The Czar was to late and the Bolshevik revolution took place over throwing the Russian govt.. The let them eat cake attitude made the changes. (He took pictures.I wanted to visit there ever since)
    The Bolsheviks used fear to gain the support..then becoming the village saviors by offering needed supplies.

    • Also with the war sequence the puppeteers get control over what they started it for..
      In the days gone by the leaders were the first one in the lineup for war and great battles.. Today they’re weasels in the background using the people as their meat shields.. Never has any of the drama they’ve instigated been in their backyards or affected their loved ones.
      Even with our politicians very few are put in harm’s way instead their placed in a Tolkien position. Never again will you see two leaders racing down lances drawn in a joust..

  4. George, not get it at all. You say: “. . . money’s purchasing power being axe-murdered with more carnage to come due to excessive spending . . . .”

    Amen, brother.
    But I still not get why you are Larry the Lamb when it comes to Trump and his posse in Congress adding $2 trillion to the national debt. Their current budget deficit is the biggest since 2012 (when we were mired in the Great Recession’s decrease in tax revenues)!!
    This is your numero uno issue.
    You disdain Keynesian economics, but sit so meekly in the face of this enormous deficit spending — coming during GOOD times! Even Keynes disdained deficit stimulus during good times!! Ha. (The recovery phase was when Keynes wanted to pay down the national debt, for the next bad cycle.)
    Why are you MIA?
    Why do the Conservatards get a pass?
    Best, Mike.

    • Hmmm….Mike how the budget works in my household is we have our base costs..these are constant. Everything beyond that is what I have to work with.
      Trump is in the exact same boat I am in.
      Most companies I have worked for when things get out of hand will cut wage hours since that is what is flexible.
      I think the true spiral began when our country began borrowing to make budget..then to add insult to injury we sold out the blue collar laborers by outsourcing industry.
      As inflation increased wages decreased..and we had to borrow more..
      When the death spiral started was the day Moody’s downgraded the federal reserve and the dollar bill..
      Shortly After that the thought..let’s print our way out..its just a number who will notice..the middle class resolved and we became a two class country where one in three rely on government programs to exist.
      Now my guess is that interest and constant cost increases from inflation on the deficit. What is it..a couple billion in interest a day and every day that number increases what another forty million..just on the interest on what our incompetent congress did to us through years of working only for the puppeteers.
      My budget had to increase as are income hasn’t so I’m still working on next years budget and it will have to be quick..DJT doesn’t have a choice it has to increase..when I built our home..a bottle of cola was fifty cents now it is over two dollars..
      The only other logical option is go bankrupt write new secured script and be like Argentina.. Or Germany in the depression.. Bushel baskets of currency to buy a loaf of bread..baskets of gold and silver for garden goods..history repeating itself..a constant loop..what we learn today will be forgotten in three generations and we’ll go through it all over again.

  5. This is definitely off topic but it’s been running through my mind for some time now..
    I believe in harmonics..when I was a child I read a book called time ( something) anyway it was someone that controlled everything by using sequenced tones.. Now I’m sure most of us have read the Yale studies on how plants make sounds and are affected by sounds.. Japan did a study on plants and sounds..
    We know that all award winning songs are only four cords played in sequence.
    Monks have been said and demonstrated levitation by a sequence of sounds.. I love to read and reflect with meditative music .. Usually musical bowls..
    Could tbere be a rythem For time..the markets everything

  6. This is politics! Every new presidential administrations enters their term believing they have 8 years in which to keep the economy afloat. Some inherit a stable economy some don’t. The gist being that the short term
    (4-8yrs) takes priority for purely political purposes. The reality is the long term consequences of a short term bandaid in lieu of a political shortfall for the party they represent. After a period of time the inevitable catches up, and whether by miscalculation or mismanagement, the injection to prime the economy backfires. It’s a child’s game of duck, duck, goose, or hot potato, where playing fast and loose may result in a political fiasco.

  7. Sorry this US has capitalism thing bugs me so to reiterate, the US does not have free-market capitalism. Someone was upset last time when I posted links so here’s the actual summation of the studies so as to save anyone the bother of looking this up; the US is more of an oligarchy: “Multivariate analysis indicates that economic elites and organised groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence.” Why did the banks & AIG get bailed out? Money from thin air for the rich & powerful, TBTF, one rule for the powerful, one for everyone else. Unfortunately this monetary debasement will ultimately come back to haunt the 99% as the next QE program (or even just the halt in raising rates) will sink the dollar. Free market capitalism is the dream but it exists nowhere as far as I can tell. Most like to think we have it here in Ireland but Europe, & the same big interests who control that unelected bureaucracy, own us & we can’t do jack sh1t about it. We (yes, the Irish people) even paid EUR 1.5bln to unsecured bondholders of failed banks because we were told to, we had no legal requirement to do so! TBTF is NOT capitalism.

    • Unfortunately from what I have read..sometime long before I was born..not all at once a little bit chopping down a cherry tree it was wracked down one bill after another with small chunks of our constitution being eliminated after another.
      The final blows have yet to come the sad part is at this point they have total control and don’t have to hide their actions as much as they use to. We all know it..we all talk about it..yet we still vote in the same people time after time.
      What I fail to understand is. Its their country to..its their unpacked script we worship and yet they wish to destroy it along with the countries they are destroying for control.. Obviously without reflecting on the ethics of their actions..oh well at this point like the climate change we cannot do a thing about any of it.

      Testing Theories of American Politics … – Princeton University
      PDFPrinceton University › scholar › files › files

  8. George:
    If you haven’t considered yetL
    Whose District is Wall Street in? Jerald Nadler.
    Who is their Senator? Chuck Schumer.
    What party do all the Banksters, the Fed Banksters, and the brokers belong to? How do they Vote? Who do they elect, year after year?
    I think we will get a run back up so their friends can sell strong hands to weak hands but then they will crash the world to get their power back, and leave nothing, if they can’t run it. This is not they will take their ball and go home, they will blow up and burn the ball!
    They have tried too many ways to unseat T and failed in all of them and I think they would rather destroy the world than have a single deplorable not dependent on their rule.
    Big AL

  9. ““security state” programs ”

    ‘Hidden in plain sight’ – the Internet is the Security State. The rest is/was ‘working the plan’.

    I think the “Tech Wreck” was the result of government getting the public to build the Internet. Now we’re all safely tucked into the cloud.

  10. On the outskirts of Talley, power is out for about 90% of the county, and the damage is extensive enough it will take some time. I was in Pensacola for Ivan, and it took awhile to get things back together there, but Talley has alot of “canopy roads,” roads covered by pretty trees. Makes a mess.

    Been a relatively safe trial run for a more serious and longer term emergency. Found some areas to make adjustments!

  11. Aaaaand for those that need their dose of conspiracy theories this morning there’s the infamous 1988 cover of The Economist saying 10/10/2018 “Get ready for a World Currency”. With the markets tanking on the very day how much fun is that? There are other videos better than this but this is all I have time to find right now:

    • It’s totally possible Bill…

      The FRB DOLLAR bill is the ponzi scheme the world bought a hundred years ago..
      The only value it realistically holds is the belief that it has value because someone says it does. Its just like the bit coin as long as everyone believes it’s value it will retain its value the only real difference is you can hold a dollar bill or coin.
      Bernie figured that one out and for years he was the man..
      Only to discover that the papers with numbers was just that.
      You get some country to join hands and come up with a money system that’s currency is backed could raise some real havoc.

      • “The only value it realistically holds is the belief that it has value because someone says it does.”

        And if you don’t believe it a battle ship’ll drop a one ton HE shell down your shorts…

  12. The USA has periodically gone through unnecessary financial and economic spasms due to the fact that our Founding Fathers, in an unfortunate compromise, settled on a 4 year term for the presidency instead of the original 7 year term without the possibility of re-election. It has manifested itself throughout our 200+ year history. Can you imagine how different things might have been? Perhaps even Henry Clay might have made it to the White House. He had a plan to eliminate slavery. Maybe that’s why he famously said, “I’d rather be right than be President!”

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