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.
We have two charts (courtesy of our www.peoplenomics.com 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.
“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:
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...’