Might as well buy a Lotto ticket, if you think you can make a quick buck in this pig of a market. The reasons are obvious, yet hidden from the public.
The Lying Fed?
It has been painfully obvious for years that most of the so-called economic gains in America were the effects of pernicious money-printing by the Federal Reserve. However, until a month ago, it was still possible for the small-time investors (like us) to look at Money Supply figures and ballpark how much of the “numerical gain” in markets were actual goods and services increasing, versus effects of Made-Up money.
The Federal Reserve has been systematically killing transparency since Alan Greenspan axed reporting of the broadest measure of money (M3) years ago. Now, even the narrower measures (M2 and M1) have been hidden. The Fed doesn’t want to panic (otherwise) rational investors by telling them money supplies are up (M2) 26% (and M1 almost double) in the past year because that would reveal a terrible Truth: The gains of today are illusory and deliberately misleading.
For the legal department of the Fed (and the razor-wire hiding coup Fools on the Hill). it’s all necessary to keep a Global Depression (long overdue) from taking hold. The answer has been?
The Pseudo Lie
There are two kinds of lies in the world: Overt and Omission.
The Fed has been careful to avoid Overt Lies. They simply decree (sorry investors!) that they will no longer tell you how much money is being made-up. As a result, inflation, GDP, and all other dollarized economic measures can be whatever political considerations dictate.
In fact, if hauled before Congress (if we had a legit one, not sold-into-financial bondage through contributions as the charade of checkbook democracy, they’d be able to Honestly say “We are carrying out our Mission (dual mandate) as directed by Congress.”
The dual mandate from congress was about prices and employment. Which runs contrary to the notion in my book The 100-year Toaster that the entire world has been torched by the terrible pandemic of Debt. Which, unlike Covid, no one is working to cure because everyone’s making bank on the disease running wild.
Of course, this means that unit volumes (consumption) can’t be allowed to drop (too much, anyway) and thus if prices don’t pop out of the chimney and homeless are still just under the overpasses, then the joke of a “healthy Economy” can be sold on Controlled News Networks.
Thing in law is that Overt Lies are punishable. Omission Lies? Much harder. How do you prove someone didn’t “just forget” to mention something?
M3, Aggregate Index, and Time to Crisis
There is really something useful in long wave economics to be seen here: When the Fed Hides the Economic Data, the Crisis is already clear. It can’t be discussed honestly, however. Let’s look back:
St. Greenspan (who we reckon to be the patron Saint of crooked elites) stopped reports the M3 (wide financial base) on March 23, 2006.
Which once again leads us to our use of the Aggregate Index (*reported twice weekly on the Peoplenomics side) as a real “truth Detector” because it really works, though often with too much lead time.
Let’s make up a simple table:
- March 23, 2006: Greenspan axes M3 which was raising red flags about real estate going into Bubble Mode.
- Week ending May 5, 2006, our Aggregate Index closes at 9463.45.
- From here, a Secondary High 9121.29 occurred on August 26, 2007.
- That’s when the Fed (unhindered by nuisance reporting of M3) really poured the coal onto the real estate fires. By October of 2007, our Aggregate Index had run up to 11359.27.
- Week ending March 8, 2008, though, the force-fed “expansion” was getting long in the tooth. Confidence waned, dropping the Aggregate to 9337.54.
- As the U.S. economic system teetered on the Brink, a decision was made to run markets up more in hopes of postponing the inevitable. May 16, 2008, the pumping and official ignoring of NODOC madness bubble our Aggregate up to 10367.46. Whee!
- Then the bottom began to fall out.
- From the week of September 19, 2008 (Aggregate 10367.46) the market fell for three painful weeks to October 10’s Aggregate 6696.69.
- The Collapse of the Housing Bubble wasn’t to be denied.
- March 6 of 2009, our Aggregate bottomed the same week as the Dow. The Aggregate closed at 5209.51 after being lower, intraweek.
Aggregate Pointing to a Crash Ahead?
We have no way of knowing (in advance) when the PowersThatBe will pull the plug on prosperity again. Just remember three things:
First: This is NOT prosperity. The government is papering-over a likely global pandemic economic collapse by sending out Made-Up money. The more you spend, the longer the Musical Chairs plays on.
Second: Our Fiat Money is 97% Debt. Compared with the purchasing power of the Dollar prior to the Fed-jacking of Banking, we have just over 3% of purchasing power remaining. Many top liberal economists (such as Stephanie Kelton) have argued that since the economy is working on 3% money, no reason the money supply couldn’t be blown up to three times (or more) and run on 1 percent real purchasing power.
Economists argue that “Inflation” acts as a kind of “social conveyor belt” and that people who are smart-enough to buy on margin (e.g. by taking out a bank loan against a guaranteed title to their property) will win over time. They will indeed be paying back the debt with “cheaper dollars.”
Third: Periodic Economic Disruptions Conspire to Return Capitol. When a big problem – like the Housing Bubble and Collapse – comes along, the Ownership Class seizes on the crisis to make piles of money. Titles to property come home to the rich.
Conspiracy-minded people look at the massive influx at the southern border and wonder “Is a devastating new Covid wave (or something else) going to kill off a huge portion of gringos such that replacements need to be at the ready? Is THIS what’s driving border insanity?
Sadly, we will never know.
What we can do is look at how we’re replaying events of 1929 and see that we MAY be in a similar long-term cyclical top. That the Disappearance of M1 and M2 data – possibly analogous to the peak of 2006 – isn’t happening again.
It also has an eerie echo of 1929 to it:
The Week Ahead
Except for a Dallas Fed number this morning, decent day to go back to bed. Tomorrow we will have our two-part edition (with the second part coming around 8:15 AM Central) for the Case-Shiller Housing numbers.
Wednesday’s main event could be the ADP jobs preview. Thursday the new unemployment filings and the Challenger Job Cuts report.
Although markets are closed on Good Friday, the government will be open so the Employment situation will be along plus early Auto sales figures. We’ll be up, sure.
The only other “exciting event” will be the lawn’s first seasonal mowing here…
What Passes for “News”
In the mainstream, here’s the daily sheep feed:
New York is turning into a poster for bad government: “Cuomo admin. kept COVID-19 tests from nursing homes as Dem’s relatives got them.”
Suez Sillies: See if this makes sense: “Megaship Blocking Suez Canal “80% Partially Refloated” My only nautical experience is 11-years living on a sailboat, but I wonder if nautical designers are familiar with the calculations for “80% partially refloated”?
Wait! You mean it’s a cash-cow for Trump-deprived Mainstream media to lay Ultra-Hype on the Suez? “Why The Internet Loves the Suez Canal Stuck Ship Saga.”
Jargonism in sports: Odd quote here… “‘I’ve grown as a human being’ – Smith would return to Australia captaincy if selectors wanted.” Get back to us when he’s grown as a carrot or something.
And Universe is Winking, Perhaps?
Assuming you know the U.S. is pouring arms into Ukraine. And assuming you know Russia has moved troops up along the Ukraine border. Further assuming you know four soldiers were killed in eastern Ukraine this weekend by mortars and that the smell of war is in the air as Russia eyes Odessa which would close Ukraine’s only port. I mean…skip all this.
Then ask yourself: Did sanity beam down to the planet over the weekend, or are we all still crazy as ever?
You know where our bet is…sheesh.
Dow futures down 143 and S&P down 16 with an hour to the open.
Write when you get rich,