Oh, sure, of course. That trade I mentioned Thursday morning (hinting at the DOG of a trade) handed-in a modest return before the close Thursday. Love when the DOG‘s come home for dinner.
It was expected, though I should have waited on my entry instead of going in during the after-hours session. Still, it bagged a fine lunch (for several) but not a blow-out dinner with Dom for the whole county, right?
Money Supply Vs. Markets
I have concluded that we are very, very close to the “end of the line” for delusion investing. We can actually see it in how the Federal (not really) Reserve (which they don’t have) has been HIDING DATA in slow motion as systemic risk to the Nation rises. M3 first, not M1 and M2 are hidden.
Ugly Secret #1
In order to understand prices of the stock market today and how they relate in historical terms, it is easiest to begin with where the Dow Jones Industrials were when the Fed was hornswoggled into being. Dec. 1913, but being a lazy sonovabitch, let’s take the first Dow close in 1914:
I will use the green dot number in our discussion this morning in order to eliminate holiday proximity as a conceptual argument.
The next question is “What was a dollar Buying?”
To answer this one, we take a gander at the Minneapolis Fed data calculator and figure out how much would what cost $100 in 1913 fetch in t0day’s world?
The answer (in 2019, which is important as we shall see) was $2,588.06.
The important part is that Inflation Marches On. There is no accounting for the 2.3 percent inflation in 2020, nor an addition – what do we call it, 1% this year, so far, in the Minneapolis number.
Thus, we can take our $2,588.06 and puff that up 1.032 times (3.2%) to $2,670.88.
Last step in the process? We do some division to calculate the (small) percentage of actual purchasing power that remains in the U.S. Dollar/FRN complex as they are passed interchangeably.
So the Dollar is Worth?
The “Dollar” is worth 3.744% of 1913
This ain’t too hard: $100 divided by $2670.88 – there’s your answer.
Where did the rest of the money go? Why into government spending, rent on the nation’s money to the Bankster Class but generalized as into the “Hands of One-Percenters” is an easy-enough concept.
The most AMAZAING PART, however is what the effect of all this has been on Stock Market prices.
So let’s hold this key thought in mind and continue to slog ahead.
Real Versus Face Value
Crackpot Economics, now. Let’s see what the simple declining real purchasing power of the dollar might do to stock prices, shall we?
Use a (mythical, never-before captured on film) constant value company as its basis…
A table, please? We will use 100% dollars and 100 percent stock price for the constant value company effective January 1914 for giggles:
We know for a pretty-solid fact (some are, some aren’t in economics) that the 1914 Dow was around 57.455.
And since the data is clear, does this mean the “fair market” value of the Dow could be as low as (gulp!) [26.71 X 57.455]….
I’m sure you remember a few years back, a long-time friend of mine (serious financial professional in Oklahoma) warned readers that when “this let’s loose” we could see the Dow in the 700’s. People called BS and promptly ignored is sage advice.
But now, the bar may be a little higher (1,500?) but that would be close to where things MIGHT fall. Inflation pushes targets, but 700 at a washout bottom (if the Nation survives at all!) is not out of the question.
“Ure saying a company’s stock can be price huge multiples of fair value?”
You haven’t learned much from history books or watching eBay auction prices, or scamming climate-killing, resource-squandering Bitcoin hucksters, have you? Why, they get $59,000 EACH for made-up secret numbers, lol. Z’iss sound like a rational planet, you’re on? Nope. Your on the Universe’s Orbiting Scam Lab.
What does this spell? B-U-B-B-L-E
1929 All Over Again?
Let me pause and remind you of a few facts of long wave economics: Prices are only very loosely tied to value and on-par exchange. They drift over time.
During the South Seas Bubble or Tulip Mania, and even 1929, there were similar extremes. We’ll pencil out some other ideas on the Peoplenomics side of the house tomorrow.
But for this morning, just realize that we do NOT have the same numerical basis, but we do have an incredibly similar waveform compared with 1929.
And, as a result, even though the market is likely to “bubble-up” more, we are only playing the downside corrections.
Because – and this is serious – when this sucker breaks, the comparison will fit into this context:
OK…big problem is: What could drive collapse?
Well, that’s why we read the web, isn’t it?
What Causes Us Worry
Headlines that reacquaint us with the dust bunnies under the bed? Try some of these on for size:
“Biden calls Kamala ‘President Harris’ during speech.” (Oohhh sheet!)
Gosh, I don’t know which is scarier: President Harris or another Covid lockdown. Both are likely coming, in our view. Especially (on the virus side) because “Paris to enter four-week lockdown as France faces third Covid wave.”
America’s schizophrenia is evident in many ways, as well. As we whip through the DSM-V looking to characterize “American Madness” some of the symptoms have included:
- The NY Times is tearing down walls with their “House Votes to Give Millions of Dreamers and Farmworkers a Path to Citizenship.” Like we need open borders (and hundreds of thousands with no health certs) with 10-million Americans still out of work because of Covid. AYFKM?
- Nearly equal stupidity and disconnect is evident in “Yes, Capitol Rioters Were Armed. Here Are The Weapons Prosecutors Say They Used…” Our news flash for National Propaganda Radio is ANYTHING can be used as a weapon. They’re just playing into the PR plan of the Pelosi Razor Wire Coup (PRWC) that has (remarkably) even MORE distanced the “ruling fools” from the growing number of patriots demanding representative government. Not this Digital Mob Rule shit that leads to communism with a half-hour layover at socialism.
The Big Picture?
When the markets collapse (we’re eyeing April suspiciously) president Harris will come in with an even harder socialist gun and other freedom grabs. This will be followed by a Soviet-style domestic collapse of America. Power, internet, banking become “iffy”. Then we roll into war with China over (among other things) stiffing them on real returns from buying U.S. Bonds and challenging them over Taiwan…because we can’t make much of anything anymore.
You see: We have transitioned from a self-supporting highly-motivated nation into a puddle of “woke saps.” Who peddle hate over profits, dreams over doing, re-segregation over Unity. And phony fiat (the Fed’s made-up money backed by air and we the tax chattel) over hard assets.
It always looks good — for a while — then history reverts to sane. Always replays the same. Whether it’s today’s “woke” re-segregationists leading into Civil War (1) or the runaway speculators (1929) or fraudsters in accounting (Internet Bubble Collapse (1) (200-2003). Someone will tip it one of these days.
Bitcoin is $58,578 today. Not because it is real, fungible, or you can eat it. It’s just that the back-to-the-basics are M.I.A. except for a few outposts on the web. Which honestly advise people to become debt free, claim your own health, and evolve a workable personal survival plan.
Down in the Noise Floor
Most important story of the day? May be that Russia Makes First Interest Rate Hike Since 2018. Reason? Lights a fuse does it?
- Russia raises rates.
- Other nations follows
- 10-year bond pressure increases
- Fed sees inflation and has to raise in the May-July period
- Stocks, unable to pay a dividend – figure they are running out of Greater Fools to dump shares on – pre-emptively crash beginning in early April.
Bet me? Read news for the kindling stories. Not the train wrecks after events.
Swan Song for Social: With more censors (overhead) and more platforms (revenue dilution) our silly-pick of the day is Social media platforms are going to war for online talent. Dumb does get dumber.
Looking for the “Duesy” Analog
Side trip into this bit from Wikipedia because it’s so useful to remember:
“Duesenberg Motors Company was an American manufacturer of racing cars and high-end luxury automobiles (sometimes referred to as “Duesy”). It was founded by brothers August and Frederick Duesenberg in 1913 in Saint Paul, Minnesota, where they built engines and racing cars. The brothers moved their operations to Elizabeth, New Jersey, in 1916 to manufacture engines for World War I. In 1919, when their government contracts were cancelled, they moved to Indianapolis, Indiana, home of the Indianapolis Motor Speedway, and established the Duesenberg Automobile and Motors Company, Inc. (Delaware). In late 1926, E.L. Cord added Duesenberg to his Auburn Automobile Company. With the market for expensive luxury cars severely undercut by the Great Depression, Duesenberg folded in 1937.”
Well, I keep seeing stories about ultra-high-end car companies like this morning’s “Lamborghini reports record profits in 2020, CEO teases electric future” and I wonder to myself:
“Who will it be this time around?”
Around the Ranch
Futures are up small amounts. but, our Aggregate closed last night at 35,528.32. Last Friday closed at 35818.28, so barring a strong rally into the close today (which would need to carry into Monday) we continue to view America is “past her prime, unwilling to admit realities.”
But we shall see.
Pot Roast Friday here in the Outback.
Millions of projects underway. Seeds are popping in the greenhouse, too.
Elaine’s doing super well – and may be off (after hip replacement) weight restrictions next week. After that, into physical therapy again for more strength building.
We’re trying to schedule Hip #2 to be done before utter financial calamity sets in.
Might be close, though…
SatGourmet tomorrow – ShopTalk Sunday, and as always, the charts on the Peoplenomics side tomorrow.
Write when you get rich,