More on the Fed’s “Making Up Money”

“Economists” call it “Modern Monetary Theory.”  Wiki it and you’ll find the idea is dreadfully simple – make it up:

“MMT argues that governments create new money by using fiscal policy. According to advocates, the primary risk once the economy reaches full employment is inflation, which can be addressed by gathering taxes to reduce purchasing power.[6] MMT is debated, with active dialogues[7] about its theoretical usefulness, the clear useful real-world practical applications and implications, together with the varying effectiveness of its targeted use and varying challenges of its policy prescriptions. “

Hmmm…creating “new money” by  fiscal policy?  

Whee!  Printing Up More:  Futures +335 an hour before the open

Why not when you’re “Making Up Money?”

Yeah…that is one reason I’m getting ready for what could be a major change in my investing plans.  Because logic, honesty, profits and losses….none seem to matter as much as the 28-trillion dollar elephant in the room:  The banker-driven (but not really) “Federal” Reserve.

Here are the two weekly confessionals on this wild binge-printing event –  “Making Up Money” – known formally as the H.6 Money Stocks report. (Which no one but us seem concerned about!)

M1 is “cash and equivalents” and M2 is the same plus some time deposits.  And over at John William’s, you can find his excellent work where he estimates the level of M3 (which included other measures) which was hidden by Alan Greenspan.  Eyeballing that, it’s around 31%.  A key point we will return to…

Of course, the reason the Dow hasn’t gone on to 50,000 already is simple:  Although the Fed “poured on the ink” in the wake of the massive market decline from February 19 down to late March, they are – very much like doctors here, trying to adjust the “drip rate on an IV” – trying to figure out where to hold things roughly in place.

Financial heroin drip is it?  When in doubt, drip in more!  Whee!  What fun this is…put on some Miles and go with it…

In other words, they know 105% annual increases in M1 would be simply too obvious – not to mention overtly fiscally irresponsible – so they have dialed the rate back to a more modest 81.5% in recent weeks!!!

What’s Missing is M3 Data

Just to keep things in perspective here, William’s (M3b) work offers the insight into the problem of inflation.  That is, if prices are stable, while cash washing around is going up at an annualized 31% percent rate, has “modern economics” decided to turn pure socialist and  make up our future on the fly???

It would seem so.  And not only that, but it may not be such a bad future.  After all, even the carrot-in-chief is now talking about Uncle Sam underwriting up to HALF THE COST of your next (domestic U.S.) VACATION.

Meanwhile, says CBS, looking like the next handout (which looks like socialism to keep the masses happy, to us) will likely be a replay of Round 1: A second stimulus check? Here’s how much you could get.

So to summarize: 

  • You have already gotten an “advance tax refund or rebate” against your present earnings when reported next April.  We are still sketchy about how this will work out come next year at filing time…As soon as elections are over, I figure both parties will have an ankling party.
  • Uncle Sam may be in a mood to jack up domestic travel – though it seems suspiciously like a “vote for me and I’ll get you such-a-deal…”  We’re skeptical since the dems won’t give our jack-crap until after the tortoise (Biden) has finished his crawl.
  • Meanwhile, the real growth in America has gone negative to the tune of about 7% year to date. We figure -10 percent for the year, but that’s before “making up 30%” — So CV-19 as an economic boon? (ViseGrips, please!)

And, actually, it likely be worse for the year. 

The reason?  As long as the economy isn’t back, the shortfalls will continue to accrete over time.  To show you the dynamic, let’s look at the latest from the Association of American Railroads  Rail Time Indicators series just out this week:

“Total carloads for the week ending June 13 were 198,437 carloads, down 22.8 percent compared with the same week in 2019, while U.S. weekly intermodal volume was 250,854 containers and trailers, down 7.3 percent compared to 2019.”

Now (I know…it’s early for hard mental work, here), but  imagine than January and February…even into March were somewhat “normal.”  As the ongoing (week-on-week) data continues to “suck big ones” what happens?

The annual rate continues sinking toward the big round ceramic throne…  Meantime, the American Railroad Journal (January 1873) was touting bonds that were effectively yielding 7% – and that was in a massive recession just forming!

And finally (there is a God, right?) we get to the meat of the morning:

Current Account Gibberish

I love the Bureau of Economic Analysis.  Because they are so prone to using  self-referential percentages rather than laying out the :hard numbers: and letting the “intelligent electorate” run their own calcs.

So let’s look in on this morning’s report, shall we?

Exports of goods and services to, and income received from, foreign residents decreased $47.5 billion, to $902.3 billion, in the first quarter. Imports of goods and services from, and income paid to, foreign residents decreased $47.7 billion, to $1.01 trillion.

I wouldn’t get too excited by this.  Could just mean U.S. companies are starting to “slow-pay” foreign outfits.  (Or, this is the door some of those “big business bucks for CV-19 are going out…).  By the way, did you see where in the wake of the “China Trade Deal “As China Lags “Phase One” Pledges By 87%, It Plans To “Step Up” Imports?”  Why are we not surprised…

Dead and Dying Department

No telling how long the global pandemic will continues at sub-panic levels.  But what we can report is the case count globally is up to over 8.5-million and remember, this number compounds just like “interest.”  Daily death count was over 450-thousand globally and 118,435 here in the US.

That’s about between the population of Sugar Land, Texas and Cambridge, Massachusetts.  So, consider for a moment what it would be like to wake up one morning and notice all the people in either of those towns dying.  That’s the scale of this.

Case count in the US is now about 2.2-million. Bigger than Phoenix and smaller than Houston to put things in right-sized containers.  We’ll try to mention when case counts get up to Chicago-sized (2.7 million minus a couple of weekends of gun battles).

Meantime, CV-19 is an easy-peasy summer-filler for editors.  Always something to write about with it.  And, around here when he’s awake, Zeus-the-Cat says it still reeks of monetizing.  He paws the story Germany’s tracing app sees nearly 10 million downloads as a fur instance.

Yes sir, CV-19 is both MONEY and POLITICS as the Trump campaign requires Tulsa rally ticket-holders to sign COVID-19 waiver.

On the Radar

Charge of election-tampering have gone nicely global.  As Belarus Accuses West, Russia of Destabilization Ahead of Polls.

Market hype centers are trade hopes – which seem to get jacked-up right ahead of options: Futures Jump On China Trade-Deal Optimism Ahead Of Quad-Witch Friday.

Passings: Sir Ian Holm: Lord of the Rings and Alien star dies aged 88.

And remember how Obama did a (lousy!) nuclear deal with Iran?  How they were going to play nicey-nice with the international community?  All bullshit in the review and our skepticism was well-founded as the UN Nuclear Watchdog Passes Resolution Criticising Iran.

Again, not much to be surprised about.

Peoplenomics tomorrow?  “The New WEH” [Web-Enabled-Human].

Watch for afternoon repo-deals from the Fed…

Write when you get rich (and richer),

25 thoughts on “More on the Fed’s “Making Up Money””

  1. I cannot believe it .. another thing killed off by ussa .. the fractal guy the holy grail of analysis gets it so totally wrong .. ah well get prepared for the most psycho stuff ever .. hertz the new investment bank drilling for oil on 5th avenue after jp moron says 190 bucks a barrel for oil .. nah everyday is another out there further mad .. professor dalio would be so happy with his little game

  2. I saw something interesting to me, as I generally had little interest in human psychology. But this kind of thing can open your eyes to how social creatures react being given different rewards for similar work.

    Peak prosperity notes the Fed is providing Trillions to financial markets where the top 1% own something like 80% of the financial instruments. This kind of “unfair” giving will affect us at an instinctual level. It will continue to rip apart any remaining faith in our culture.

    I never really understood why the “equal” pay thing was so explosive. I figure you negotiate your labor rate and live with your decisions. But if these differences are exposed to people, being given different rewards for the “same” work (as democrats highlight), I can see how the instinctual response of people will be to get upset, even if they weren’t upset with their reward when they didn’t know of a difference.

    So convince any group of people they are being treated worse and the logic parts of their brains (if it exists at all) will be overridden by their “animal” brain, and cause them to be more easily influenced by politicians who of course have answers to said treatment.

    I am really surprised someone seeking power is not already highlighting the Fed activity and trying to work a voting base up around the injustice. Perhaps the elites are so tied into the 1%, they don’t yet see the shift. Let them eat STOCKS.

    • The top 1% really isn’t the prime beneficiary of all this money printing and Fed market buying; public and private employees who participate in retirement plans that are deeply invested in the markets have a huge stake in this as well. It’s a sizeable group; composed of public and private employees from the bureaucratic universe who are happy to turn their heads in the name of self preservation and personal gain. The trough feeders and the corporate 401K crowd will cheer this on until their expiration date (or the failure of the whole house of cards).

      On another note, why is the US leading in so many Covid stats? Might I suggest the following?

      – US hospitals have been heavily financially incentivized to over report Covid cases

      – Reporting is largely politically driven in Blue states, reported by anti-Trump bureaucrats

      -Inaccurate reporting is the norm; any fatality who tests anti-body positive is counted as Covid caused regardless of actual cause of death

      – Most other countries are doing their best to suppress figures as they are smart enough to know it’s not good for their economy

      – Less developed nations simply have no means of tracking Covid cases or deaths so a huge wave of rural deaths are going unnoticed and unreported (think jungles of Brazil)

      – WHO being a CCP mouthpiece is whipping the world into a lather as part of a targeted effort to ingratiate countries to China

      – The number of people in the US with financial and political incentives to push the Covid Agenda is unknown, but one can be certain it is a startling figure and the composition of that group would raise the hair on any semi-patiotic citizen’s neck.

      Looking in the rear view mirror…happy motoring!

      • Covid deaths are probably UNDERREPORTED. Rather than seeking reasons to fit preconceived notions about conspiracy, why not simply look at excess deaths for 2020 versus the averages of 2015-2019. Take those numbers, add in reported covid deaths for March 1-May 9, and you still come up 12,100 short of the number of people who actually died. A neat summary is at

        Further, some countries may be a bit hinky on their covid stats, but S. Korea’s 89% mask wearing after the advent of covid, the recently eased mandatory masking in Taiwan, and contact tracing in those countries plus New Zealand are reasonable and sufficient explanations of why they succeeded (death rates per million of 5.4, 0.3, and 4.9 respectively as of 6/17 verus our death rate of 364) where we have failed. It’s not as if they had different information than that available to the USA. We screwed up. They didn’t. Occam’s razor is a powerful tool.

      • MarcR I appreciate your thoughts. Normally, I wouldn’t place any stock in USA Today or other Gannett pubs but Siedner does seem to have the right creds.
        However, I go back to the incentivized hospitals, America’s obesity problem combined with at-risk baby boomer population and underlying health issues and simply have a hard time with the statistics.

        Per Senator Jenson:
        Jensen, April 8: I would remind him that anytime health care intersects with dollars it gets awkward. Right now Medicare has determined that if you have a COVID-19 admission to the hospital, you’ll get paid $13,000. If that COVID-19 patient goes on a ventilator, you get $39,000, three times as much. Nobody can tell me after 35 years in the world of medicine that sometimes those kinds of things impact on what we do.

        The senator was forced to backtrack on his comments after political pressure was applied but his original statement rings true.

        It’s not necessarily a conspiracy, just the nature of the creatures involved with our system in this day and age.

        George’s axiom rings true; Everything is a business model. (or political)

    • “I am really surprised someone seeking power is not already highlighting the Fed activity and trying to work a voting base up around the injustice.”

      They don’t dare. “Playing the game” is a route to eventual power; crying “wolf” is a route which could lead to the collapse of the “house of cards,” and memorializing blame for the crash, for generations, toward one person or political party. The risk far outweighs the potential for gain…

  3. Wars and rumors of wars…how can someone profit from this juicy situation? Defense stocks..LMT/RTC/NOC – and or ammo manufacturers, GUN Makers – opportunities abound it seems.

    Or play the Short Side in Muni Bonds ! yeah thats gotta be a winning ticket;
    Take the city of Seattle – please!

    Insurance Companies are starting PANIC – ya dont think they are going to be RAISING Rates anytime soon for FIRE Insurance & Property Insurance – nahh.

    Lawyers and Lawsuits – perish the thought – they wont be coming to SUE mayor durkin and her admin – nooooo; Loss of Business Claims, No Injured Innocents Claims, No Destroyed Property Claims…

    But WAIT !

    ..there is MOAR 4 SEATTLE – latest whistleblower (working w/FumblingBumblingIdiots/criminal probe) in Boeing case is EXPOSING the Incompetence,Fraud and Deceit RAMPANT at the once Great US manufacturing giant.

    Can U say Criminal Negligence ?

    lets compare and contrast Seattle Muni Bonds versus Ethiopian “GERD” Bonds.

    – GERDS look good until U factor in Nile Denile for Egypt..bombbombbomb, bomb the GERD..eventually.
    So its a toss up – so just stick to the market – maybe even Triple Levered Bull ETF – just go with the flow. BUYBUYBUYBUY Gold is on SALE, Silver is on SALE and Bitcoin is on SALE at $9300 per coin.

    – worthless, fraudulent, digital tulips..Com’on “homegamers” SHORT some BTC’s and show this fool what a worthless asset they R.

    No Bitcoin 4 Ure..but U can SHORT Them, if U got BIG BALZ like sAndy.

  4. It’s corrupt from head to toe and has been for some time.

    Recall the secretiveness of bailout recipients being a big thing last week.

    “The Trump administration said on Wednesday that it plans to keep the identities of more than 4.5 million businesses that received a government bailout through the Paycheck Protection Program a secret.”

    “But Treasury Secretary Steven Mnuchin, in testimony before the Senate Committee on Small Business and Entrepreneurship, said his department considered that information “proprietary” and “confidential.””

    No more parades.
    No more fireworks.
    No more summer family reunions.
    No more amusement parks or concerts by the gazebo.
    No more trick or treaters.
    No more Santa at the mall.
    Hertz was another 100+ year old company.
    “Gone with the Wind” not quite 100, yet.

    Most of the Columbus statues have been torn down at this point. No word on government canceling the paid holiday in honor of the “butchery”. That thought is a rerun.

    The concept of America most of us visualize is now over. Some kind of international zone is spring up. The last thing to go is:

    “We need more Justices or we will lose our 2nd. Amendment & everything else. Vote Trump 2020!”

  5. The FED is the problem ….MAKER….IT NEVER has solved anything in its entire Reign….only used to subjugate the citizens of the USA via THEIR elected representatives…AND profit at the expense of the citizens of the USA…..1913 established and has been RULING this country ever since….” Creature of Jekyll Island”….for the facts…this is when this country…was lost…and many still hold the FED in high regard….as a needed source of prosperity….barf bowl please….
    The FED and Social Security ..ARE where YOUR elected politicians LIE to you everyday about how valuable both are…LIES for many decades….barf bowl again please….might this be the decade the lies end….November we may see….the awakening….I will not hold my breath…gotta go clean the bowl…

  6. Yo G-Dog,

    What happened to the Fractals ? Maybe all U all need to REREAD/RE-Review Wolframs’ Mathamatica – yeah I know its a BIG ASS book.

    At first I thought fractals were tiny blue furry creatures, but no, thats imposible cause my kids old Furby toy keeps repeating BUYBUYBUYBUYBUYBUYBUYBUYBUYBUY…whenever I walk by the old toy chest in basement.haha

    Its simple.. 30 THOU on the DOW – that Inflation Conflation is baked in baby..”the beat goes on, but I’m so wrong..

  7. In tomorrow’s PN, you mentioned the WEB-Enabled human. Read up on Elon Musks Neuralink first.. This is the first step towards real singularity. I just listened to a podcast with him and this is yet another venture for Musk that I am confident will happen.

    I mean, he built the worlds most valuable (just surpassed Toyota) and finest car company. He is the father of electric cars. He runs the first privatized space Company and sent America’s first manned flight to the International Space Station. The first such flight since 2011. Musk is the father of privatized space travel.

    He bores tunnels, is helping build the Hyperloop, started PayPal, popularized Solar panels and now is about to introduce the million mile battery and other battery technologies that will enable cars to travel in excess of 500 miles on a single charge. Combustion engine cars can’t travel that far on a single tank of gas.

    Am I confident that he will be the father of singularity. There’s NO DOUBT.

  8. Packing the food away, but enjoying the popcorn now. Greatest show (for now anyways) on Earth…

  9. Interesting that when the working class gets a hand out it socialism, but when business and banking sector gets trillions in hand outs its called capitalism, or is it fascism or communism or in truth is there any difference….

    • Cannot recall anyone calling handouts to business and banks capitalism. I have heard crony capitalism many times. Both parties are deep into using the government to transfer ill gotten gains to their voters / supporters.

      I don’t know if there is a name for what is unfolding as our current US economic model. It certainly has nothing to do with capitalism. What do we call an econmic system that is socializing all risk and bad investments but all gains go to the ruling class. Maybe this is most like Chinese communism where all the goodies goes to the ruling elite.

      • Strange but the 1% wealth grew 16.1 % during the virus so someone sure benefited from the scam as they looted the country, while the dumb ones were in lock down playing the Lone Ranger with their mask and all.The country was based on the wealthy controlling the country,as J.P. Morgan told his wealthy friends all we have to do is control the oval office,and thus they have as they always got their man into office, with only one exception and that was J,F.K and they murdered him to remove him….

      • @bluedogg

        Nobody noticed when we had a housing bubble burst and investments tanked across the board, that Gates and Buffett were making money at ~12% per annum (still a lot better than you & me), but (frequent White House guest) George Soros was makin’ it at over 46%

        Pierpont Morgan and his progeny have controlled the government since Grover Cleveland. Creating the (not) Federal (not) Reserve, then convincing Congress to abdicate its responsibility to create and manage our money, merely made it easier.

        It’s kinda cute that you think the banksters didn’t own the son of a hardcore gangster. Joe was every bit the mobster Capone was, and by most accounts a lot less nice. Don’t confuse the fact JFK was a patriotic American, with the facts that the banksters, Richard Daley, and Sinatra’s mobster friends are the reason he became da Prez.

        Trump is not pwned by the banksters. I doubt Reagan was, I don’t believe either Ike or Truman were, and perhaps not Hoover (bear in-mind, Reagan’s and Truman’s VPs WERE owned by the banking cabal). The rest of the Presidents since 1901 certainly were.

        I don’t believe Mr. Kennedy was offed because he dared to have the U.S. Treasury print $450mln in government-backed currency (a paltry amount, even then.) By 1960 standards, JFK was a flaming Liberal (IMO he couldn’t get elected today running even as a conservative except in Tennessee, Alabama, or Texas, because our politics has shifted so far toward communism.) As I said, he was a patriot, meaning he was loyal to the Constitution and to his Oath of Office. In so being, he p!ssed a lot of people off, for a lot of different reasons…

      • Joe, it is fascism. Remember, fascism is essentially “corporatist socialism.” It is both a social and an economic philosophy. ANTIFA is a social fascist organization. It has tacit approval from the “media” and “entertainment industry,” and many Democrats, not because they like violence, but because they are economic fascists. As long as it is their portfolio and business or industry that’s blessed by corporatism, they’re all good with whatever happens.

  10. wow thanks to all some great logical comments on this thread .. so well done . thanks

  11. I know..this has absolutely nothing to do with the creative accounting of the federal reserve and how everyone should be stocking up on KY jelly for the coming tax year..
    Even so I just have to say it..
    DAM IT THE KIDS DID IT.. a few years ago I had gotten an odd message asking my opinion about a project they were working on.. it had obviously come from someone from a long time ago by the fact that they used a nickname from 40 plus years ago.. anyway they were contemplating putting a remote drone on Mars as one project for the future. Even sent me one to play with. I gave it to the grandson that can make the thing do all kinds of things…well today on space weather.. they mentioned that they did send it up with the rover and have been practicing to be able to run it here now..dam I never thought they would do it. The wind sheer alone will make it Interesting..I can wait to see the videos.
    It’s to bad the gent that originally thought of doing that passed on..he would be so proud. Maybe he already knew they did it.if he did.he never shared that info with me..
    Now that’s news that tripped my triggers lol lol
    We all already expect to be told to bend over and spread our cheeks lol..

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