“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 ShadowStats.com, 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),

george@ure.net