What’s so insidious about the Fed’s bailouts of investors in hedge funds, mortgage-REITS, stocks, bonds, leveraged loans, and other often risky assets? The destruction of capitalism (14 minutes):
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
And Stock futures are up again…
What a disconnect between stocks and the real economy!
Wow!
Amazing!
Crazy!
Insane!
“What a disconnect between stocks and the real economy!”
It has been that way for quite some time as many of us have been saying. It’s just in times like these that it becomes so blatantly obvious.
Great report, tells it like it is. Indeed, what a disconnect. So, we know the printing press can go on forever; however, at what point does this insanity create enough hydro static that all the basements flood?
free money has to go somewhere
and capital for ‘real’ investments are no where to be found
Awesome point. Which begs the question… would we be better off if we abolish the stocks and stock markets? Clearly they don’t do what they were created to do – raise capital.
That is a really great question!
Now they just raise Hell if they don’t get their over-indulgent dose of $oma!
Signed #windtwistedmokes
Statistics are the evidence of theory. Wall Street dominates the world. World is on fire. Exhibit A.
What we’d be better off abolishing is the Fed, which only Ron Paul seems to grasp. Google Andrew Jackson’s comments on the Fed of his day, the Bank of the United States and see exactly why- the same thing is happening as we speak: money is being directed virtually interest-free to the very banks that own the Fed; they and their subsidiaries are manipulating the markets for all they are worth*(selectively long, short, and when it suits them, burning the shorts). We are seeing a Potemkin Village in the major indices while the underlying economy is doing anything but recovering.
* a ten-fold increase in Hertz(which declared bankruptcy, no less) in less than a week, for example (I have no idea if the Fed was involved in this, but it is the sort of thing they are fully capable of, or the outlandish hikes in high-flyers which I do not believe for 2 seconds are the work of ordinary shareholders.)
Herd wisdom. When the cash flood gates open it makes sense. But herds are full of ignorance as well as some wisdom. And when panic comes the ignorant will be trampled. The lesson? Always be the first to panic, or stay out of the herd.
March 23rd was a great day. Kind of a bummer if you couldn’t find a great company at a reasonable margin of safety within that one week window. Almost time to consider shaving off off profits but at this point it seems to be kind of pointless to fight the fed.
85,000 investors have bought shares in Hertz since it filed for Chap 11. There are so many debt holders in line it’s doubtful they’ll get 100 cents per $.
Shares will be wiped out. But they are optimistic.
It wouldn’t surprise me if brokers are joking that they could use a new virus every year. Collect during the sell phase, shake down the Fed for trillions, announce the re-opening, collect during the ‘recovery’
And if there is a second phase ( underway) there is no need for a new bug.
PS: the site Market Watch has a report on the big uptick in Hertz shares. along with some ‘icing’ about rentals improving ( like oil in April, how could they not improve?)
The report fails to mention that the shares are going to cease to exist. But if Cinderella can sell the fairy carriage before midnight…
Here I am in the UK and can recognise those “great asset holders”who are and were “bailed out”by peasants like me.Unfortunately,I will not be “bailed out”and I seem to be running faster and faster and getting closer to destruction whilst being taxed and taxed,for my own good seemingly,all to save the glorious great and good.A few have suggested other avenues and on closer inspection it is obvious they have never entered those avenues.Frustrating at best.
Not to worry…things that blast off are usually followed by “Houston, we’ve got a problem”. Oh crap, is anybody working at NASA right now??!! Layoffs??!!
Wolf I really appreciate your push back and inyor face honesty. Thanks so much. Please keep up your important work.
Curt Tyner
And NASA is still uncertain whether it will have to lay Bob or Doug or Jack off… Things are bad.
I see what you did there!
Most Americans are complete morons who think the Fed is doing a great job. They constantly vote against their own self interest in favor of the oligarchy. They deserve the screwing that they are getting and I hope they all end up starving living in cardboard boxes under overpasses.
Actually a majority of Americans probably know zip about what the Fed does. All they know is they work harder and fall behind. Unfortunately this allows politicians and their oligarch backers to promote false narratives that cause the citizens to vote against their own self interest.
Well said @Lance Manly. Unfortunately this lack of understanding will also be applied when the camels back breaks and the guillotines roll out. Truly selling the rope that will hang us here.
Well, Louis XVI only had swords, muskets and the Swiss Guards to hold the frenzied masses back- TBTB today have tanks, machine guns, Tasers, razor wire,sound cannon and poison gas for starters, and given the disregard for the Constitution that the present administration exhibits will not be averse to using all of them.
tough to argue that….sheep
There aren’t nearly enough overpasses in America. Great time to invest in overpasses!
It’s funny. And yet our bridges and dams are not being maintained as they should be. I find this maddening.
It’s penny wise and pound foolish. If we really can’t afford to keep our bridges maintained, then don’t buy then next two Navy Ships. That’d fund countless bridges’ maintenance.
“If we really can’t afford….” That line used to be associated with how much savings one had.
That’s what “Affordability” meant.
When we talk about “government spending” it seems everyone ignores that everything is (and has been for some time) unaffordable? That’s what is maddening to me. What happened to people’s ability to think? It just one big dissociation. A collective illness. Like a massive and growing higher center of gravity. An economic tower of Babel. A greater, darker, massive shadow of substance, rising higher above our heads.
You have got that right- $13 billion for the latest aircraft carrier (and that one plagued by a faulty toilet system (you would think that would be the easy part) not to mention a dodgy catapult system. That would pay for one hell of a lot of bridge repairs or fixing the turbines that just blew out in time for flooding in New Orleans. Where are the people complaining to their Congressmen about this?
You mean Real Estate?
In our (half-hearted) defense, those in power ARE masters of lying, in addition to cheating and stealing. Even those who do try to stay informed will find it impossible to dig past all the many layers of propaganda and excrement. Of course, when trickle down econ is STILL being peddled DECADES after Roy Rogers opened the joke… ya, that’s on us. People are lazy, selfish, willfully ignorant and then, suddenly, outspoken communist activists.
I have been screaming at people for over a decade that the only game in town is the Fed and politics is just a sideshow. Nobody cares for as long as they have bread and circus. Most people don’t vote and when they do they vote with the herd.
I’ll put some hard real-world numbers on this for you.
I’m working with a community that will purchase itself in the near future. This means the residents of the community banded together to form a corporation that will take out a mortgage to buy the commercial property they live in.
Normally, we borrow 325 basis points above 10-year treasury. But now that treasuries have been suppressed — we can’t have that!! The “capital markets” (i.e.: big banks, hedge funds, etc.) suddenly decided we needed a floor on the rates they extend my low-income clients, even though we offer a loan product that has *never* — yes, you read that right — never had a default in 30 years. We should be able to offer .66% + 3.25% to our clients (~4% on a 30-yr am, 10-yr note). But nope. Richie Rich has decided he needs to make up for losses! So it’s now 5.2% because some bailed-out rich guy said so.
Here’s the result: The average HH income of my clients is ~$25,000/yr. Their per-household cost of securing their future and preventing themselves from being re-developed into a high-rise (their area is gentrifying) is $60/mo. HIGHER because of the increased interest rate.
Some examples of what they do for a living: restaurant server, landscaper, retired security guard, warehouse worker, landscaping company owner, cleaning company crew manager & gravel pit worker.
Over the next 10 years, each of these heads of household will need to take $7,200 from the mouths of their children, literally, so some rich $%*!# can have gold plated banisters on his yacht instead of regular ones.
It’s all enabled by the Fed. And the Fed is enabled by all the commenters here who love to refer to hard-working salt-of-the-earth folks as sheep that deserve to be sheared.
It’s beyond disgusting.
Are you refering to the “few” commentors using the derogatory “sheeple”? Most of what is said is critical of the very “steeple” ones and their Fed cronies that you are pointing your own finger at. Just about everybody is disgusted by the nonsense going on as no one wants to get clipped by the mad barber of Wall Street, let alone Fleet Street.
I wish it were just the few BuySome.
The Fed couldn’t get away with what it’s doing without the complicity of the *entire* (liberal and conservative; democrat and republican) donor class. They make all the rules for the rest of us and they love inequality. They make out with it before cuddling with their private equity funds at night.
This includes the “I’m sMaRtEr-ThAn-U” temporarily embarrassed millionaires who hate medicare for all because they want to be able to keep all the money they’re gonna make someday, instead of paying for “someone else’s bad choices.”
It’s all disgusting. Every last bitter drop of judgment pointed at “those people” who somehow deserve to be ground into the dust for no other reason than being born incorrectly.
I’m so done. I’m so over it. I’m culling so-called friends who, if they knew where I came from, would drop me like a hot potato. Well, that’s my sin — putting up with them. I’m fixing that now.
Very true MF: The Fed could not continue on without the complicity of the Democrat and Republican voters who elect the members of the U.S. House and Senate.
Congress, and Congress alone, has power over the Fed. Although the President appoints the Fed Chair and seven members of the Board of Governors, these must go through the Senate to be confirmed. Beyond that, the Fed answers to no other power but Congress – and the banks who own the twelve regional branches.
Edward Curtin’s recently published ‘The Shallow Deep-State Goes Deeper as It Moves Toward Martial Law’ has some powerful statements of truth IMO:
“They are the … super wealthy who control the financial institutions, Wall Street, the intelligence agencies, the corporate media (but not Wolf Street!), the internet, the military, and the politicians. They are multinational.
They are the wealthy nihilists who care not one jot for the rest of the world. Their bloodstream runs on war, the preparations for war and the economic exploitation of the world.
In the USA, it (class war) is conducted as usual under the guise of Republicans versus Democrats, the two representative political factions that are the faces of the controlled “opposition”, who are actually allies in the larger confidence game.
It is all a lie. A show. Nothing but a spectacle for the gullible. A shadow play.”
As per Wolf’s guidelines, I will leave it there and not leave a link to the essay. But business and politics intersect, and that is nowhere more true than the Fed and Congress. Thank you Wolf for bringing to light the actions of the Fed and “the best Congress that money can buy”!
@ Dan Romig: I said donor class not voters. By the time voters are presented with their “choices”, the choice has already been made for them.
Do you want your abuser to have an “R” or a “D”? You get to choose!
There are exceptions, of course. But they are brought to heel quickly enough. Note that every single senator passed the mammoth CARES bailout that just cemented our new aristocracy for the foreseeable future. Every senator has the right to hold up a bill to force debate. Not a single one did. Not. One. Mr. Trump, outlier that he supposedly is, signed it.
Shortly afterward, America blew up. D’s and R’s alike called out the cavalry. Heads were cracked. The looters at the top were appalled at the uppity penny-ante looters at the bottom. Meanwhile, I saw very few looters being arrested, let alone charged with crimes. I did see lots of protestors (aka “voters”) and reporters get attacked.
Voters have no power. We know that the looters at the top know this because they suppress those “voters” in broad daylight now.
So stop blaming “voters” please. Donors hold the only votes that count.
MF….also, the Ivy League geniuses on the Supreme ruled fraudulated voting is totally 100% constitutionally legal. And they effectively legalized bribery of public officials.
That is a very good point MF.
You are right that two party duopoly puts forward choices. In the last Executive Branch election, those choices were Mr. Trump and Senator Clinton. Anyone who was watching saw how the DNC moved for Ms. Clinton and against Senator Sanders.
The next election for president will likely have Trump and Biden as the two party nominees. So yes, if you vote “R” or “D”, the choices have been made.
However, I do blame “voters”, and donors as well, if they vote for or decide who is on the ticket of either party of the two party status quo. There are other candidates for President and Congress that are not Democrat or Republican.
Since becoming eligible to vote in 1980, I have never missed a vote. In that time I have never cast my ballot for Congress or President to a nominee of the Democratic or Republican party. The odds are that I will die before the stranglehold is broken, but I will go to my grave with a clear conscious. I do not, I never have, nor will I ever support, “The lesser of two evils.”
i’m soooo with you, Brother.
unfortunately, i’m starting to see these protests and uprisings i was once waiting my entire LIFE for, not as lasting change on an epic societal level (i don’t see the musculature to sustain this rage; now i think it’s blowing off pressure), but as new distractions now from the one true real “knee grinding deeper into our necks,” to riff on the metaphor of the moment.
and regarding this:
“I’m so done. I’m so over it. I’m culling so-called friends who, if they knew where I came from, would drop me like a hot potato. Well, that’s my sin — putting up with them. I’m fixing that now.”
–NOW shit’s gonna get interesting for you. i went there and never went back to trying to “fit in” and not be found out for my own trashy ghetto girl tendencies. they are the best tricks i’ve got and i had no idea.
x
The main problem in this country has always been one of education. Our kids are indoctrinated from their youth on what is good and bad, and are essentially taught not to think for themselves and to be dependent on government and group largesse.
Just look at the basic state of financial education in our schools, what financial education, you ask? My answer is exactly. HS grads couldn’t even figure out how to balance a check book much less understand that why they actually need something beyond basic HS education to even function (that’s how badly our school system is failing)
And what happens, we get imbeciles who keep making our public schools worse and worse. (no, the public schools doesn’t need more money, they need to get real educators, and to get rid of all of the slobs who dictate what needs to be taught for kids to be properly adjusted on a socially) i.e. no, our kids don’t need to be taught about the various types of sexuality, they need to be taught simple math and logic so they aren’t bamboozled by those trying to take advantage of them.
Both parties are complicit in this, Bush’s no child left behind was the same as no child gets ahead, Obama’s race to the top didn’t bother to tell you that the top was defined for you, and there is a ceiling.
So, instead of focusing on being woke (which is another term for being suckered), the population can actually focus on what matters, which is for a system that opens up opportunity for everyone, and not just the Fed backed few.
The MF is right. Not one senator voted against it, including our idol Bernie Sanders. who is being entirely cooperative these days. What I’ve been wondering is this. Did Bernie have feet of clay, or did they tell him he’d better cooperate if he wanted to stay alive?
He saw what happened to the Kennedys and King. He saw that all the investigations were blatant frauds. I can see that under these circumstances it could easily happen again.
The same can be said for ALL interest rate lending…why are the banks permitted to charge the obscene interest rate on credit cards but able to borrow at near zero interest rates?
The FED is a politicized banker…and it doesn’t matter what political party is in office…at the end of the day the Main Street commoner is screwed..
That is correct say so,
and it has literally always been one or another puppet such as the ”Fed” and the current crop of politicians paid by the oligarchs to keep WE the PEEDONs in our places.
In the ”olden days,” the oligarchy did some of the work themselves with their own swords or the swords of their henchmen as is still going on in a few places; in most parts of the world today, our owner/rulers keep us in our place with economic swords and puppets, etc…
Really seems to me that the only two options today are more swords or more of the kind of re-distributions that happened due to the original Declaration of Independence, United States Constitution, and especially the Bill of Rights.
Many folks have commented pro and con on the ”grand experiments” STARTING The World on the path to more democracy by those documents; IMHO, in order to continue on the path toward fair opportunity for all we really need to update all of them with special focus/regard to weaknesses exposed clearly by history and current events.
There is a concept that no one is really free until everyone is really free; considering the many high walls in place to protect the rich, they apparently consider that principle very true.
Wasn’t the Bill of Rights sort of tacked-on as a concession to the Anti-Federalists? In the initial Constitution our Owners didn’t want it.
That is it in a nutshell. Usury was regarded as criminal for 5,000 years (until lobbyists were invented), and the bankers are working overtime to not just pay savers no interest, but in an all-digital system to deny them the option of at least putting their money in the mattress (now, adding insult to injury, being “unsecured creditors” in the case of bank bankruptcy) and thereby being able to suck savings away from them with NIRP.
The Fed isn’t politicized one bit, though- it does not respond to the voice of the people, only the voice of the too-big-to-fail banks that own it.
FDR, for all his faults, appointed people with brains to police the system: Joseph Kennedy, for example, who had made a fortune on Wall Street and knew all the tricks, to very effectively run the S.E.C. ; he would never have sat on his ass while a Bernie Madoff ran amok, for example. Trump’s administration is all about cronyism and privatization with as little oversight as possible, and he is going to wind up in the dustbin like ( a much more worthy) Herbert Hoover even against such a lame character as Joe Biden.
A great irony: Nobody is carrying a sign in the street saying “Hypocrite George Romney – Bain Capital”.
MF,
Here are a couple of strategies I would use for dealing with the MFers. First I would appeal to their self interest. This deal is a great marketing plum for them, which can buy them a lot of cover from possible coming political reforms. They can milk this do gooder deal for advertising as well. Hey, look, we are really not such MFers after all.
Another route I could use is to take the bad deal, borrow 10-20K more than the project needs for a “contingency fund.” Use the contingency fund to buy some put options on the MFers, then show them up for the doodoo they are. I could then use my option profits to buy down/prepay the loan. This is a sneaky thing to do, but it’s what they do all the time.
[i think i can finally say out loud that i actually LOVE you, Petunia. –x]
Wolf tells it like it is. Nobody in mainstream media talks about it, but the Fed is taking us down a path to disaster, and it is intentionally deceiving the public.
I think even Wall Street is amazed at the Fed’s misguided policies. Wall Street is worried the Fed will turn into a nonstop money printing and inflation machine. That’s why stocks continue to rise. Every time the market has a hiccup, another trillion will be printed.
Interest rates at .5%? Deficits at 10-15% of GDP? Bailing out speculators? What a bunch of crazies we have at the Fed, posing as intellectuals.
The solution are plain and simple. End the constant Fed interventions. Let the market raise rates on its own. Give millennials a chance to buy investments and homes at decent prices. Let speculators face the financial consequences of their own decisions. Make executives earn a profit via good management, versus cronyism and stock buybacks. Make legislators balance their budgets. Tax capital at a higher rate than wages to even the score.
You cant taper a Ponzi Scheme……
ask Bernie Madoff….
You can’t taper a Ponzi Scheme if you want to keep it going. If you want to end it, you taper it.
A Ponzi Scheme can’t go on forever, and it will end badly no matter what you do. Ask your Bernie Madoff.
Here here.
For example, the only asset I hold of late is my home, to live in it. And I happen to really like it, to. The layout, location., how it fits my lifestyle.
If the Fed’s asset inflating policies ended, The Zillow would say it’s going down in value. I’m fine with that because I’m so happy living in it as it was meant to be, not investing in it, and when I’m gone, some less rich deserving soul will more likely be able do the same when I go.
Well said.
Extremely bad taste. Powell, like Trump are symptoms, not the disease.
Right now the market is buoyed by hope, not fundamentals. If hope evaporates there will another round of “price discovery”. Then, when the markets shave 50-70% off their current values, we can state unequivocally that Capitalism is alive and well.
Wolf, did you ever read these books about Capitalism published in the last half of the 19th century? There were three volumes, but one of the authors died and some of them were published post-humously.
They predicted Capitalism would be the system that beats out every other system, but eventually shakes itself apart.
Davie:
Not to be corrosive but did you have to read a book to understand that???????????
(Stay safe and healthy)
Karl Marx suggested similar…. but then he was wrong about Communism….
So back to the drawing board!
This isn’t capitalism.
Why is this considered news? I thought it was business as usual.
This website is the only source is the closest to objective truth available.
In a CPA firm where I audited those wishing to gain loans the amazing reality of politics, banking, stock companies and who you know made sure only a few actually get to practice “Capitalism.” Note that in this firm was a few clients were White House Alumni….
At this point I hold firm to the concept learned in philosophy which was “substance over form” which is a fancy definition of “What they tell you it is and how it REALLY is….”
Wolf is a rare source indeed with the most recent direct benefit received from info found here was know that Enterprise rent-a-car was over pricing the rental cars selling so I avoided overpaying. Instead, I purchased from an excellent and honest direct auction buyer a F250, 2001 work truck sold by the LA Water and Power Dept. It was in cherry condition and had only 67,000 original miles and paid 7K plus tax and license. Compare that to having to spend 50 to 70K for any decent new truck nowadays.
Again and again, because of the info here I can only look at what is happening with the feeling similar to looking over the short wall of a 50 story LA high rise…. Breathtaking fear and I see no way the world can avoid a depression even worse that the vintage Wall Street Market selloff.
A patent attorney friend indicated the remote workers at Google, Facebook, Microsoft and Apple may end up going anywhere but San Francisco, Seattle or New York which logically will affect the value of living close to work. What will become of the great edifices built by these companies? Will now high real estate prices decline fast or over time?
My mortgage payment, property taxes and fire insurance are less that what a person has to pay for a 2 bedroom apartment. That cannot and will not last.
Most everyone I ask feels out of control and I cannot help but think of how it seems hard not to think that World War is going to become necessary to determine who is going to be the Boss because USA is in play and things don’t look good if China takes that spot….
The R party is led by hotheads who would go to war to show them who is Boss. The D Party is led by cooler heads who know that business is business, and as our systems converge we can work out a peaceful coexistence.
Then why did the D Party turn gwb 3 wars to 7? Because they did that with cool heads? Perhaps but does that really matter? Maybe this is better: The R Party is insane and the D Party is owned by corporations & their donors.
On a personal level: This fall we have the choice between the madman who pushed the Fed and a demented man who can hardly read a teleprompter anymore.
Yes RD Blakeslee. And some wonder why voter turnout is so low, with most of those not realizing it’s because it’s by design.
If I remember correctly, John Hussman is of the opinion that that SPV created by the Fed is illegal under current law and should be banned by congress. As you pointed out, however, political leaders in both parties are beneficiaries of Fed bailouts.
Given this could you, John Hussman and perhaps David Stockman and Bill Bonner and others take up a class action suit on behalf of ordinary Americans, to sue the Fed and if needs be take it all the way to the Supreme Court? I have no doubt that you can crowd fund such an action.
He could be right but the chance of it turning it into class action lawsuit or reversing the action via Supreme court is about as good as riding a unicorn, hanging out with real Santa Claus. A pure fantasy that will only make us feel better thinking about it but will never happen. You also have to remember who appointed two of the judges in the current supreme court in the unlikely scenario it gets that far…
Yah, after all the Ivy League genuies on the Supreme are rich too, know who they really serve, and may own stocks too. What they gonna do… recuse themselves. Maybe but only if they all do, leading to failed class action perhaps…as no court in session?
Isn’t Bill Bonner hiding out at his real estate development in Argentina he is always hawking?
Is he still telling people to invest in gold?
Harrold,
You have Mr. Bonner confused with Doug Casey. If you are going to throw stones, get your facts correct.
Bonner droned on for years about his “ranch” in Argentina and imminent collapse of the system.
Someone needs to get their facts straight. Harrold’s rings true to me.
Somebody needs to stand up the FED like a Tom Fitton at Judicial Watch…. Jim Grant where are you.
Scott Mienard from Guggenheim has certainly been on point.
Wow. So, there is the second amendment, rampant (and documented) fiscal immorality and consequently lots and lots of pissed off people (who are “waking up”). Meanwhile, you have “other super powers” stirring things up using social media. What could possibly go wrong?
Capitalism is about profit, which is based on revenue. However the ratio of profits , or revenues to expenses improves when cheaper credit is made available. This is why markets perform better in a crisis than they go up during the normal business cycle. The promise that Fed will lower rates is the best measure of stock valuations. This one was doubly great because it busted up the tight labor market, and allowed for corporate downsizing. If I didn’t know better I would say this was the biggest fix in the history of financial markets.
Dear Ambrose – you’re over-thinking it. In a Capitalist society, man exploits man. In a Socialist society its the other way around.
No matter what the political structure, tribute always flows to the Master.
Fantastic report Wolf – your best ever.
This information should be spread everywhere so that more people become aware. [Other sites should pick it up, and anyone with any influence should post it widely.]
Wolf, should you decide to go into politics, I would certainly vote for you. Please do.
“This information should be spread everywhere … ”
Practically impossible. The elite own the media, school systems, etc.
Up next – cities towns and state. It’s part of the plan. Then middle class homeowners are forced out of home ownership from skyrocketing fees, taxes so Blackstone can package the homes and sell them as REITS or whatever they are called. “We’re taking Detroit private. Anyone can own a share of our company. What can be more democratic than that?” – RoboCop
“Wolf, should you decide to go into politics, I would certainly vote for you. Please do.”
i thought so, too, but he’s actually waaaaay more dangerous being and remaining truly independent and financially self-sufficient, so if you all really dig what he’s doing, click on that mug we all did and DONATE.
Wolf’s a quiet leader and he’s leading thought in his own way here. the Wolf Meet is still going on here. it’s bigger (and better) than i originally thought or how anything is turning out. but it’s real. i was right so i’ll go on spewing what comes into my head a little longer because of it. (smile)
so toss Wolf a few bucks because it pads him with a little more armour to keep on keepin’ on here, as no one else can or will or has the heart and musculature and FIGHT or morality.
even if it’s $5 donate because even spare change from someone for whom that’s a lot of money is fuel for lift off.
i say this because i feel Wolf is in increasing danger. / he’s surpassed “entertainment.”
he’s why i believe in investing in the future of NEW scrappy entrepreneurs in this new age/era of complete employee slave pussy-ness. wait… even SF business owners are pussies to me now sucking up their own demise, so that’s why i say NEW scrappers.
(to MF, as in: wherever you were ashamed of coming from has more honor and chutzpah and fight than soft mushy weak people in charge)
yes, Killer Mike was right about it being time to organize (on the low). i don’t want “permission” to protest in polite safe numbers.
i wanna think up plenty of “Defensive Loophole Economics” plays like Petunia.
as an artist i’m delving into the thinking BEHIND this. it’s different. you don’t wanna be temporarily embarrassed millionaires EVER because you know there’s nothing there.
Petunia- i’m working on a piece harder than the weinstein piece which was a tiny beat down for me. thanks for the dare. i’m taking you up on it and it’s gonna be a little longer because everytime i go into one subject i pull the rock up and have all these OTHER new little critters to get to know first.
that’s why i only got chills over the uprisings for ONE day before i realized something was hella FISHY and …wrong wrong wrong direction. no singing kumbaya because monsters felt like they were the ones counting “1,2,3… NOW SING!”
x
Anyone know of an ETF that specifically looks to identify high yield investment opportunities that are likely to be bailed out when the SHTF again?
I have to disagree that the Fed will end the money printing at some point. They will never end it. How could they? There are no politicians, Republican or Democrat that want to end it other than Rand Paul. It’s not even an issue for either party. The Fed doesn’t want to end it. The Fed is actually asking Congress for more spending to monetize. When Biden is elected and the Democrats take the Senate, they will monetize student loans, state debt, and municipal debt. If that isn’t enough they will monetize taxes. They will not stop. Ever. No one in government has the guts to stop and no one in government thinks it’s necessary
Let’s be clear, very clear about guv mint TJO,,, at this point, in spite of all the ”drain the swamp” BS, it is SO clear that all the MFrs in guv mint, no matter if elected or appointed, are puppets of the rich oligarchy by any name anyone cares to call it.
Been that way for eva, eh? And the only ”blip” in the biz as usual was when some of our founding folks decided to go hard against King George III.
Of course that did not last very long in the very very long history of these oligarchy folks who work in a multi century time scale, just approx 1800 to 1970, when the ”NEW” oligarchs of USA figured, correctly, that they needed WE the PEEDONs for cannon fodder and for very enthusiastic cogs in the machinery to produce the weapons for the cannon fodder to defeat the ”wannabee” oligarchs of the nazi and other socialists/fascists.
After seeing how close the nazi were, with a small country and very limited resources, to literally/actually taking over the world, the old order oligarchs knew they had to rein back the manufacturing capacity of USA, anticipating, correctly, that someone in USA could/would become like the nazi leader, and with the manufacturing of USA intact, take over the world fairly easily.
We are going to have a lot of fun in the next few years sorting out this whole globe mess,,, or Gaia will have to do what Gaia does, has done, and will do when needed.
@VV – 1800 to 1970 nuts! You need to go back and reread about the Whiskey Rebellion that I’m sure you know about. It was crushed by troops led by one of the richest Americans and biggest landowner in the newly created US. Oligarchs have been in control from the git-go.
I forgot to mention – G Washington was one of the largest whiskey distillers in the US at the time. Also a very successful land speculator profiting on the development of land around the expanding new Capital of the US.
Lisa,
That period is approximately the duration of the various times that the oligarchy needed WE the Peedons as cannon fodder, etc. and were forced to give us somewhat of a good deal instead of stealing from us as usual.
Not saying we were not owned since for eva,,,
Ha ha I’ve always said that the only reason the USA didn’t become Fascist in the last century was because the Germans beat them to it. But now neo Fascism is flourishing in the USA and success is near!
If the Whiskey Rebellion is an indication then these founders were just a different set of aspiring oligarchs.
Don’t pay to much homage ……………..
Didn’t Rand Paul vote for the CARES act?
Ron Paul was the real Warrior.
You are right though, I think. The money printing/digitizing will not be ended by the FED, unless forced, and there is no such force on the horizon.
People are protesting about the wrong things(s). They should be protesting about the discrimination between the haves and the have not’s. The have not’s always being prosecuted for minor things and the haves never charged for anything, or being able to settle their way out of trouble with money, is a big thing. As (coloured) minorities almost always belong to the have not’s, they are the most discriminated in every way. Discrimination is not only a racial thing, it’s also about on what step of the social ladder you stand. And because minorities populate the lowest steps, they get hit the most.
The protests lack focus. They only scream into the abyss, hoping someone who can do something, will do something. They should be shouting directly to the moneyprinters and their protecters, who defend this system and perpetuate slave labour for their own benefit.
Maybe someday the protesters will figure this out. That their inequality is caused by the moneyprinters.
It will be like Jesus Christ who chased the moneytraders out of the temples and restored some fairness. There’s a long way to go.
“People are protesting…”
I wonder if the “protesting” ever helped anyone in the matter of wealth distribution.
As a threat of action, maybe. And protesting sends a message of a need or a problem.
But we should distinguish the Protesting and Rioting. Rioting is about telling that the there is uncontrolled social unrest. A message too, but very unclear about the solutions.
And give a thought about recent Yellow Jackets movement in France: there was protesting, there was rioting… with no visible results whatsoever. Perhaps the politicians became more cautious about social issues.
Engin-Ear:
“I wonder if the “protesting” ever helped anyone in the matter of wealth distribution.”
History is littered with the detritus of the “heads” of regencies that have been overthrown and literally decapitated in endeavors to “level the playing” fields…..between the “….haves and have nots”!
If the politics don’t allow peaceful change then violent change is inevitable.
And me thinks those running the show would be aware of that … and would do whatever it takes to ensure that the protesters do not come for their heads.
Herd them in another direction.
I fully support the Black rights fight but I cannot help but notice that it has, along with Covid, kept the masses distracted and the MSM busy telling people what to think, do and protests (when the Big Story actually is the Fed is again bailing out their mates… but this time on an epic scale).
There are black people getting shot and strangled by cops every other week – captured on video.
I distinctly recall a black man getting strangled to death for selling cigarettes a few years ago….
Yet suddenly the MSM decides to address the plight of blacks in America.
Sure, maybe enough was enough — or maybe the sheep needed to be herded?
CRV:
The above referenced Edward Curtin essay addresses these points directly.
“But when the propaganda is so slick that it creates a double-bind, people grasp at any neurotic “solution” out of frustration. As I write, huge crowds are out in the streets protesting the sick murder of a black man, George Floyd, by a white cop (which happened one mile west of my home). Police infiltrators have started violent looting. Chaos reigns, as planned.
He (President Trump) knows how to perform his role. He is a fine actor. He outrages, spews idiocies, as he is supposed to do. That Mussolini style stance, that absurd hair, the pout. Just perfect for an arch-villain. It’s so obvious that it isn’t. Herein lies the trick.
And who profits from his policies? The super-rich, of course, the power-elite.
Who just stole 6-10 trillion dollars of public money under the hilariously named Cares Act? The super-rich, of course, the deep-state.
It was a bi-partisan bank robbery from the public treasury carried out under the shadow of Covid-19, …”
Well put, Dan.
“The protests lack focus. They only scream into the abyss, hoping someone who can do something, will do something.”
i grew up going to protests and remember all the time as a kid being hella bored at the endless MEETINGS my folks were always going to when they were married and apart.
there are NO MEETINGS now and not before Covid. / just rants proclamations no strategies or community organizing. (even things with artists would devolve and split up)
as much as i WANT to believe again, just ONCE more please!–i no longer believe in anything real or solid or lasting in this swiping dismissive short-attention-span world, and i’m just gonna have to make my little world and live within theirs.
it’s why my nihilism is okay and i’m turning inward and not worrying about “everyone” anymore. / like ALL of us, i’m nearing the end of my time here on earth—a witch told me when i was gonna die when i was a teenager and everything else came true so i’ve got about 20-something years left to be relevant/efficient and the last ten went by in a blink, and she never said i’d die with all my parts and limbs so i don’t take future ease for granted).
my nihilism is a good kind. like when Petunia tells you how to use their money to pay them back.
THAT’s the kind of thinking we need now. let the tantrum people do their part. it’s a quick burning out heat. use it. BUT NOW what’s real and lasting and possible.
THIS IS WHY I LOVE PETUNIA. because she may rip your wax off painfully, but she’ll make your existence ultra-violet. / i’m sure… ask her HUSBAND.
x
Have to completely agree with this one or at least that’s exactly how I look at it too. Perhaps I am the glass half empty kind of guy but then again I have been disappointed too many times before. Without a real organized movement and leverage to force the powerful to the corner, all it will turn to is bright burning rage at first then fizzy out into nothing. Saw that with occupy wall street and these protests while it’s lasting longer than expected are nothing like the Civil rights movement in its structure and discipline.
US masses can take a page out of learning something from HK protest and student protest in China 89, sustained protest over a period of time with actionable demand. Even then, it’s still an uphill battle especially against an authoritative regime, one that we are dangerously close to..
The US economy is now the government…….the trend was established in the mid 60’s…….slowly at first…….now the crooks are firmly in charge……..our freedom of speech is nearly gone……
As in all dictatorships……its only a matter of time until it all falls apart…….the only mechanism that can run a successful economy in the long run is a free market……with a few adjustments to make it humane…….and this ain’t no free market.
The “ free market “ is what got us into this mess. The only thing free about it is Corporate Welfare. Until the Working Class seizes, owns and control the means of production, nothing will improve. Trump is a Fascist. Capitalism is a failure and is literally killing us.
“The Communists disdain to conceal their views and aims. They openly declare that their ends can be attained only by the forcible overthrow of all existing social conditions. Let the ruling classes tremble at a Communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win.”
– written long ago by you know who.
The free market cannot run a successful economy in the long run.
Pandemics and wars have proven this point over and over.
I heard that the official motto on our currency, “In God We Trust” is being replaced by “In FANGMAN We Trust”.
I had an uncle (by marriage) who could not understand why the government couldn’t just give everybody all the money they need and people wouldn’t have to work. He was a Communist when he was young in the Thirties and Forties. If he were still alive he could get a job at the Fed.
We thought the Communists were the big threat to capitalism…
Surprise!
It is the Central Bankers, the unelected dictating from committees meeting in oak paneled rooms….
FROM…. Bernanke promising to normalize rates when unemployment dipped below 6.5%….to his promise to unwrap, roll off, QE purchases…..never happened..
TO…..SNB owning $4 Billion in Apple Shares and $4 Billion in Microsoft…
bought brilliantly before ECB rate cuts
Very Good Wolf and dead on…
But the problem is that the Fed is untouchable…
you cant touch the Fed when they are goosing the markets to all time highs…what politician would do that? (Dow 29K +)
And you cant touch the Fed when they are “saving the system” with Trillions for Paycheck protection, bailouts, etc…
Conclusion: Politically the Fed is untouchable.
They are, and have been, in fundamental violation of two of their three mandates….
They promote inflation when there is a mandate for STABLE prices.
They promote record low long rates (4000 yr lows as Jim Grant points out) when they are mandated to “moderate” (not extreme) long rates. Record lows are extreme by any metric.
But not a word……not a word….
All that’s missing now, is stock buy backs.
Maybe the next stimulus can fix that. We should use it to set up a stock buyback program. It can lend out loans that don’t have to be paid back at zero interest rates.
But we’ll call it a loan so the Little People don’t notice.
America is the best nation in the whole world because our stocks markets are the highest. We don’t need to make steal of 5G because we can just force other not to make them. We just need to make the stock markets to always to up, and that will prove we are the best.
Great commentary Wolf! I agree with CRV above. It seems the unrest is misdirected. They are focusing on the symptoms of inequality, not the causes. I also find when talking to smart friends and family, they often have great points about why our system is breaking down financially and politically but only focus on one or the other of those aspects. I don’t understand why the majority cannot see how tightly woven together they are. I am looking to throw away my vote this November. Sell me on who I should waste it on.
If one believes the recent reports on loss of support by one rich guy in a nice suit, then the other rich guy in a nice suit has already won. Of course there are a few more weeks to see where might be going. I’m of the opinion that the “No Vote” situation is expressing a much stronger feeling about what the populace really believes these days. It may be the loudest form of protest ever registered and scares both parties more than anything else. Perhaps the D-R system (Dead Road) can be met with a new “R&D” party which thinks before acting. It looks like there may be four more years to have it in place before the next round of B.S. hits.
Vote for someone other than a Rep or Democrat. That sends the strongest message if you are upset with the status quo. It shows you are not apathetic.
Thank you!
I am not apathetic. I am disaffected. There’s a big difference.
No vote is wasted if you vote for who you want to win, whoever that is. The only ‘wasted’ vote is the one you cast for a choice you don’t want to make because you think “I have to because everyone else is voting for this person too”.
It is quite frankly infuriating to me to have to explain OVER and OVER again that voting third party is not ‘wasting’ a vote. The logic is quite simple BUT NO ONE EVER SEEMS TO GET IT:
Either your single vote IS going to choose who wins, or your single vote IS NOT going to choose who wins. There are no other alternatives, those logically cover all possibilities.
If your vote IS going to choose who wins, the why would you not choose the person whom you want to win?
If your vote IS NOT going to choose who wins, then why do you think it’s necessary to vote for only one of two possible candidates?
This all just highlights the fact that your vote IS NOT going to choose who wins. The election would have to be a perfect tie with your vote being the tiebreaker for that to happen. It’s essentially mathematically impossible. Therefore, your vote WILL NOT choose who wins.
So again — why not just cast it for whom you want and know that you’ve used your one basically insignificant vote to at least make a statement about your preference?
Not only does this work on a personal level, it works on a macro level. Because then the collective would be choosing according to the cumulative unfettered choices of every individual and we wouldn’t have this forced fake dichotomy between two choices all the time.
However even when the logic is laid out perfectly before them people are just too stupid in general to accept or understand it. They have this nagging feeling that if their ONE vote is not cast for a person that they think “most people” would vote for, their ONE vote is somehow wasted. It is maddeningly stupid but it’s a stupid that I guess is implicit in human nature and cannot be eliminated.
I voted Libertarian in every election up to Obama (I just happened to like Obama, and was getting tired of dogged devotion to Libertarian ideology; in other words, I stopped caring and started voting more on emotion than ideology). Not ONE of my votes was wasted and screw anyone who would say otherwise.
Somehow I am thinking… if the third party were to win…. they would end up the same as the R and D parties.
In fact to win they’d need the MSM and big donors on board… so they’d become like the R and D parties even before they won!
I have a friend who is a retired professor from University of California.
She had a student from India who was from a VERY wealthy aristocratic family (apparently she was flown on a private jet… that sort of wealth).
Anyway, my friend once asked her — have you considered running for office in India — she dismissed what with ‘oh no, we pay people to do those jobs’
Of course the 3rd party could take extreme measures and lop off the heads of those sorts of people …. but as France (and Kampuchea) found out…. that’s not a solution.
They keep on coming back. It seems to have something to do with the nature of our species….
“Of course the 3rd party could take extreme measures and lop off the heads of those sorts of people …. but as France found out…. that’s not a solution. ”
Au contraire, mon frere: they created a republic. Ben Franklin was asked, as the Constitutional Convention came to a close, “What kind of government are we going to have?” He replied, “A republic, if you can keep it.” That requires clearly written laws, enforcement and a well educated public. None of which is the case today. The U.S. Civil Code in 1950 was about an inch thick. Ironically, the true general level of education (Google 1900 High School Exam, for example) has gone downhill since mandatory universal “education.” Just think of what was just passed into the next year’s grade due to COVID.
Robert – remember that Napolean character…. Emperor Napolean is what he liked to be called….
The last time I looked France had the same system as the US and every other OECD country.
The rich ‘farm’ everyone else.
And it’s been this way for a long, long, long, long time.
You call it a Republic – I call it an Oligarchy.
The yellow vests are opposing the French oligarchy (Macron needs to get with the program and redirect them…)
It’s tough to run an effective rebellion when the other side has all the pepper spray and tear gas… and will shoot you if need be.
@Willy – Thank you ever so much. In all the verbiage on Wolf Street I have never heard it stated more succinctly.
‘oh no, we pay people to do those jobs’ –
I would even register for a third party and than vote for a fourth party candidate just to screw with the pollsters who were fixing elections far before polling. But I came to realize that the pre-ordinated winners were able to claim it was a fair and just election in which everyone had a chance to participate, and that’s just pure B.S.! So, I undermine their claim to authority by reducing the numbers which they say sanctions their power. Walk away and break the illusion, or let them use you for their own ends…so far the second choice has not gotten more than putting Frat Boy Bill in office to further the disgrace without even an overriding majority of voters supporting him that year. And that’s the best past showing for a third party candidate so far. It seems time for everyone who has had it to drop all participation for one election and work on a new party from the grassroots. F*ck MSM.
The closest we ever came in modern history is Ross Perot. He showed all Americans, with simple clear charts, on National television, where we were going. Americans didn’t elect him. Then we went where he said we would, and we are still none the wiser.
I am all for it. My 401k is just about back to where it was before the Wuhan virus crash.
I think that’s kind of the point. The government cannot allow the stock market to fall because it has encouraged everyone to put their future retirement savings into the stock market via 401k programs. Therefore it has an obligation now to always keep it going up.
It is a sad side effect that rich people can game this system to become richer. We have built an economy that can only benefit the everyman if it benefits the rich *more*.
So every effort we make with the everyman in mind, as pure of intention as it is, is inevitably only going to increase wealth disparity. Wealth disparity is the worst problem our country has, by far, and it is only going to get worse.
Hi Zantetsu, I am afraid it is not merely a black and white, us versus them issue. I am categorized as a wealthy person. I have been working since I was 12 years old, delivering newspapers and stuffing train station newspaper machines as a young lad. My father did not have a high school education, and I was from a lower middle class background, to put it nicely.
The reality is – the more assets you own, the wealthier you become when the Fed acts to support asset prices. And everyone along the continuum of obscenely wealthy to fabulously wealthy, to wealthy, to not wealthy but owning assets, benefits. Recall that Yellen urged Americans to get into assets before she embarked on her asset support activities.
I’m referring to anyone who makes more than, say, 750,000 dollars per year, and thus has so much excess capital that they can not only avail themselves of the advantages that our system gives those with excess capital, but *must* do so otherwise leave a large amount of profit on the table, in my comment. Not sure if that covers you, but if it does, then yeah, you’re who I’m talking about. Anyway, it was not my intention to make it personal in any case. Sincere best wishes to you!
Crush the Peasants said: “Recall that Yellen urged Americans to get into assets before she embarked on her asset support activities.”
_________________________
and who have been listening to Yellen, other that wealthy people or market participants? sound like inside information. corrupt.
and how has your wealth been gained? through stuffing newspapers? or asset appreciation, which is just a derivative of FED actions?
The bailouts keep the system from collapsing so effectively we all benefit from that.
However the very wealthy benefit a lot more…
Their investing strategy of ‘heads they win tails you lose’ is working extremely well for them.
No doubt they look for high risk, high return opportunities that are TBTF.
Surely there must be an ETF that works off of those strategies????
but why assume the bailouts keep the system from collapsing? doubtful. and even if true, then the system should collapse.
and no, we do not all benefit from that.
Perhaps instead of sending out $1200 the government should have sent $1200 worth of FANG stocks to everyone?
It may soon be time to be thinking not so much investment and making money, but try to hold on to what you have in some material form. Perhaps the elite are already thinking ahead, understanding this paper ride is not going to last forever.
Does anyone want to bet on who is going to be owning most of the material property (real estate, land, commodity assets, farms, precious metal, etc ) in the near future?
I’ll bet on myself, in my deliberately limited sum. Land, timber, a nice house our family built for itself 42 years ago, and no debt.
Never played in “the big casino” (NYST) – never will.
The 401Ks will be safe and sound, until after the election.
Yes. the same already own them.
Great content, as usual. And loved the passion.
Hooded looters know to act now,
while the police are busy with other things;
in court, they get off scot-free.
White-Collar looters get bailed out first
and foremost, with blessings from Congress.
There are no winners&losers anymore;
everyone gets an A.
Without punishments and rewards,
nothing gets done; consequently,
racist, fascist China is eating our lunch.
I just had a small epiphany.
Recall when the Repo market was spiking last year?
My understanding is that banks did not trust counterparty banks so were unwilling to make overnight loans – and the Fed stepped in …
When did that happen? Ah…. 2008.
There were clearly some serious ructions occurring that the Fed was dismissing as nothing burgers.
I noticed this article in March:
FT.com “The global economy was facing the worst collapse since the second world war as coronavirus began to strike in March, well before the height of the crisis, according to the latest Brookings-FT tracking index.
So we’ve got the data headed south…. and ructions in the repo market.
I smell GFC 2 was brewing. ‘What cannot continue will stop’ – was stopping
Then within months we’ve got the central banks flooding the world with trillions of dollars…. and lots and lots of it is being used to bail out people who do not deserve bailouts.
Does anyone know about this? Very few. Is anyone making a stink? Nope.
Recall TARP – 700B…. there was one heck of a fuss over that!
What is happening now dwarfs the response to GFC1.
Now I am not going to suggest that Covid was invented, or exaggerated… It is real. And people are dying.
But what did Rahm say about a crisis not being let to go to waste?
How is it that the Central Banks can get away with pumping out literally trillions upon trillions without anyone making a peep?
Well of course — let’s blame this on Covid…. Covid is why these dodgy fund managers are insolvent…. Covid is why we have to bail out essentially the entire planet…
Imagine trying to do what the CBs are doing without Covid? What do the optics on that look like?
Well everyone, the banks have messed up again …. and this time we need to help them out but it’s going to cost 20 trillion (or whatever).
There is that… but then there is the issue of confidence. How would the masses react this… how would the markets react to this? Panic????
Instead of GFC2 and a massive crash…. we kick the can and continue to stagger down the road…. but we are in a severely weakened state after tearing a groin this time….
Just some random thoughts….
Oh … this is a must read…. that ties in with the above thoughts:
Wall Street’s Financial Crisis Preceded COVID-19: Chart and Timeline
If a reputable polling outfit were to ask Americans what caused the current financial crisis on Wall Street, they would say the coronavirus COVID-19 pandemic.
If Americans were asked in the same poll when the financial crisis on Wall Street started, they would tie it to outbreaks of the virus in the U.S. this year.
But as the timeline below and the chart above clearly substantiate, the financial crisis on Wall Street began in earnest on September 17, 2019, almost four months before the first death from coronavirus anywhere in the world was reported in China on January 11, 2020 and five months before the first death in the U.S. was reported on February 29, 2020, having occurred one day earlier on February 28. (See the New York Times coronavirus timetable here.)
This big disconnect between what people believe about the current Wall Street crisis and the easily documented facts show just how effective Wall Street’s spin doctors and protection racket have become at promulgating a false narrative through mainstream media outlets. (To help get the truth out to the American people, Wall Street On Parade has chronicled each milestone in the crisis in an investigative series that now includes more than seven dozen articles.)
The reason that it’s critically important for Americans to understand that Wall Street is getting another massive bailout from the Fed for a crisis it started before COVID-19 was on our shores is because the structure of Wall Street, with trading casinos allowed to own our largest commercial banks, is far more deadly to the future of America than COVID-19.
More https://wallstreetonparade.com/2020/05/wall-streets-financial-crisis-preceded-covid-19-chart-and-timeline/?fbclid=IwAR2Mqq73xmQKxWCa2IiXU84FdxXVvJe3OxLChbneaJ5prxvBGUXdMzcupuw
(that graph comparing 2008 to 2019 Repo is particularly interesting)
Here’s the graph
https://wallstreetonparade.com/wp-content/uploads/2020/05/Repo-Purchases-by-Federal-Reserve-Versus-Yield-Collapse-on-10-Year-Treasury-Note-During-2008-2009-and-2019-Financial-Crises.jpg
Correction on this :
My understanding is that banks did not trust counterparty banks so were unwilling to make overnight loans – and the Fed stepped in … (in 2019)
When did that last happen? Ah…. 2008.
I can’t help but thinking that the repo action during 2019 which the Fed dismissed … (see JC Juncker ‘when it gets real bad you have to lie’) was signalling that the Central Banks realized that their stimulus was starting to not work….
MMT (money for nothing chicks for free…) was also getting a fair bit of play in the MSM….
Lo and behold what do we have now — it’s not called MMT rather it is called Wage Subsidy… a much kindler, gentler way of expressing it (and it’s of course temporary)
What else do we have that smells of MMT? Yes of course we have Mortgage Holidays. How wonderful… can’t pay your mortgage… take a holiday!
Here in NZ you can get up to 2500 per month Wage Subsidy … you can get Interest Only Mortgages and I do believe it is possible to get a Mortgage Holiday….
Petrol is a lot cheaper. And who drives much if you don’t have to go to work…
No wonder people are so pleased with this Great Depression that has 41% of the workforce on wage subsidy — many are actually doing better than ever.
And to top it off – they don’t have to work (that’s the chicks for free part…)
I fail to see how the subsidies and holidays can end.
Thousands of businesses are gone (tough to put toothpaste back into the tube… or shaving cream back into the can)
International travel is not going to return anytime soon…. and mortgage holidays are not really holidays … what you don’t pay gets added to what you owe but the term remains the same so your payments are actually higher post holiday (as I understand it…)
It would seem that the subsidies and holidays must continue — in fact I have seen that Australia is discussing an extension until the end of the year.
Imagine what will happen to the property market here in NZ if that 41% on the subsidy got cut off when it expires at the end of July … and/or if the mortgage holiday was ended.
If it smells like MMT … tastes like MMT… and feels like MMT…. then it’s MMT.
We just aren’t calling it that.
Recall the cartoons of Bernanke throwing USD out of a helicopter?
That’s happens 24/7 but it’s also cloaked in more palatable terms… afterall… we would not want anyone to wake up to the absurdity of all of this.
They might panic (and hoard their money for nothing… or buy gold and silver)
Now look what I have done — that song will be playing in my head all day now!
thanks
Michael:
Pithiness: In this collective cry of impotence, I enjoyed your comment the most because I know how difficult this was for you. I look forward to your return to Engelish in the future. Until then – linearly culled from the comments on your behalf – with affection:
1. Disconnect = insane but < blatantly obvious
2. Nowhere to be found, then begs the question, FED over-indulent.
3. Blast off will push back, end up in boxes, break camels back so invest in overpasses.
4. Look penny wise = beyond disgusting + bad cut by mad barber.
5. Cries = I'm done.
6. A shadow play for outlier. Obscene.
7. The correct say so, of the irony, for the MFers.
8. Solution = plain and simple, but taper hard for deserving soul.
9. Well said. Yes. But hope will shake itself apart.
10. Stay healthy = news + cannot and will not last.
11. Peaceful coexistence = insane and needs teleprompter to see design.
12. Illegal = fantasy < genius failed.
13. Wow. Biggest fix = over-thinking it. But please do.
14. Part of the plan = got chills + they will not stop.
15. Scream into the abyss = violent change inevitable + chaos reigns if without few adjustment to make humane
16. But not a word.
17. Kind of the point, this paper ride.
18. A small epiphany. Thanks.
(HUUUGE SMILE)
funny as hell.
x
“collective cry of impotence” : so gorgeous my skull cracked with its PERFECTION.
Crazy Chester ain’t so crazy after all.
but we’re NOT impotent when— to bring back the wise words of Unamused—WE ASK THE RIGHT QUESTIONS.
where it DOES feel “different this time” for ME, is because They’ve Gone Too Far This Time.
Petunia was getting MF to “Ask the Right Questions.” / you have to change your thinking from being within to being on the low and working it from under.
like how femme bottoms rule from BELOW… ya dig?
this is my angle. i used to think i had to do it on the down low but nah… Loophole Angles. when you don’t want the shit, the game is different because YOU’VE CHANGED THE GAME.
THAT’s my angle.
so no… i hardly feel impotent. this covid stuff and SF’s reaction AND SURPRISINGLY the uprisings (that was my clue this wasn’t gonna be as easy as it was looking with corporations and the NFL and TVguide suddenly gung-ho about all this “don’t kill black folks” stuff), all the events and the reactions to them made my chocha sad and dry up and i thought it was broken til Larry’s show on KPOO saturday morning (music was gooood), but Petunia’s advice to MF was really:
HOW TO THINK. the RIGHT QUESTIONS TO ASK.
so i’m a broke ass pipsqueak living in a rent controlled apartment in a beat down neighborhood and i have NEVER felt as powerful or as able to incite a domino effect as i do NOW.
because like MF, i had a living suicide, and there is NOTHING scarier than not only someone with nothing left to lose, but someone with nothing left to lose and an All Access Card and an insider’s knowledge of The Game.
this is why Petunia is also hella dangerous, too. that’s why i aim to meet her one day if i have to go to HER. i already was fixin’ on doing that a few years ago.
x
Meanwhile…
Estimated U.S. military spending is $934 billion. It covers the period October 1, 2020, through September 30, 2021.
And that only included the unclassified part of spending. The classified, secret spending is likely as least 50% of what they report (maybe $500 billion).
Paying people more to stay at home than what they earned when they worked 40 hours a week is not capitalism.
Funding non-essential business owners is non-essential spending.
A movie theater might be replaced by Netflix.
A small town entrepreneur in central Saskatchewan was kind of a big wig because he owned three successful businesses.
He was a broken man when I spoke with him in early May because 90% of his staff opted to apply for the $2,000 per month Canada Emergency Response Benefit and his three essential businesses were being slowly destroyed.
He couldn’t afford to pay 2K per month but we can.
the movie theatre employs people in the town, Netflix doesn’t.
Yes, it is. You take romantic feelings with the bourgeois. My advice is don’t
David, I replaced Netflix with my growing 350+ DVD collection. Eliminated internet data charges for same.
Unbridled capitalism will devour itself
Pass the bromo….
Wolf,
Great Commentary delivered with passion and purpose.
Hope someone is listening who can make Capitalism work.
I have been watching this week Milton Friedman’s speeches – he is so relevant.
Here in the UK people protesting about history- toppling a statue of 17 century slave trader. This guy Edward Colston gave a lot of money to city of Bristol made Bristol an important City.
You cant re-write history.
In my humble opinion who is British Indian Asian.
Keep up the good work.
Milton Friedman??? You have to be joking right? The Milton Friedman who imposed his utterly discredited victorian-style monetary insanity on Chile destroying the country? Whose policies were adopted by Thatcher and failed disastrously?
Or are we talking about a different Milton Friedman?
Milton Friedman – Chicago School – Capitalism & Free Markets.
There is only one Milton Friedman.
Thatcher, Chile – 2 sides of the same trade that is what makes a market.
2 Different opinions.
Please watch his lectures and interviews.
Thatcher was not a failure – Freed from shackles of trade Unions.
London Stock Exchange – Big bang – Financial services winner.
if you chose to ignore the major recessions of the Thatcher governments and the total destruction of Chile. Thatcher abandonment Friedman’s M3 targeting, because it didn’t work. Friedman’s economics was the simple monetarist nonsense of Ricardo and the gold standard victorian era sound money nutcases.
Sorry, but Friedman is not a good point of reference.
Rajan soon said: “Milton Friedman – Chicago School – Capitalism & Free Markets.
There is only one Milton Friedman.”
____________________________
Thankfully, that it is true – there is only one Milton Friedman.
He was a mater at conflating Capitalism and Free Markets. Not the same thing. at all!
Did you see the Epstein documentary?
Apparently he left $100M to the city of Bristol to build a to help Make Bristol Great Again.
And… they are replacing the Colston statue with one of him.
I believe there are now MBGA hats and T-shirts available on the Bristol town council website now if you are interested.
Rajan sood said: “Hope someone is listening who can make Capitalism work.”
___________________________________
i would prefer someone who could maintain true free markets ……..
That speech should go viral.
thanks Wolf!! your best Wolf Street Report ever. This needs to go viral folks. Let’s see what we can do!
And this is a surprise, with all the billionaires in Congress and Trumps cabinet. I especially love Mnuchin, went from a multi-millionaire to billionaire in the last downturn by taking over a distressed bank and foreclosing on homeowners. Yeh, that’s the guy to be helping the little guy, this time.
Harris is toast as vp. Not happening.
Never fear- Michelle Obama (or maybe Oprah Winfrey) is quietly waiting in the wings)
Don’t really follow politics… but seems to me that every Potus has billionaire ‘advisors’ and other very powerful men nudging them along.
How amusing that Obama promised to end the lobbyists and Trump promised to ‘drain the swamp’.
Isn’t it also odd that not a single Potus has tried to stop the NSA from illegally spying on all of us?
In fact if you google this ‘Obama Expands Surveillance Powers on His Way Out’ you will find …. that Obama increased the powers of the NSA.
Would it surprise me if Trump did more of the same. Um…. not one bit.
Like I said… I don’t follow politics much… if I am after entertainment I’d much rather watch the Toronto Maple Leafs play the Habs.
It is beyond corrupt for the US Congress to continue to allow the Federal Reserve to have the power to print US dollars. Regardless of whether the Federal Reserve system worked in the past to benefit the American people, now it benefits primarily the elite speculator class not the American people. Article 1 Section 8, clause 5 of the US Constitution provides “The Congress shall have the power . . . To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”. Even if it requires the override of a Presidential veto Congress must recapture this power.
Great stuff and comments as good as ever. A few weeks ago our favorite Senate Majority Leader was the subject on a very well done show. All I can say was he is more evil than I thought before. The new insight really explained on why so much doesn’t get done.
And then there is the Fed ?
A non-related virtual personal : Every year between 4/1 and 6/22 I do some active act to in order remember The Battle of Okinawa and my father in law and my father. So here’s to the them and the Big Mo’ and the 6th Marine Expeditionary Division and to the newly planted Real Apple Tree ( no grafted bull shit) in my back yard.
Let us not forget those who answered the call and gave everything to ensure we have a place free of would-be kings who would place us all in bondage. At the same time, we should remember it was “peace-time” soldiers and sailors standing watch in an earlier cold war who were the first to die in 1941. (Only a retroactive law changed their status.) Until I see a wheelchair bound, in-service injured PFC running the show of priorities at the Veterans’ Administration instead of another cushy a**ed f*ckin’ officer with a fully guaranteed package of retirement benefits, I will not believe that we do recognize the cost of freedom!!!
It is interesting, that we are being distracted from the larger injustices to focus on the smaller ones.
(tongue in cheek time)
Dear Wolf Richter,
Your specific Wolf-o-lution has not been approved by the Fed, the people in charge, and the people running the media. We advise you to fall in line and use the appropriate and approved narratives used in your geographic location.
If you need to see the list of approved revolution, please take time to educate yourself using approved television channels such as CNN, Fox News, MSNBC, there are also various radio stations available in your local area should you not have a television available. We have provided multiple revolution options across an entire spectrum of issues and agendas over a variety of media options where you can properly express your outrage.
Repeated viewing and listening is advised until you have obtained the proper talking points and can parrot the appropriate narrative on your website.
Thank you.
Your friendly neighborhood people in charge (and yes, some of those people happen to live in your town, but that’s just a coincidence)
????
Yes, wouldn’t it be odd if you got a knock on the door at 5 am in the morning, and Nancy and Dianne are outside, and in their sweetest and most charming voice, they say: “Mr. Richters? We’d like a word with you, please step into the car.”
Best hope that interview does not go viral.
It is the first I have seen anyone expose the extent and nature of these bailouts. The MSM is not touching this subject.
The consequences of exposing the truth can include character assassination … and your site could end up on ‘the list’…
Truth is the enemy.
Funny thing, Wolf, a sneaker ad popped up under your response just now. I think it’s a message… Start running….
Because when Dianne and Nancy shows up, they’ll be hotwheeling it in whatever the latest the Federal dollars can buy.
Interesting inflammatory video pamphlet! That being said, I suspect the steps taken by the FED are aimed at avoiding a wider collapse of the economy. Sure, that means helping the wealthy.
Let’s look at the alternative though – if we do have a collapse of some part of the economy. Then the rich will be underwater (which is sound in our market economy). But there could be a strong secondary negative effect on mainstreet and everyone in the US – which is not a very palatable option either.
There is zero that the Fed did that helped main-street businesses and workers. That was the government that did those programs.
I don’t think the FED and the government are totally independent entities, one being the good (the government helping main-street) and the other the bad (the FED making rich richer). Plus who would be the ugly. Oh wait.
I think Congress has better tools to help main-street (I get the additional $600 / week after being laid off).
While the FED has the tools to inject money. I understand that some of the effect is making the rich richer (and reducing inequalities is key to keeping this country together, so that definitely does not help). But the secondary effect (this one if beneficial to the people one would hope) is to prevent a collapse of part of the economy so that Americans can be re-hired faster. The rise in inequality will have to be addressed of course.
@ BTC
the FED appreciates your support.
Capitalism (the system replaced by neoliberalism) has no moral authority. A military run for profit, or a hospital, will never be prepared, for exigencies. The government response to Corona virus was about bailing out hospitals, not saving lives. That was incidental. Protesters want to defund the police in MN, which is a private security force to protect businesses and property. Capitalism is a bankrupt system, which does have the benefit of creating an egalitarian business model for allocating capital. When 1% own 99% of the value (stock) in these companies there is no economic democracy. Eventually all profit is squeezed from the system which restores the balance. The 1% are referred to as bag holders.
All true, but when the People control the means of production and the economy only 0.01% (or less) control the Politburo. And they live very, very well.
So do the NKVD.
Thank you for pointing this out Wolf, lots of other places aren’t saying much. After listening to your rundown of all this, can you see why some of us think this was a cover?
The motivation is simply to bail out capital — the people who hold assets. It wasn’t a cover, and it wasn’t an opportunity. It was just a bailout of asset holders so that they don’t have any skin in this crisis. That’s all it is. But that is terrible enough.
So you think the reaction would be the same if Covid-19 wasn’t happening?
Without Covid, there would have been a much slower sell-off — that’s at least what I was counting on when I started my short position at the end of December.
Covid shoved years of upheaval into two months. If markets decline 20%, the Fed generally doesn’t budge though it might change its rhetoric. Under Covid, markets were going to heck in a straight line, and -50% for the S&P 500 was getting closer, and billionaires and hedge funds were losing their shirts on exotic trades. So the Fed saved their collective ass.
Wolf – the timing is certainly very odd…. (but that is not in itself evidence of course)
I have tried to look at the PDF referenced in the FT/Brookings Index article which states we were facing ‘the worst collapse since WW2’ pre-Covid… but cannot make any sense of it.
What I do know is that the global economy was definitely heading big time south towards the end of the year (note the German industrial production — GFC levels…. auto sales particularly China plunging….)
NPLs in Europe pre-Covid (particularly Italy were disastrous)…. if German production was crashing then the real numbers out of China (her biggest client) surely must have been horrendous.
Perfect storm approaching?
Then suddenly Covid hits and the flood gates open.
Immaculate timing one might say….
There is also the fact that as you point out ‘the motivation was simply to bail out capital’
I agree – but for the life of me I cannot find an MSM reference (other than that single FT article) that states/implies that these trillions have not been unleashed because of the impacts of Covid lockdowns….
You are the only one (that I am aware of) to point out what is happening on the bail out front.
The world believes that if there was no Covid, there would not have been the need for bailouts.
It could all be a coincidence…. it is impossible to prove this assertion.
One thing that is odd is that if you google Hospitals Overwhelmed by Flu Patients Are Treating Them in Tents….
You will get a Time Magazine article from the winter of 2017/18…. a year where the US had 45 million flu infections. 810,000 hospitalizations, and 61,000 deaths (CDC site).
Yet there was no lockdown. I do not even recall hearing about that ‘pandemic’
One other thing…. civil unrest was occurring across a swathe of countries in 2019 (HK France Latin America Lebanon etc…) — and as demonstrated by the current protests in the US, many people were just looking for an excuse to get on the streets.
Let’s imagine there was no Covid – and the central banks had poured trillions into bail outs because GFC2 was threatening.
I suspect that would not have gone down well.
And Rahm might say fellas, ‘let’s kill two birds with this one stone’
In HK for instance, the mass protests have mostly stopped since Covid. The main reason is that the police immediately arrest people if they gather in groups of 8 or more.
In most other countries the same applies. Also people are afraid to congregate to begin with so that keeps them off the streets.
Covid is deadly – but it is also quite a useful scapegoat….
Willy Winky said:”You are the only one (that I am aware of) to point out what is happening on the bail out front.”
____________________________
With due respect to Wolf: Google Max Keiser and Stacy Herbert, Keith McCullough of Hedgeye, Chamath Palihapitiya.
Not as clear, crisp and encompassing as Wolf, but others are aware and commenting on FED mis-deeds.
There are a lot out there that see the corruption.
It is obvious that we have entered a system of lords and serfs and the Fed exists to enrich the upper class. The system is beyond saving (unpayable national debt, for example) and only the largest asset holders will come ok as the dollar is destroyed. The serfs will fall further and further into poverty and have fewer and fewer systems to protect them.
Globally we’ve always had a system of lords and serfs.
Even a lower middle class American would qualify as a lord compared to a third world slum dweller.
What’s happening is that the pie is shrinking the middle classes are starting to get a whiff of slum stench.
I listened to front line interviews with protesters in Lebanon recently…
Most of them were young (20-30), educated, and well spoken. The common denominator driving them into the streets was ‘the inability to make ends meet – or find decent paying jobs’
As expected, people are not reacting well to this situation as protests were raging pre Covid.
Unfortunately there does not appear to be a solution. I cannot say that I did not expect this.
Willy – as always, bread and circuses. And, as the circuses continue they become more violent (gee, whoda thunk). If we run out of bread let them eat cake.
Good to hear the passion in your voice Mr. Richter!
Kudos to you!
A million in a crowd before the White House chanting quietly:
“What are you gonna do when we come for you” (“Bad-Boy, Bad Boy”)
A prominent corporate leader in the mid 1940’s just after WW2 ended stated that: “The business of America is business”.
How true.
But, “business” is a total dictatorship……..
Is that what we want??????
It’s what we have: “Democratic Authoritarianism”.
This is a blind alley we into what America has entered.
There is no way out.
Socially, financially we will slowly disintegrate.
What comes after nobody can really predict.
These are “self-inflicted” wounds aggravated by humanistic trends represented by the visceral racism that is endemic in our country, extreme right wing social and economic policies that have ravaged so much of our country; an “opposition” party more in line with collaboration vs real progressive changes, resulting in the election of a true demagogue. The enablers are the American voters and the dirty money that permeates our system and has since the beginning.
There can be no “justice in the streets” in America when the civilian police forces are able to run rampant over the Bill of Rights with almost impunity. The wealthy have been successful so far to be able to manipulate this force to their advantage. The advantage is being rendered smaller and smaller until such time as those forces will no longer be able to render the angered masses quiescent.
That time is coming nearer with subsequent fascistic actions by the overall authorities.
Keep up your good and significant (anger) writing, Mr. Wolf!
Sierra said:”These are “self-inflicted” wounds aggravated by humanistic trends represented by the visceral racism that is endemic in our country,”
_________________________
Does these wounds boil down to racism, or is that just a diversion provided by the elite?
Mr. Richter, thank you so much for this brutal synopsis.
WOLF – I agree this is your best ever article. This is evidenced by the fact I just purchased a financial sector ETF this morning and I feel like I need to take a cold shower. As I listened to your podcast, I felt guilty, sick, angry, confused and helpless all at the same time. I am not a financially wealthy person by most measures, so my act of “if you can’t beat them – join them” is for temporary survival (buying ETF). Yes I donate a LOT of my time to charitable causes, but the hopelessness and anger you have caused to boil up inside me is palpable. I feel the misguided anger of the protestors and looters. It reminds me of the famous JC quote on the cross “forgive them – they know not what they do.” We (Wolf readers) are so very fortunate to be educated as to what the roots of the emotional outcry of the masses is really about – even if most of them do not understand WHY they are WHERE they are. I wish / hope / pray / beg for a peaceful way to steer the wayward USS USA back to open waters.
Beardawg said: “educated as to what the roots of the emotional outcry of the masses is really about”
________________________________
Do we really know? Initially, I thought it was about police brutality – of the worst form, taking a human life. Then, it was painted as being about racism. Now, on this site we are talking about it being about the haves vs have nots.
and
Wolf said: “looters came for the money and reacted to the horrendous economic inequality in this country” (Wolf said they came in cars, looting drug stores at night)
Should we not seperate the protestors from the looters. How do we know the looters were reacting to horrendous economic inequality? Do you think that was the motivation?
Wolf, Imagine 300 Million 99% listen to what your are saying, guess what happens? In stead of going to street and smash Federal Reserve Buldings, they will loot private shops. In stead of calling for End the FED reforms, they open stock trading account and load up shares. I want to be showered by FED money too! And once the 1% off load share to the 99%, FED will let it tank and tell the 99% to learn a lesson that “investing has risks”. You are NOT helping here…..
Wolf is probably getting a call right now indicating his Wolf-o-lution is not approved, and to look on the appropriate channels to get the right narratives.
Dude, outside parties smash windows.
Bear/JZ – poignant comments.
Now let’s imagine what would happen if Wolf’s article were to be picked up by CNN.com NYT.com BBC.com etc… and generate 100M views….
I suspect the rage that you are feeling …. would be felt globally and no doubt there would be people with pitchforks (or the modern day version – Molotov cocktails…) outside the Fed these past weeks.
I’ve got $1000 to wager that this article will not go mainstream. That would not be in the interests of the Fed and one might argue that it would not be in the interests of society.
Anarchy is not a great look when you have a complex economy to operate.
‘It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford
The FED acts irresponsibly and should be closed.
Finishing my day getting more depressed by reading/hearing proper articles/analysis here. I should have taken the blue pill, the end result will be the same.
Anyway, thank for the good work.
We are watching how history works in the unrest we see throughout the country at present. It is not logical, and it does not happen when, or where, or for the reasons most people would think. Eventually their will be a reckoning for the actions of the Fed and the disparity between the producers and the wealthy who exploit them. It will probably not happen the way we would imagine, and may not even make any sense, but it will happen.
My thoughts, exactly.
It brings to mind the old adage of “circuses and bread” to keep the masses distracted and in servitude. Having many of them working at subsistence wages also served that end. So, what happens when jobs disappear and the circuses of mindless TV, social media,etc. are replaced with the more real masses in the streets and all that goes with it. During the French Revolution, I’m inclined to think that the guillotines for the rich was the ultimate “circus” for the great unwashed. The French nobility didn’t see it coming, and neither does the one-percenters. Most of them don’t know how vulnerable they are. They can’t slink away quietly in the night as they are all known, and I doubt there are enough bunkers for them to all cower in. I truly wish for a different outcome, but the blindness of those in positions of privilege ultimately dooms them to repeat history. Some of them, like Bill Gates, may see it coming but the inertia built into the “system” makes it self-sustaining, and difficult to to inact real change without violence. Since most people alive today in western society have never known real deprivation, their rage when they are eventually confronted by it will be overwhelming in my humble opinion. I continue to hope for real wisdom and leadership throughout the world. Unfortunately those that are led must also have a measure of wisdom and be able to choose leaders that don’t reflect their narrow self-interest to the detriment of the greater good. If it is true that we get the leaders we deserve, then God help us all.
You overrate the fed, oh look the market. turned red……..
First post here..Finally someone actually explaining what is going on. Hard to find anyone in the media these days talking factually and truthfully! Thanks for keeping us informed! I always look forward to reading your take, and wish the mainstream would take note.
This bubble will pop.
Every bubble pops, the question is when and for how long. What’s the depth of retracement?
Looks like hedge funds had no choice but to jump in. Has retail money become the smart money?
One possible sign that a reversal is near is Druckenmiller turning “bullish”. He bought at the top of the market too back in 2000.
This is the bitter result when Congress creates an Agency or Act which by its own hand transfers its constitutional powers. This is what happens when, We The People fail to not only lack focus but cannot agree on what risk their creation imposes on We The People. One half of our Nation cannot risk that the other one half slip into despair, lack of purpose or a crushing condition of the loss of dignity. This would be losing the moral right to claim ourselves ,We The People. Capitalism of our Republic is under threat.
Rules
1. The market is never wrong.
2. When the market is wrong, see rule one.
I appreciate illusion and a good Magic Show. But where is all the “Liquidity” coming from to ramp these financial markets? Sure, the Fed’s total balance sheet footings have increased by roughly $3.5 TN since the mid-September 2019 banking “Repo crisis”. But after netting out the $1.5 trillion of unused cash proceeds from various Treasury debt issues that are sitting unused in the Treasury General Account at the Fed, we’re left with net incremental Fed Bux of only around $2 trillion to send a $33 trillion Total Market Cap stock market ever skyward, rebounding roughly 30% off its March 23rd lows and still ascendant. Yet the Fed evidently has money left over to buy unlimited amounts of corporate and junk bonds, state and local tax exempt bonds, etc?
The only other sources of monetary fuel I can think of that might be enabling this bailout and amazing ramp are proceeds from stock sales during the Feb 20 – Mar 23 crash have been reinvested in equities by market participants; or we’ve been treated to clever use of lots of leveraged derivatives, the quiet participation of the global banking network that actually creates the vast majority of the money, offshore investors, or “bailed-out” hedge funds, private equity firms, insurance companies, etc (but that might include some double-counting?), or a massive amount is being done 0ff-balance sheet, or there are some other unspecified source(s) of funds.
I readily acknowledge I have little expertise in these matters and feel I surely must be overlooking something very material. Thanks for a terrific post.
” we’ve been treated to clever use of lots of leveraged derivatives, the quiet participation of the global banking network that actually creates the vast majority of the money, offshore investors, or “bailed-out” hedge funds, private equity firms, insurance companies, etc (but that might include some double-counting?), or a massive amount is being done 0ff-balance sheet, or there are some other unspecified source(s) of funds. ”
I pick “all of the above.”
Chauncey
You question how a $33T stock market can be boosted by $3.5T of money. The magic. How can they do this? This is my guess as to how it works.
You apparently believe (as very many do) that money goes “into” the stock market–or comes “out” of the stock market. So to make it go up by $5T you might think you’d have to add $5T in cash to do this. This isn’t the way it works.
On the stock market, no money goes “in” or “out”. It instead goes from buyer of stock to seller of stock–the stock goes up (or down) in value untouched in any way. The value is only judged by the last price traded. Suppose a stock is “valued” at $30. If someone offers to buy it at $40, and someone else who has it sells it for $40– and thus by definition the stock is now worth $40. The net cash required to do make the price jump is $0 if you are on both sides of the trade. That would cost the Fed nothing–just needs to have a stash of cash handy and (quickly) take both sides of the trade. So if the Fed (or proxy) is doing both buying and selling, it can possibly drive up the price at no cost. The “risk” or “cost” to the Fed (or proxy) would be if the price got pretty high, and some wise guy on Wall Street who knew what the Fed was trying to do, who earlier bought it at $20 sold the stock to a buyer at $40, making him $20–and the Wall St guy guessed right that because the price felt high the next seller would be willing to sell at a lower price than $40. Then the Fed proxy would potentially lose–have to try to bluff it up again. I’m guessing that this would all be done by fast computer programs–they would be competing with other programs, plus some sucker day traders in their bedroom who would be the most likely losers who would sell at a lower price than the Fed decided they were willing to push it. Although generally the Fed would spend some to keep it up when a fast selloff after they made their last trade at $40. Who knows how much some clever programs that outsmart other traders could increase the price in this way, while expending as little cash as possible. As it would be bluffed up, others could follow buying in hopes for even more gains.
The price is always set at the margin no matter how small the volume, and low volume makes ratcheting upwards easier and cheaper.
Lisa –You said it much faster than I did.
Good educational response Ralph. Thanks. You would think this would be illegal. But apparently this has taken place in the past with private manipulators, according to accounts I have read.
To answer your liquidity question you first need the answer to the most fundamental question in Finance:
How many dollars, physical and digital, are in existence, who owns them, and where are they?
(I have never seen that question answered)
Breaks my heart. I hope to have a 200,000 plus down next summer on a home. But, everything today goes up up up~ so I don’t know if it matters.
The last 2 days did it. Investigations are beginning with S&P contracts. I think the poster above got it. It’s another ponzi scheme based around the same crap since financial deregulation started in 1983.
My guess the Fed will give a stern warning this week. The structure of the U.S. economy isn’t ready for this type of liquidity scheme. We’re talking 50% correction and the Fed can’t stop it without destroying capital flows..
My guess some Fund managers will be missing by fall.
It’s not just the .1% making out. Government organizations are just as guilty, relying on these funds to pay out pensions.
Last few days, higher end housing is going at a decent clip … on both coasts. So much for a price drop.
A realtor sent me actual details showing homes are down 10% in price from a year ago on Seattle’s wealthy East Side. Not sure where you are getting your impressions.
Wolf, great job explaining how the deal with the Fed went down. Keep up the great work and analysis!
Allegheny Port Authority was given 99 million in bailout funds, and gave each driver a bonus of 25,000 that was tax free. Comments on this? Oh but the buses were free during lockdown, except no one was riding them. This isn’t stimulus, its straight up looting. Ten years from now i feel we who are skeptical will be vindicated.
Correction 162 million.
Please note:
Creating this article in Youtube format allowed me the opportunity to use as a learning tool for my 2 oldest children – 7 & 12 LOL
The 15 min video took an hour to complete with pauses and explanations but it provided me a great learning “SPV”, along with providing an open conversation with the future and trying to engage them with current market events so they don’t just hear their father talking and assume I’m just saying blah blah… Or maybe this time they just hear Wolf saying blah blah blah…
Thank you
nah, this stuff gets in, like when you think you don’t have any scruples but then you’re face to face with a situation and your mom or dad talking to you at age 7 comes to your mind and you switch it up to save your ass or your soul.
my entrepreneurial mother taught me to do budgets as a kid (to get school clothes or plan a project, as she said budgets were how you made dreams come true) and would talk to me about how in order to be in charge i’d have to be able to say difficult things to people’s faces in a clear, constructive way, or i had no right leading ANYONE.
i thought i wasn’t paying attention but i was, and it’s the only way i’ve gotten this far as i was never very “employable.” and as crazy or wild as people “think” i am, i’m more about reality than Regular People who only look at the monthly payment and never the costs down the line. i had no idea til about ten years ago.
i still remember my mom explaining why there had to be levels of unemployment to keep the country going gangbusters. i wasn’t even in high school yet and i asked, “but what happens to THEM?” because i knew those seemingly meaningless percent of unemployed would likely include ME.
and i’m almost 53, my mom would give me money magazine subscriptions when i was in high school, i’ve read this site for years and i still barely understand WHY the Fed and i have to listen to Wolf sometimes a few times because i zone out and hear blah blah blah, too.
x
20 years ago, none of this would have been going on. Somehow the Fed has become the Plunge Protection Team In a really obvious way and everybody is cool with it. This all ends up bad, but possibly in 59 years. Hard to tell when it all explodes. Perhaps ask me Ponzi.
CCC, RE: “20 years ago, none of this would have been going on.”
Is that accurate? Has it been going on all along but not at this scale? Are we more aware now with the explosion of information available? It seems human behavior doesn’t change much over time.
What do think?
i think the internet and lack of community and chase for ever higher yield (for what?) and the monetization of EVERYTHING has reached a new peak of american psychopathy. where common sense stopped because you don’t wanna burn your neighbor’s house down / but now it’s.. “what neighbor?”
my mom used to tell me the checks/balances were some kind of financial common sense that hasn’t existed for a long time.
that i don’t think will get any better anytime soon with how kids are already apparently getting messed up with the masks and social distancing from everyone.
Anyone following Chesapeake Energy lately? The stock closed yesterday (6/8) up 498% from two trading days prior (6/4) and this morning the stock is halted, “amid reports of chapter 11 bankruptcy plans”. CHK is a prime example of the garbage going on in the stock casino these days…
Stuck-at-home day traders trying to get rich quick. “The zoo has gone nuts,” is my new motto now.
That’s it! “Zoonuts”. I’ll have a diversity of happy animals deliver funny donuts to the lockdowns! It’ll be the next big thing, yeah. Now, where do I get my big free loan?
The FRB is a knee on my neck.
The Congress is a knee in the small of my back.
The Congress controls the purse strings, i.e. spending.
Congress borrows from the future (expected tax receipts) and chronically incurs ever increasing debt because it could all be paid back when the Economy gets better.
The FRB buys unsold debt to prevent interest rates from rising because…well, just because it keeps all the plates spinning.
I would wish for legislation to fix this. However, based on centuries of experience we all know how that turned out.
Hey Wolf,
Regarding Janet Yellen and the late ’80’s Bezerkeley mindset, I took an International Econ course taught by Dr. Yellen in 1988. At the time, it was Japan that was the competitive economic rival, and Yellen, as well as others, such as Laura Tyson, were espousing exiting the industries in which we were losing our edge, like autos, and focusing instead on high tech. In fact, one exam in Dr. Yellen’s class consisted entirely of an essay where you had defend your pro or con position on the US exiting the auto industry. Yellen favored exiting, and those who argued exit received A’s. The reprobates, including myself, who argued for restructuring and retraining, received less than A.
One of my favorite Charlie Rose interviews is with Laura Tyson and Sir James Goldsmith who took apart Tyson’s ivory tower argument supporting GATT. The very short-sighted Yellen and Tyson could not see that any lead in high tech would not last, and could even be lost. https://charlierose.com/videos/1563
In addition to teaching undergrads at Berkeley, Tyson also worked at the Berkeley Roundtable on the International Economy, a consulting front for professors to make some extra coin authoring position papers for industry. Tyson would go on to become a Clinton economic advisor and dean of the Berkeley Haas business school. And so it goes.
Thanks for sharing. Intersting. Too bad none of my profs ever made it to the top of the Fed. I would have had a blast with them ?
Thanks, Crush.
There are at least 2 excellent videos on Youtube with James Goldsmith from 1993-1994. He speaks of what Globalization will bring among other things. He saw it coming. So did Ross Perot in 1992.
I have been waiting to buy gold cheap in this stock market insanity. Why is gold not selling off? Who’s still hedging in gold and why?
A lot of us are together in gratefulness to Wolf for his expert muck raking in our behalf. Hope all of us are together on kicking in 25 bucks or so to sustain him, from time to time.
RD Blakeslee,
THANK YOU!! I just received your warm smile via PayPal!!
Wolf,
How would you describe Mitt Romney’s career at Bain Capital? Was he a Capitalist Hero? a virtuous businessman? a thief? a shielded pariah?
I won’t bother to describe him until he threatens to re-show up on my ballot. For now he’s someone else’s problem.
@ Wolf,
Then I will maintain my suspicion that he is a disceitful, duplicitous, overated, silver spooned, money grubbing creep ‘taker’ masquerading as a ‘maker’.
Hey Wolf, where’s the WR transcript (usually comes up late Wednesdays)? I prefer reading to listening.
Coming very soon… working on it. This is a long one… takes a while.
Thanks.
Wolf, you rocked this one. Take over the airwaves to broadcast this call to arms!