The government better not ever stop dousing consumers with free money.
By Wolf Richter for WOLF STREET.
The latest wave of stimmies, this time $1,400 a pop, began to wash over our dear consumers in March, and they went out and spent it on everything in sight, except at grocery stores, as they’re still trying to use up their three-year supply of pasta and toilet paper. A few weeks ago, when I reported on consumer spending that had dropped in February as the $600-stimmies from December-January had run out, I predicted: “Waiting for a $1,400-stimmie WTF spike in March.” And what a doozie we got today.
Retail sales in March spiked by 9.8% from February to a huge record $619 billion, seasonally adjusted, according to the Census Bureau this morning. Because March last year was already part of the lockdown plunge, I will compare all sales over the next few months to the same period in 2019. And compared to March 2019, total retail sales spiked by 20.8% to form the epic WTF chart of the year:
Prices have been surging at new and used vehicle dealers – with a big impact, as we’ll see in a moment with another WTF chart of the year – at gas stations, building materials stores, and at many other retailers. None of the data here is adjusted for inflation.
So those are the dominant powers behind the spike in retail sales: Price increases, filling holes left behind by snowmageddon, and above all, the stimmies.
New & used auto dealers and parts stores: Sales spiked 15.1% in March from February, to a WTF record of $134 billion, seasonally adjusted, amid rampant price increases. Compared to March 2019, sales were up 31%. This is the largest category of retail sales, accounting for 21% of total retail sales.
Earlier this year, the largest dealer group in the US bragged about historic profit margins. Even the Bureau of Labor Statistics reported that, despite its heroic efforts to repress price increases in its CPI via hedonic quality adjustments, used vehicle prices had surged nearly 10% in March compared to a year ago:
Ecommerce sites and other “non-store retailers”: Sales jumped 6% in March from February to a record $93 billion, seasonally adjusted. Compared to March 2019, sales spiked by 47%! This category includes ecommerce, mail-order operations, street stalls, vending machines, etc.
Food and Beverage Stores: Sales inched up 0.7% in March from February to $72 billion, having gone nowhere in 12 months, and were down 12% from the March 2020 spike in the era of pasta-and-toilet-paper hoarding.
Restaurants & Bars: Sales jumped 13.4% in March from February to $62 billion (seasonally adjusted), thereby pulling nearly even with March 2019. But sales were still down nearly 5% from February 2020, just before the lockdowns. Included are cafeterias, delis, fast-food joints, high-end restaurants, bars, and other “food services and drinking places.”
In many cities, the indoor dining bans have spawned a wonderful new movement to eating outside, weather permitting. In San Francisco, reportedly 1,250 of these “parklets” have sprung up, and entire blocks are closed to traffic at night, as restaurants that line the street have built partitions outside and set up tables, chairs, and heaters. They do a thriving business, and the entire atmosphere is wonderful, with so many people eating and enjoying themselves outside for all to see. Just make sure to dress for it.
General merchandise stores (minus department stores): Sales rose 6.0% in March from February, to $56 billion, and were up 12% from March 2019, but were still down a smidgen from the spike in March 2020. The category includes the brick-and-mortar stores of Walmart, Costco, and Target, but not their ecommerce sales, which are included in ecommerce sales (nonstore retailers):
Department stores: sales jumped 13% in March from February, to $10.8 billion, despite the power of stimmies still down 5.5% from March 2019, on their long path into irrelevance. This includes the brick-and-mortar stores of Macy’s, Kohl’s, etc. but not their ecommerce sales, which are reported under ecommerce.
Building materials, garden supply and equipment stores: Sales jumped 12.1% in March from February, to a huge record of $44 billion, and were up 39% from March 2019, amid massive price increases in all kinds of products – for example, lumber prices in the spot market have nearly tripled year-over-year! – to create another WTF chart of the year:
Gas stations: Sales jumped 10.9% in March from February to $46 billion, up 10.2% from March 2019, and the highest level since 2014, largely driven by big increases in the price of gasoline and diesel:
Clothing and accessory stores: Sales jumped 18.3% in March from February, to $22.8 billion, up 2.3% from March 2019, but below the peaks in 2018, and back in the same range prevailing since 2014. Even the power of stimmies and price increases couldn’t propel clothing sales at brick-and-mortar stores beyond that level:
Sporting goods, hobby, book and music stores: Sales spiked 23.5% in March from February, to $9.6 billion, and were up by 46% from March 2019, for another WTF chart of the year:
Furniture and home furnishing stores: Sales rose 5.9% in March from February, making up the territory lost in February, to $11.6 billion, and were up 18.8% from two years ago:
Electronics and appliance stores: Sales jumped 10.5% in March from February and were up 4.9% from two years ago. Despite that jump and the power of stimmies, sales were below where they’d been in the heyday of those stores 15 years ago. Americans are buying more consumer electronics and appliances than ever before, but they’ve been increasingly buying them online:
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This is an embarrassment, just a sickeningly poor excuse for the management of an economy.
It’s an embarrassment from your POV.
From the view of average daily joe, they don’t see the big picture, all they got is $1400, or I guess $3400 (or how ever much stimulus was) over the last year, and honestly, they are wondering what’s the big deal, and why can’t the government do more. Cause $3400 isn’t even 20% of $20K.
I look at it like this:
I was going to buy a new vehicle right when the virus hit. All of a sudden I wasn’t in a hurry to go hang out in a dealership or do anything non-essential because they were acting like it was an extinction level event.
Almost as soon as the shutdowns began in earnest, the buying sprees started and price increases began. I still wasn’t even thinking about doing it. Fast forward to today and that vehicle price alone has increased enough to soak up the entire stimulus money that I received, and then some. That says nothing about the rise in price of everything else. So, I am essentially poorer after the stimulus than I was before.
People are stupid. They don’t realize that this is a giant ripoff, and it’s making everybody but the most wealthy of the wealthy, poorer. The more they do it, the worse it gets. The FED and .gov are corrupt thieves.
How come when the rich buy stuff they need it’s fine, but when poor people do the same thing it’s stupid. How is $3200 per person in stimulus money spent by a poor person improving their lives, stupid?
Petunia, because much of what is being bought is not stuff they “need,” but what they “want.” No one NEEDS a new car, and if you couldn’t afford it before the stimulus, you couldn’t afford it after the stimulus.
If someone took their “stimulus” and bought clothing at Old Navy, that’s one thing. It’s another to splurge on expensive video cards at Microcenter, new pickup trucks, expensive golf clubs, and so forth.
This money is basically being stolen from our future. And after all of the crap bought with it is obsolete or in landfills, we’ll have ZERO to show for it.
Because it’s not improving their lives, Petunia. Inflation hurts the poor. Did you even read what I wrote? When you give somebody $3,200, but their bills increase to $6,000, what have they gained?
RightNYer,
“This money is basically being stolen from our future. And after all of the crap bought with it is obsolete or in landfills.”
Are you suggesting infrastructure spending or education is superior? Everything that ever existed will eventually be in some sort of landfill. The real question is whether we get there in a straight line or not.
ACTUAL infrastructure spending or STEM education? No. Government union boondoggles or subsidized degrees for Women’s Studies or Critical Race Theory? Yes.
Ten speed 2020 mustang during a covid lock down had almost everything in it a Ford Shelby had in Kentucky. The only thing it did not have was a CD player, they stop putting them in. I believe the price was about 40k. Now it’s probably 48k. Beverly Ford. I love my cd’s. Maybe someone from Ford will see this and rethink removing CD players. The electrics are fast but that is only on take off, after that no much umph. Why wouldn’t they have their own generators to charge them any how? fiscal stimulus was needed during Bernanke and he never got it. The virus finally brought this stimulus on. We’re the banks against stimulus at that time I don’t know. The fed did what they had to do IMO due to the virus. I’m vaccinated with two Pfizer jabs, thanks to the stimulus.
I have to assume John is a troll, based on that post.
I love my CDs that can be played in my vehicles so much that I make my own from a turntable to a USB digital output phono pre-amp to my Apple iMac using VinylStudio software and bingo; albums to listen to on the hi-fi at home and CDs to spin when driving at no extra cost (a few cents for a blank CD to burn).
Depth Charge,
Last May 2, the time to but a used car was as good as it gets. I pulled the trigger and brought my checkbook to Penske’s dealership. Will there be another opportunity to get a good deal? Sometime, but not now.
DC & RNY,
You two have no idea what a person’s needs are.
People need smart phones and computers now, even when they don’t want them, because that’s how we communicate in our world. People need fast internet connections at home because most work and study at home now. People need credit and debit cards now to get a F’ing haircut. People need clothes & shoes because they wear out. Poor kids like ice cream and toys, just like rich kids.
What people need is up to them, not up to you.
At least you are not living in Canada. Check what they did to our housing.
^^ Clash of the Titans
When people are voting themselves my money and the future of my children, it certainly is my business.
Comment on education. Yes, it actually is superior to crap that we buy, because that’s something that can’t be taken away from you. I think if everyone who got their stimulus were forced to spend 12 hours on basic finances and passed an exam before they received the check, then we’d be better off. But today, that would be considered r*****.
DC: regarding your comment about people being stupid. People have been trained that way thanks to our idiotic education system. They don’t realize it because let’s face it, how many people as a percentage would read Wolf street and understand half of what Wolf is talking about. (I would guess 70% of the US population couldn’t get past the first paragraph) Why, cause they are really uneducated about basic things like money, and they don’t care.
This gets back to my usual rant about how education in this country has suffered because… well, let’s face it, people have been trained not to value it, and the teachers are mostly not the best that we can get, but whatever we can scrape up. The reason, because they are not compensated well, and at this point, deservedly so because the educators aren’t really doing a decent job. But it perpetuates a downward cycle.
Compare that to most of Asia, the difference is just mind blowing.
It’s been my observation that nothing infuriates the wealthy more than seeing the undeserving (in their view) get a handout that they themselves weren’t eligible to get. Whether it’s a food shelf, food stamps, or stimmies, the resulting infuriation is the same.
These stimmies have obviously done far more for the economy than Trump’s tax cuts did. Wolf’s charts point that out pretty clearly.
makruger:
“It’s been my observation that nothing infuriates the wealthy more than seeing the undeserving (in their view) get a handout that they themselves weren’t eligible to get. Whether it’s a food shelf, food stamps, or stimmies, the resulting infuriation is the same.”
You’re darn right that it infuriates me when people who make constant bad decisions get to vote themselves my money.
“These stimmies have obviously done far more for the economy than Trump’s tax cuts did. Wolf’s charts point that out pretty clearly.”
Yeah, at the cost of $7 trillion more in debt. If $7 trillion in debt did so great things for the economy, why not borrow $70 trillion and really take off?!
@Petunia
Ignore the comments – they are recycling the tired old (and wrong) “welfare queen’ story.
You are absolutely right that the vast majority of poor people spend their money where they need it, mostly.
Yes, they’ll buy a toy or a game for their kids that they couldn’t afford before, or some small thing for themselves but the reality is that they need more money than the stimulus provides.
Real poor people didn’t have the cash or the storage space to stock up on pasta and toilet paper – it is the Costco families that did ($100K income, large suburban house, etc).
Nor is the inflation story particularly convincing. Yes, inflation is up but $1400 vs. the $30K to $40K incomes actual poor people receive – it is an absolute win.
On the other hand: if you’re making $100K, the price inflation cost in absolute terms is much more serious because these people have 10x or more the disposable income.
Time and studies will reveal what is really going on – but I personally expect a huge amount of these WTF spending spikes to be from middle to higher income people – the former spending found money (stimulus etc) which they absolutely don’t need so why not; the latter because of the stock market and real estate wealth effects.
Really poor people don’t own the places they live in – they certainly aren’t spending huge bucks on home improvement. I go to a restaurant supply store regularly to buy specific items – there is a builder’s supply store right next door which I still can pass by (some company has apparently taken over the end of the small connecting street and is going to wall it off!). That place has been packed to the gills ever since May 2020. These aren’t poor people – these are the highly paid general contractors that do middle to upper class $20K and up kitchen renovations and what not. Friends who are plumbers, carpenters etc – who were already doing well before COVID – are now doing even better.
Clue, this is just completely wrong. Let me address one point at a time:
“Ignore the comments – they are recycling the tired old (and wrong) “welfare queen’ story.”
No, we’re not. Many people who got this “stimulus” didn’t need it, and splurged. That’s why the retail sales data was what it was.
“You are absolutely right that the vast majority of poor people spend their money where they need it, mostly.”
And where they don’t need it, too. Some of it is bad luck, and some is bad decisions. The truth is always in the middle.
“Yes, they’ll buy a toy or a game for their kids that they couldn’t afford before, or some small thing for themselves but the reality is that they need more money than the stimulus provides.”
Maybe they “need” to not have so many kids. My wife and I have two, because that’s what we thought we could afford, and we waited to have even those two.
“Real poor people didn’t have the cash or the storage space to stock up on pasta and toilet paper – it is the Costco families that did ($100K income, large suburban house, etc).”
Yes. And those “Costco families” got huge printed windfalls too. There was ZERO justification for giving families making $150k $10k in tax free “stimulus.”
“Nor is the inflation story particularly convincing. Yes, inflation is up but $1400 vs. the $30K to $40K incomes actual poor people receive – it is an absolute win.”
Yes, it’s a “win” for someone who makes $30k to get $12k in tax free money (all the stimuluses for a family of 4, plus the expanded tax credit, etc.). It’s not a “win” for the elderly lady who is 80 years old, saved $300k over the course of her life, and is seeing the value of that plummet in real terms.
“On the other hand: if you’re making $100K, the price inflation cost in absolute terms is much more serious because these people have 10x or more the disposable income.”
Right, so people making $100k (not rich) and who don’t have a lot of assets, are the losers. The government picked winners and picked losers.
“Time and studies will reveal what is really going on – but I personally expect a huge amount of these WTF spending spikes to be from middle to higher income people – the former spending found money (stimulus etc) which they absolutely don’t need so why not; the latter because of the stock market and real estate wealth effects.”
Yes, and that was the main part of the “stimulus” that I opposed.
Clue, our people are still far better than foreigners on STEM things (the few we have), and a limitation on immigration would solve that problem.
To call STEM “garbage” is very telling.
The previous decade was the ripoff, and now people are getting their “backpay” for a decade of economic policy which punished them, and rewarded the 1%. There is a lot of hope out there that the BS years have ended, that economic growth will no longer be repressed, that policies born during GFC and the recession of 2000 are over, that the pandemic will be resolved, that we can get some clarity on issues of race and ethnicity, and our place in the world. That we will end the blood war against the people of the nation of Islam. That we are going to take out the trouble makers, and honor those Americans who have been making this daily sacrifice to a system which barely acknowledged them (front line health workers of late). However this stupid hope is, they have it.
Yes, but without more stimulus checks you’ve well illustrated why prices should come back down.
The Fed may very well start screaming about yoy deflation by the end of the year and try to get them to start ubi.
“What people need is up to them, not up to you.”
Ah isn’t that the rub? So should people be forced to take the “vaccine”?
I’m not talking about needs, Petunia, I’m talking about inflation and the grotesque economic distortions we’re seeing as a result of this profligate money-printing endeavor that is crucifying the poor. Should I assume you like hurting the poor, Petunia?
It’s interesting that freebies to the rich, in tax cuts and subsidies, hurt the poor, but you don’t seem to see them. You only see the tax cuts and subsidies that go to the poor and working class.
Those stimulus checks I received are nothing more than a tax cut to me. They don’t exceed the taxes we pay. How is a tax cut to me bad, when many rich people pay nothing.
Petunia is correct. Depth Charge and libertarians are shedding crocodile tears, they were CRICKETS on huge tax cuts for the rich and corporations. Because they know tax cuts for the rich and corporations increase revenue and only govt spending causes deficits. The poors know how to spend money the way they like. Givem a break.
I’ll take Depth Charge seriously on his comments about reducing deficits, when he full throatedly supports heavily taxing the rich and corporations and supports Dwight Eisenhower’s 91% tax on the rich and corporations.
Gotta respond to teacher-bashing MCH!As an ed. Grad student enrolled at one time,at DePaul U.,I have to take umbrage with Some of youroints.Teaching,in some ways,is like being a server.Lots pf time-management,attention management,and attitude management in addition to resource management.Both jobs place humans at the Brunt of other humans’attitudes,problems,cultures.We are blamed for Everything snd not properly compensated and wuite often,not thoroughly trained.Physically exhausted,and very possibly verbally abused by our bosses.
Realistically,it is not apples to apples comparison when comparing students in whatever Asian country to students here because very different cultures are being compared.Immagration status and number of e.s.l. Students per class and school are a big complicating factor.Poverty and malnutrition as well as neighborhood violence is another complicating factor.The family’s value placed on self-improvement and education vs. Entertainment or social success are key.Too many schools,parents,teachers,fellow classmates do Not Value Smart,out-of-the-box thinkers,they are exhausting and make others feel dumb.
Timbers, taxing the “rich” at those rates when they’ve earned it is obscene.
Taxing the “rich” when they’ve gotten their gains through Fed manipulation is another story.
@Timbers, nobody takes that 91% proposal or anyone who proposes it seriously. You keep bringing that number up and when challenged, you won’t even tell us how much more revenue that policy will bring.
Are you against the tax cuts because it also helped upper brackets along with the middle class?
@Petunia, I completely agree that people should be free to spend money on the things important to them. Not what the bureaucrats think are important. I truly believe introducing negative income tax and scrapping welfare programs, will do magic to the dignity and motivation of current welfare receivers.
At RightNYer
Where where you on deficits and inflation when tax cuts for the rich under both parties were passed?
Oh wait I already know….CRICKETS
RightNYer on deficit inflation causing tax cuts for the rich….MIA ALL THE WAY.
I’ll take you crocodile tears about inflation and deficits when I see you demanding Dwight Eisenhower’s 91% tax FakeBook, Google, Mark Zuckerburg, Amazon, Jeff Bezos, Koch Brothers, Mitch McConnell, Nancy Pelosi, Clintons…etc
When you post as many posts about tax cuts of rich and corporations causing inflation/deficits as you do on spending.
But of course you never will.
Ditto for Depth Charge
@Nacho Libre
“nobody takes that 91% proposal or anyone who proposes it seriously.”
You might want to direct that comment to the Congress and President who passed it, and the American voters who voted for those Congressman and President.
Where they “serious”?
You decide. But is that even relevant?
It worked.
@RightNYear
“Taxing the “rich” when they’ve gotten their gains through Fed manipulation is another story.”
And yet where were you when tax cuts for the rich and corporations were passed?
Not complaining about deficits and inflation, that’s where.
Looks like I triggered Petunia and Timbers – they’ve both started lying about me. Strawman much? I fully support taxing the wealthy WAY more than they are being taxed. And my problem with all of this money printing is, again, the fact that it’s making EVERYTHING more expensive for everybody, and will lead to absolute misery for the masses. Try to keep up instead of lying about people, K?
@timbers
You squandered yet another chance to tell us how much tax revenue your 91% plan would bring in.
Policies should be based on numbers not feelings.
Current tax levels are already high when we add up fed income tax, payroll tax, state tax, state payroll tax, sales tax, property tax, car tabs and all other nickel & dime taxes.
I’ve been opposing our levels of government spending for decades now. I opposed the corporate and individual tax cut unless it was going to be paid for, but I also oppose the fact that EITC and other gimmicks means that the bottom half pays no federal income taxes at all.
I also oppose massive printing which benefits largely the top and corporations.
@Petunia
@timbers
Yes, I agree.
Libertarianism is a uniquely American phenomenon – in no small part due to vast sums of financing from rich people. It is the original astroturfing starting with the literal paid import of von Mises to the US.
The reality is that rich people, as a class, are ridiculously selfish. They would much rather pay nothing to support physical and societal infrastructure because they know full well that their kids aren’t going to public schools; that they can afford the gated communities; that expensive health care means less competition for provider resources etc etc.
The whole Proposition 13 debacle in California is a great example. By cleverly using a few poor grannies as fronts, they passed a law which forced the state and local governments to switch its primary funding source for schools – property tax – to other means. The state and local governments used to derive the majority (40% to 50%) of its income from property taxes – this is now 20%. The difference has been made up for by increased sales taxes, income taxes, vehicle registration fees, etc etc which poor people (disproportionately to both wealth and income) must pay.
When Prop 15 came up last November along with Prop 22 – the oligarchs came out in force. Prop 22 saw the highest spending, ever, in support of a California ballot proposition: $220M+
It made even PG&E’s egregious $40M bid to cement itself as power provider to its existing customers, look puny.
Prop 15 spending was only $139M while Prop 61 was $128M (61 aimed to reduce prescription costs; the pharma bastards spent $100M+ to defeat it).
This is America today: a country of the rich people, by the rich people and for the rich people.
Stimmies needed to target productive spending. Insulation in homes to save on energy costs, cash subsidies for gas/ electric hybrid cars and trucks, trade school tuition to raise supply of retiring tradesmen, etc. What we have now is a failure for the long haul.
@W
I do agree that public education is important.
However, the reality is also that:
1) Public education is being used as a propaganda vehicle on a number of subjects, especially including the ever shifting winds of political correctness.
2) While public education teachers in rich blue cities are relatively poor – the opposite is true in deplorable red rural areas.
When public teacher unions and what not start getting into politics – then the gloves come off.
Our printed money economy is requiring ever more rocket fuel. Distortions are so very high. The SP500 has nearly no value if interest rates ever rise. To get get an equity like 10% long term return it would need to be at around 700 instead of 4100. All government has left is zirp and high inflation and trillion dollar deficits.
“The SP500 has nearly no value”
The shiller PE is currently 37. To get PE of 10 (meaning interest rates are even higher) and assuming no earnings growth ever, S&P should should be 1000.
If earnings have any growth at all going forward, you can get to SP500 at 2000 and higher even with 10% interest rates.
I don’t think there will be any notable earnings growth unless “stimulus” is permanent. Our economy is not growing, as a whole.
I will not argue with saying sp500 could be 1000 or 2000.
One measure that predicts long term market pretty well is to use a 10% hurdle rate on dividends growing at same rate as nominal GDP. Do that assuming 4% growth rate and you get 700.
Maybe we will not go there but earnings drop in a recession like this year went to about 100 and PE has been 7 in my life time.
OS
There is another option, to cut spending, but you’ll end up on the CIA watch list if you say it. I’m in UK and I could end up on the UK equivalent list but I’m too old to care.
Be brave and say it. I’m talking about a ‘closed’ sign on the Pentagon. Then you could have ‘stimmies’ for ever and a smaller National debt at the same time. All the other nations in the world could then follow suit and citizen real wealth around the world would explode.
Maybe you think they will all attack you of course, in which case, you’ll have to suffer all the crap you’ve got.
DC & RightNYer keep steeling my thunder. I can’t even get a word in edgewise. Before I type it out they’ve already said what I was going to say. I’m going to have to find another topic to rage about.
I’ve incurred a lot of expenses like everyone else. Like a tooth implant, 5K uncovered, and was going to use my stimulus payment, never got the stimulus. But I will see the med bill for the implant and the future inflation. Also they took away the med deduction in the 2017 Tax Cut & Jobs act. They are screwing the middle class big time on all fronts.
I doubt many people have issue with the individual “stimulus” part of the equation. We’re a rich nation and nobody wants to see gut-wrenching hunger.
My issue is the opaque nature of the thing called “stimulus” and the apparent (because nobody really knows) small amount that actually went directly to individuals.
Bail-outs of blue states and various pension plans appear to have gotten bigger slices of the “stimulus” pie.
I’ll undoubtedly be attacked for even wondering about this, but this year’s increase in the US debt is larger than the COMBINED GDP of Germany & Russia. A nation of “we the people” deserves more clarity on what a couple hundred congress persons have done with & to our economy.
Rich? We have the biggest debt in the wold, ever. We are broke and living above our means as a nation.
Biggest debt in the world is irrelevant when the US can print its repayment anytime it feels like.
seriously though, think about it, how much of that 1.9T from JB is actually real stimulus vs bailing out all of his supporters. Cities that are poorly run, bailed out.
I mean the math is simple right, 1.9T / 330 M people = $5700+ a head. And let’s face it, the denominator here is a lot smaller than 330M.
Regarding education, take a hard look at what is going on in US education and keep in mind where the administrators of tomorrow will be coming from. The same applies to the work force, too.
With the kind of education offered to the kids of ordinary Joes, how will US manufacturing and other companies be able to compete with the Chinese and the rest of southeast Asia ? Considering what is regarded as important in most higher education nowadays, what kind of ignorant people will be running things in the future US ? How will the US manage to compete against a resurgent and competetive China where STEM is highly regarded and having a leadership that seems to be hardnosed and well aware of their long term advantages ?
@Realist
The whole STEM thing is garbage.
Companies are firing older workers in the US en masse and replacing them with cheap foreigners – both imported (H1B) and actually outside the US.
More importantly: if you’re an educated elite in the US now – are you really happier having a level playing field for your kids?
Yes, the “educated elite” I know of put their kids in investment banking and other finance curriculums. I don’t know of any that went into STEM fields.
Or even better, groomed them to run Dad’s business when he retires at 55 and spends his days at the club or travelling the world.
JP,
I’ve been hearing about the deficit for 40 years and every time they reach the debt limit, they all get together and increase it. I stopped caring about it 35 years ago when I realized it’s all kabuki for the base.
The other thing I figured out was the 435 are a worthless venal bunch.
Except that the debt is growing exponentially. If there’s really no limit, why not borrow $100 trillion and make everyone rich?
They are groping around in the dark trying to find the Minsky moment of lost confidence. It’s really an experiment to see how many dollars they can print before inflation jumps up and eats us all or assets get so high they implode on their own leverage.
P
Way to go Petunia.
The deficit is just deferred tax.
It’s what they spend it on that counts.
One F35 could lift hundreds out of poverty for ever.
Your choice!
Petunia, you are 100% correct in what you’ve written.
What I observed from the comments that you’ve received is that they seem to come from white males who shifted from hating non-whites to hating the poor.
It’s a hidden form of racism that they seem to believe is more politically correct. They don’t realize they are much closer to the poor in status than to the billionaires they love to do bootlicking towards.
“We’re a rich nation and nobody wants to see gut-wrenching hunger.”
USA is only ‘rich’ in outward appearances– it is really a hollowed out shell of an economy kept alive on ever-expanding debt/credit steroids.
This faux wealth is akin to the spectacle of legions of Americans who habitually over consume beyond their means– for example the family that has a huge McMansion with all the trimmings, toys like jet skis and RVs, and of course those expensive late model cars sitting in driveways.
But they are technically insolvent and deep in debt to support their happy consumer lifestyle.
These are also likely the kind of people that believe we can all grow rich quick off skyrocketing property equity by selling our houses to each other.
Heinz, exactly. I’ve been saying this for years now. We’re not “rich.” We just have a huge credit card, and the rest of the world hasn’t yet caught on to the fact that the economy/wealth that supposedly underlies all of the debt is worth far less than we claim.
I think that is changing, though, and rapidly, especially among the rest of the developed world (of course, they’re not in such good shape either).
The local Toyota dealers is insanely busy. Their inventory is the lowest ever. I looked up Toyota sales and they sold 220,600 cars in March, and all-time record. I don’t know about anybody else, but $1,400 is like pocket change to me. It doesn’t make me want to run out and buy a $50,000 vehicle.
All these fools see is $1,400 (possibly * 2 or 4 depending on family size) and think that they have at least 6 months of monthly payments. They don’t think about what happens after.
I won’t assume that most of these purchase are stupid. I think people try to grab asset, any asset to fight against inflation, especially when they might just need it down the road.
After all, any thought that a lot of people are stupid is flawed. Just like the negative bias on this blog shows it was wrong for so many years.
Durable goods, including cars, are not “assets.”
That’s the flaw in your reasoning.
Cars/trucks are depreciating assets but they serve a purpose. Just like phones or TVs, people still buy them because they have functions like for communication or entertainment. They are not appreciating assets though.
Now regarding rather a purchase is stupid or smart. It depends on the circumstances. If I don’t have a car/truck and I need one for work (e.g., can’t take public transportation anymore), then buying one is not a stupid idea. If I think the prices will go much higher in the future, buying one now is a smart purchase assuming I can afford one. Now, if I have a vehicle or two already, and I just want to use the stimmy money to down another “toy” to impress folks then this may not be wise.
qt, agreed. But the problem here is that we have competing narratives. If inflation truly is “temporary,” then people are being stupid for buying these things at their price peak, and prices will drop, leading to a drop in retail sales later on.
If the inflation stays, then companies will suffer lower earnings, as their inputs will be higher.
In either case, it’s not good for the future.
“Cars/trucks are depreciating assets..”
The FED has turned them into appreciating assets. Weird, right?
@Depth Charge:
It’s not the Fed that’s turned used vehicles into appreciating assets, it’s the chip shortage and the resultant reduction in new vehicle production.
It’s not uncommon for used vehicle prices to increase. After “clunkers”, the same phenomena occurred because of reduced supply. It’s how a “market” is supposed to work.
A majority ARE stupid. They elect morons. That’s why were are where we are.
It doesn’t matter where you live. You can run but you can not hide. We are all affected by the stupidity of the masses. You can’t insulate yourselves completely from society’s disfunction.
Ask the Europeans in French Algeria who left before the revolution in 1954. They left and took their wealth with them. Ask the Russians who left before the fall of the Czar in 1917. Ask the Germans who left before 1939. When society falls apart it affects everyone.
And all you are worried about is some frickin stimulus payment
Auto dealers are advertising all over the radio here to use your stimulus check to make a down payment on a new car, and take out a 96 month loan. They say they will match the stimulus dollar for dollar.
The lemmings are lined up to get fleeced like never before.
Check out Sven Henrich’s chart of the national debt today. That’s the insanity that leads to what we are now witnessing. It’s just shameless money printing.
Meh. How is US printing different than Europe, Japan, China etc?
The real difference isn’t the printing – it is where the money goes and how it is used.
I would recommend more travel to see the differences between the printing in the US vs. these other areas.
First, we’re printing way more relative to the economy than those places. Second, those places largely are using the money for infrastructure and education. We’re using it to splurge on iPhones and other durable goods that are not do durable and will end up in the dumpster in 5 years.
C
Good point Clue.
It’s not.
The ‘printing’ is to keep interest rates low because low rates favour borrowers against savers.
Since 2008 there is such a massive amount of debt everywhere in the world that increasing rates (ie stopping printing) would cause bankruptcies on an industrial scale from individual home loans to massive corporations and everything in between. They don’t do it for fun, they have no choice.
In my opinion, clever people would have gradually allowed rates to creep back up over the last 12 years to allow all borrowers to pay down their debts to manageable levels but there is so much vested interest and greed involved they’ve just carried on as if nothing happened in 2008. Covid has finally burned down the farm and we are all ‘stuffed’ together. I’m not in any way confident that any past lessons are ever learned where money is concerned.
Good try for a travel freeby.
Wolf,
I’m glad you’re expanding the WTF series. Think it could entirely become it’s own subsidiary website of Wolfstreet. I’m sure you’ve had WTF before TSLA (I would think at least), but TSLA was the real start of the trend.
I am thinking there are other possibilities as well. For example:
WTF Cryptos
WTF home prices
WTF NFT
WTF national debt
And of course, WTF TSLA when it gets up to $3K. I’m sure there are other worthwhile WTF for you to go after, but those reasonable beginnings I would say. You must expand that readership, so that you’ll arrive even more. And attract a large twitter following… hmmm, you are on twitter right?
I suggest WTF dollar bill, in which Wolf discover dollar bill is better for wiping than Charmin and worth just a little less than toilet paper.
Well, technically speaking the advantage of using the dollar bill for that purpose is that the dollar bill itself is reusable. After all, it’s not paper, but cloth.
Think about what the Fed has done. Shiller earnings yield is 2.75% with 1.4% current dividend. He is trying to run inflation hot so stock earnings might not even keep up with inflation and dividend certainly will not.
Wow! Free money for the banks and hedge funds, free money for the consumers to spend. Why didn’t we think of this decades ago? National debt? No problem, you can just zero out all the debt the Fed owns and who’s going to complain?
They’ve discovered the perpetual motion machine. It’s different this time.
I have not watched any of Weimar Boy Powell’s faux interviews with 60 Minutes because it’s basically two liars engaging in propaganda. But has anybody anywhere pointed out to Powell that all he is doing is destroying the currency and creating massive poverty? This stuff is almost unbelievable.
Right. Basically, we spent more than a century building up good will to the point where people trusted our dollar (and the economy/assets/people it represented) so much that they wanted to hold it as a store of value.
Weimar Boy and Co. are destroying that good will in record time. The rest of the world hasn’t quite picked up on it yet, but once they do, this little game no longer works.
201 ”military adventures” since 1945 does not exactly translate into good will IMO rnyr, no matter what terminology is used to ameliorate the death and destruction carried out by USA as part of those events.
While WE the PEEDONs apparently continue to support such global warfare efforts to maintain the USD and our position as the police/bully of the world, , I seriously doubt we will ever again have the good will that was evident on all sides at the end of WW2.
It has been pointed out that one always has choices, even at the point of a gun,,, but I seriously doubt any of we peons have had any choice regarding the establishment of the ”Fed” or continuation of the theft managed by it.
Who appointed this jackass – J Powel
Who appointed that crook Steve Mnucian?
Who appointed that other jackass – Gary Cohen?
Who appointed that useless AG Sessions?
Need I say more
Swamp Creature
Your simple question deserves a simple answer: Trump.
However, NONE of those individuals voted for the “stimulus” packages ruining our economy – for the most part, Congressional Democrats (NONE OF WHICH WERE APPOINTED BY Trump) are driving absurd deficit non-stimulus spending.
The numbers I’m about to use are approximate because politicians and the MSM deliberately keep things vague.
The US has now had 4-5 rounds of “stimulus” totaling about $4 trillion. If 160 million people each got a total of $5,000 direct payments (I think my estimate is generous) that’s $750 Billion of direct stimulus.
Question for you Swamp Creature: WHERE THE HELL DID THE OTHER $3.250 TRILLION OF STIMULUS GO?
SC,
I would like to single out, the only one, from your list that did a good job. While I don’t think of Steve Mnucian as a good guy, he was an extremely competent Treasury Secretary. He left the TGA with $1.7B and updated the treasury computer systems. We got our tax refunds in one week, and that’s a big achievement.
I forgot to add:
Who appointed that useless FBI director Wray?
I want an answer.
The fed is very easy to contact by email.
Think I’ll pass. I’d likely say something that would trigger a “visit” of sorts from men in black.
Petunia
I’m glad you got your refund and rebate. I haven;t gotten sqat.
No Dec $600 rebate, No $1,400 rebate. No 2020 tax return processed. I’m 0 for 3. That’s a strikeout.
Oh, just found out I can get a vaccine from CVS. Have to drive to the Delaware border 50 miles away, I’m on my way. Nothing closer.
Petunia
Wasn’t it Steve Mnucian that oversaw the PPP program and all the fraud associated with it. Wasn’t it Steve Mnucian that talked Trump into appointing Powell. Wasn’t it Steve Mnucian’s wife that complained about having to fly commercial vs flying on a chartered jet. Wasn;t it Steve Mnucian that was involved in a scandal with the Indymac subprime lender, and made a personal killing off the TARP program.
I’m sorry, with leaders like this who needs enemies. Trump hired him and those other clowns I mentioned above and deserves the blame. Period.
OE
Unfortunately it’s not ‘free’ money it’s deferred tax for US citizens and people are only lending you the money because they think you will pay enough tax to cover the interest payments each year. They’ll worry about getting their money back when the time comes but they’ll always know they can at least roll it over at maturity unless they need the cash for something else.
It’s always been this way.
For the last 40yrs bond yields have been falling which means lending to Govt has been a good bet. You can’t fall much further from here so what happens now?
Perpetual Motion is certainly needed.
It’s funny, I went to MicroCenter last night to pick up a monitor I ordered online and I noticed inside the store, line was all the way to the back of the store and even online pickup had a line. At first I thought maybe people there were lining up to wait for RTX3090 graphics card shipment, turns out they were just regular shoppers. I swear I thought it was either Christmas in the middle of Weds night or they were giving out free stuff. To add to the insanity, there was a tent and tons of lawn chair setup outside of the parking lot, I guess these people are waiting around until the next shipment of graphics card arrive then go hog wild on $2k graphics card.
Geez, this government sure is making it rain in all the wrong places…how can this new normal ever stop? Sadly free money doesn’t rain on me since by government definition I make too much but yet too poor to afford a house in SoCal, go figure…
Same, I went to a MicroCenter at the beginning of April to help my girlfriend pick up a monitor, and the line at the registers was so long it took 20-30 minutes for us to get through it. It was winding back halfway into the store. This is a store where I’ve never seen a line of more than 1-3 people when I’ve gone in the past. I was wondering what what was going on, whether there was some sale or holiday going on, but didn’t find anything to explain it. Maybe the stimulus was it.
Great store, Micro Center. I bought my computer last year at their Cambridge store – their in house brand “PowerSpec”. My IQ went up 20 points.
I’ve purchased about a dozen of these Powerspec’s over the years. They last.
A lot of people are not making rent, housing and student loan payments plus the free stimulus. It’s worth an extra $50 – $150 per day extra spending.
Let’s face it the average American is pretty poor with money, consuming too much and buying and selling assets at the wrong time.
The problem in my mind, because you are correct, but pointing that out makes you a mean person! The funny thing is people are ok with telling you how you should live while a virus is going on, but you are not allowed to tell them that the way they handle their finances and our countries (which will lead to worse outcomes in my opinion, and at this point i don’t think can be fixed). We have a problem in how we view life/reality. A group of us think its ok to do whatever you want and somebody else will pick up the tab, another group of us think people should live responsibly and within their means. That is the true divide in this country. I don’t see it being fixed until we all become believers in one or the other. How can you proclaim that genders don’t exist and then condemn anyone else who questions other narratives as not “believing the science”?
I look forward to the chaos to come for only one reason:
“I just did what I do best. I took your little plan and I turned it on itself. Look what I did to this city with a few drums of gas and a couple of bullets. Hmmm? You know… You know what I’ve noticed? Nobody panics when things go “according to plan.” Even if the plan is horrifying! If, tomorrow, I tell the press that, like, a gang banger will get shot, or a truckload of soldiers will be blown up, nobody panics, because it’s all “part of the plan”. But when I say that one little old mayor will die, well then everyone loses their minds. Introduce a little anarchy. Upset the established order, and everything becomes chaos. I’m an agent of chaos. Oh, and you know the thing about chaos? It’s fair!”
And those habits are the basis of many many many folks income.
MicroCenter is a great store.
Yep, they stayed open during the worst of the pandemic and provided great products and services. I’m a regular customer. I’ve bought at least a dozen computers from them.
Ph
Are they using their nvidia graphics processors to mine Bitcoin?
There’s a fight between gamers and Bitcoiners for chip gold.
Looks like home renovations are in again.
This reminds me of the creatures used to get together, have a few drinks, tell funny stories, buy houses. Then they all get up and go to the nearest cliff. They were called Lemmericans.
I sold my buddy my pickup at the time in 2012 for 20,000 dollars. (fair price). he’s moving and offered it back to me. (it’s now 8 years older, more miles). for………….. (wait for it, check with nada/edmuds)
are you sitting down?
20,000 dollars
that’s right, same truck, 8 years older, 1/3 more miles, same price.
ridiculous.
And you call this guy, “Your buddy”?
Asking price != Sold price
Has he found a sucker, I mean buyer, yet for it at that asking price? If not, he may think you are the sucker.
Headline reading is pretty fun nowadays in this new normal..here’s the latest gem is saw..yup no bubble around here, just another new normal..
“There’s a single New Jersey deli doing $35,000 in sales valued at $100 million in the stock market”
I am looking forward to Wolfe’s April, May, and June, WTF reports!
Happy times may suddenly become unhappy times.
I hope Wolfe has a good supply of virtual red ink!
At this point I’d bet on another stimulus check forthcoming, probably sometime in July or August. Because once the inevitable crash in spending occurs, the party of free cheese will most certainly make it rain.
And they’ll use decreased retail numbers as justification for it. Stimulus is like the Hotel California. Once you begin, you can never stop.
7 months of the expanded child tax credit is dumped in July. Then monthly after that.
Wait until all this forbearance stuff comes to an end. They you will hear some squealing!
I wonder what the Fed’s “plan” is to keep that quiet?
If inflation really hits we are going to go from a virtuous circle of higher stocks leading to better economy to higher stocks to the recoil of the virtuous circle. Could be ugly with inflation, low stock prices and high employeement.
Old school, I hope so. I’ve thought for years now that the only way to repair this country is a complete collapse.
Bring it on!
“I’ve thought for years now that the only way to repair this country is a complete collapse.” As someone who is lucky enough to immigrate here, I hope the USA doesn’t “collapse”. We all know the dollar is the only thing causing thing country a great of pain. How about a parallel currency issued for the bottom 50? Or have 1 State issue its own currency and no accept the dollar? I know it sounds complicated and crazy but, food for thought?
Once the cascade begins. Forbearance, moratoriums, Crypto, HELOCs to purchase more assets… what can go wrong?
Crypto allows for transactions to be anonymous and encrypted all over the world- does that some it up? Oh, there is only so many lines of code or something. I guess there are a lot more people than just Pablo Escobar that need to keep their international transactions secret.
My credit/debit cards do pretty well encrypting and converting international rates. Plus, I have the security of the banking industry.
Also, world governments will not allow it to exist if it actually becomes a threat to their currencies as seen in Turkey. Britain didn’t even take in the Euro. And it coyote armed itself to break from Brussels.
Why isn’t any of the obvious? when do people see?
If they tax the 1% to provide the cash payments one could look at it as a financial capitalism dividend. Those receiving the cash would finally be compensated for the offshoring of the industrial base, You know, like the 1% has. Then only the 1% will be working. Of course, that would require no debt financing for the stimmies.
April retail numbers might be higher. I got my first vaccination three weeks ago. According to the Washington Post,125 million people have received at least one vaccination.
Once they realize they are free, they may make purchases that were postponed.
what happens after they all don’t help after 6 months? Since they have now let that cat out of the bag? With Brazil and India cases raging and deaths surpassing US totals, add in getting multiple companies to work on virus, seems previous admin did better job then reported….
You will need the follow up shots to keep your travel passport active so you may move freely. The follow up shots will cost $499.95 each.
Never sell cures, sell temporary pain relief instead.
What purchases are those? What purchases did the lack of a vaccine really deter, outside of restaurants and bars (which were mostly allocated to durable goods, as Wolf demonstrated)?
1) The empty mall parking lots became truck stop, because they are safe,
quiet and the liquor store is nearby.
2) Speedy gas station selling espresso and donuts isn’t busy.
3) Walmart this morning was dying.
4) The Food & Beverage store sales chart is Harami. The last 10 dots are
stuck in the middle, glued together. They don’t move.
5) Total retail sales might get another pop in April, before becoming a dead
cat bounce.
6) SPX have a room to grow.
7) Support line from Nov 23 low to Jan 4 close. // a parallel line
from Dec 4 close, or whatever.
8) If SPX stay inside this Lazer, it might get burn injuries. SPX might jump vertically higher, or drop lower, or sideways, to save it’s skin.
9) The DOW close > 34K and the banks had a buying tail,
bouncing on dma50 and above a Lazer coming from Nov & Dec, because the beam is hot.
Dead Cat Bounces are a feature not a bug of gov debt spending!
1) The bug : PFE CEO : every year get a new PFE vaccine, for many years.
2) What is good for PFE is not so good for QQQ. QQQ have reached a line coming from : Nov 23 and Jan 29 lows.
3) WFH to cont to infinity.
Yes, the sheeple will need their genes reprogrammed each year!
They are now saying you need a third injection to counter the variants. And if there are more variants in the wild, you’ll need a fourth, a fifth, etc, etc.
Who’s “they,” and why are “they” qualified to say anything? Remember “2 weeks to flatten the curve Fauci?” These people are a joke.
Pfizer CEO says a THIRD Covid vaccine dose will be needed as soon as six months after someone receives two shots – and then people will be vaccinated annually
Pfizer CEO Albert Bourla said during a panel discussion that aired on Thursday that it is ‘likely’ people will need a third dose of the COVID-19 vaccine
The potential booster shot would be given six to 12 months of someone being fully vaccinated
Bourla said it is possible that people will need to be immunized against the novel coronavirus annually
Pfizer and its German partner BioNTech began studying a third dose of their vaccine in late February
Gee, isn’t that convenient? “Hey, we’ve got this really expensive thing that we love to sell, and now we’ve found that you need more and more of it. For realz, k?”
I see here a place for a monthly subscription.
Subscribe now to secure your vaccine next Fall!
DC
Check out market-ticker.org for all things Covid.
MonkeyBusiness
The secret ingredient to heal the population from BS perpetrated in the name of health;
Open the Economy, and let people live.
How can a true scientist reconcile the two views ( our dna is 98% viruses that we’ve conquered and assimilated vs , this virus have No equivalent in virulence and severity?!!).
Do you remember that movie line that goes like this “ get busy dying or get busy living “
But truly, are we all expecting to be methuselahs?!
Who are we protecting?!
and at what cost to our mental, physical and economic well-being?!
Nature magazine now says that herd immunity is pretty much impossible, and they’ve given 5 very good reasons. Shutting down for a period last year was reasonable, heck, Dr Frankenstein was making sense, but now we’ve got to learn how to live together with the virus.
“We will spend roughly $460 billion in 2019 on prescription drugs. In a free market [without government-granted patent monopolies], these drugs would likely sell for less than $80 billion.
The annual savings of $380 billion is almost 1.9 percent of GDP. It is more than five times the annual food stamp budget. In other words, it is a significant savings.
If we went the free-market route, we would need an alternative mechanism of financing research. The obvious one is direct government funding. The government already spends more than $40 billion a year on biomedical research through the National Institutes of Health and other government agencies. If we doubled or tripled this sum to replace the $70 billion in industry-supported research, we should be able to get comparable results.
In fact, there are reasons for believing the results would be better. If the government is paying for the research, in addition to putting all patents in the public domain, it could also require that all findings be made public as soon as practical. This means that researchers could quickly benefit from each other’s successes and failures, sharing information that is now a tightly guarded secret by the pharmaceutical company sponsoring the research.
The other major benefit of publicly funded research is that pharmaceutical companies would have no incentive to misrepresent the safety and effectiveness of drugs, as was done by the manufacturers of opioids. Without the lure of big patent monopoly profits, there would be no reason to lie about the benefits or potential harms of a drug.”
– Dean Baker
LOL. If the government is funding research, the “research” will find what the Congress who implements that funding wants it to find. Plus, we’d get funding for all sorts of nonsense like “studying racism.”
The idea that government knows best how to fund research is a joke.
The goverment already funds most pharma research through the NIH via grants to universities.
Pharma companies then take that subsidized research ( funded by the taxpayers ) to conduct clinical trials to determine effective dosage and FDA clearance.
So no…..the breakthroughs happen at the university level.
Cannot wait for the crash to come.
I am planning to buy land, but prices are insanely high. Houses are crazy expensive, which is good, because I want to sell when high buy land when low.
I would expect the crash in about 1 – 2 years, what do you think? Is that going to happen?
The pessimistic/hating the world part of me say HELL NO, can’t fight the FED!
The logical/analytical part of me is saying HELL YEAH, in hindsight it will be so obvious
It was obvious to me that the economy and debt was a huge issue in 2008 and could not continue.
13 years later and it would appear that the situation hasn’t changed.
I now believe this can go on for quite a bit longer and I wonder what will be the next step. It will probably be the next level, Special Drawing Rights (SDRs) and the Bank of International Settlement (BIS).
Cashboy, the thing is, we won’t get a warning when it suddenly “can’t go on” anymore. The implosion will be rapid and violent.
I’m not even sure there’s any good way to prepare for it. All I know is China and Russia are playing the long game.
It’ll most likely be at around 3 years hopefully, but your time frame does fit the obvious of what’s about to happen.
*I think we all should be privileged to be living in this moment and time in history, if not as equally terrified. They’ll be distorting this moment in time and history around the next century just like they’ve done in the past.
This is gonna end pretty ugly.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” – Sun Tzu
“To know your Enemy, you must become your Enemy.” – Sun Tzu
Sane and reasonable people are certainly still waiting for this financial house of cards to fall (a correction and reset to a sustainable state).
All one can say with some degree of certainty is that we are surely in the late innings of this absurd game (unless authorities in all their audacity and arrogance call for extra innings).
There are too many moving parts to this rickety economic machine to know for sure what comes next— except that this insanity that passes for ‘new normal’ has an expiration date.
Will it end in a bang or a whimper?
Market reality ended in Sept 2018 when the realized they couldn’t actually taper the balance sheet. We’ve been lala land ever since. First step is for the Fed to stop buying 1-10 year treasuries. At least the Fed verbally introduced buying less that 120 billion a month as a concept. Congress is still praying that loose monetary policy will create jobs, so any type of long term correction seems unlikely because they aren’t going to rewrite the rules of the Fed and whoever is Pres will beg for QE whenever a downturn begins. It’s sad that the central bank has over a trillion in tnotes, I can’t imagine it’s a place America ever thought it would be.
Some of us have been waiting for the “financial house of cards to fall” since 2007.
There are definitely going to be extra innings, possibly in the form of the Bank of International Settlement and special Drawing Rights.
I am not sure how it is going to be implemented.
Of course the real solution would be a world war as an excuse. It looks as if that may well be the route the USA is going with Biden and his threats against Russia.
I don’t know, but the Fed has turned long term investment into a momentum game. At first the Fed was killing all the shorts. Now they are working on killing all the savers. What’s next? Killing everyone who isn’t leveraged?
1) CEO Bourla like CV so much, he wants more.
2) Moderna is relatively small. The others have failed. Bourla rule the
waves in 2021,next year, the year after, forever. CV-19, CV-20, CV-21…CV ==> Vive le PFE.
3) What’s good for Boula isn’t so good for SPX and US gov debt. Wait for confirmation from CEO Dr. Faust, before clicking SQQQ..
Hey, simple logic for the masses is this. If $1400 is this good how about another and another. This shit is goooooooo…..d. If the world will keep giving us their production for our non-performing debt then back the f’ing cash truck up to my door and keep shoveling till the goods producing suckers collapse. Keep giving em’ the good ol’ Keynesian purple wiener.
All of you people flunked “maff.” The $1,400 has led to a massive loss of purchasing power and a debt of somewhere in the neighborhood of $17,000 for each citizen. Keep doing it and the math keeps getting worse.
$17,000 at 1% is only $14.17 per month interest. As we will never pay the principal back let’s print a lot more $$. We can easily afford it. $1400 is over 98 months of interest payments. Who knows where we’ll be in 8 years. Whee! This finance stuff is easy!
Funny thing is, as an US expat, the USD is worth more outside of the US now in many countries than it is inside of it…
Well maybe not so funny for you, but most people stateside aren’t like you and are willing to delude themselves that this is sustainable.
Godspeed…
I think it’s because the rest of the world hasn’t yet come to the realization that the dollars they’re holding will buy progressively less and less.
Nope
Our forevers wars did that.
Plus our bloated military and the MIC.
The taxpayers spent one trillion dollars on the failed F35. Even the Air Force acknowledges that failure.
OTB
Now there’s a man who’s getting to the knub of it.
You’ve got to admit it must be fun for your leaders going round the world and scaring the s**t out of everybody and telling them how the American way is the best way, do it or else.
That is not a cheap hobby, and it’s why everybody loves you.
Kurt Vonnegut once said that the greatest threat to world peace was the United States.
I tend to agree with that sentiment.
Medical practitioners call it “The Surge.” The surge of energy and activity that comes sometimes right before death.
Actually you are right. Didn’t we fall into a deep recession right after WW2? When all the war production stuff were scaled back? I think the recession will start when everything goes back to “normal”.
We don’t make our own “stuff” much anymore. This is a service economy now.
It’s amusing to read here about how 3000 bucks is corrupting the heart and soul of America, if not capitalism. Now just imagine if we increased every working adults wages by $5 an hour.
At 40 hours per week and assuming 50 weeks of work a year that comes to an extra $10,000 in everyone’s pocket. I look at the productivity gains in my own field and many others and I see exponential growth, while increases in income have been logarithmic.
Do you not see the difference between people earning money while WORKING and getting money for free? If people don’t have to work for money (whether it’s poor people getting “stimmies” or the capital class getting QE), it means money has no value, which means work/productive labor has no value.
That’s a terrible thing for a society.
RNY
That is a silly statement.
The very wealthy don’t work and they have most of the dough.
The hysteria about debt for economic recovery is laughable.
Folks are rending their garments over this but also endorse our absurd military budget and forever wars.
Our past and current wars and military account for the lions share of the national debt.
Talk about misplaced angst.
I’m really tired of this stupid strawman. First, most of us have been complaining about the debt/QE for over a decade. This meme that conservatives only care when the money is distributed to the poor is as dishonest as it is stupid.
Second, no, most of the debt is not from “wars,” but is from the entitlement programs. Look at the numbers. Social Security, Medicare and Medicaid account for most of the budget. And no, they don’t “pay for themselves,” unless you endorse the slight of hand taxing mechanism which makes it such that the lower middle pays no taxes EXCEPT those.
Third, no one is hysterical about debt for an actual recovery. But giving people money so they can buy iPhones is not causing a “recovery” in anything that needs recovering. It’s not helping the restaurants that have closed, the travel industry which was decimated, or anything else. It enriches Apple’s shareholders.
Why do you think Apple, Amazon, Microsoft and Google deserve to get free money indirectly from the taxpayer?
Why do you think the middle class should be permanently priced out of housing?
No strawman argument.
And yet conservatives never seem to rein in the lavish spending by having wars, the military itself and the ruinously expensive associated Military Industrial Complex.
Only complaining for 10 years eh?
MIC spending has been a problem since before Eisenhower.
The one trillion we have spent on the F35 program is apppalling. This project has been deemed a failure by the Air Force for example.
There are many other examples.
SS, Medicare & Medicaid will be in far better shape after the Boomer generation passes on…..their sheer numbers has been a lump in the python for their entire existence.
So much complaining about the FED…..as if it is the only factor.
As far as the complete stimulus ALL going to Apple……surely you jest. If Apple, Amazon and Google are unfairly benefiting….well there are anti trust laws to enforce.
And high housing prices are temporary….not permanent. Perhaps we should stop the hedge funds from outbidding the citizens for property.
@RightNYer
“Do you not see the difference between people earning money while WORKING and getting money for free? ”
Of course I do, which is why I suggested we focus on increasing wages. Considering all the handouts given to the rich and corporate America, I don’t think a few thousand bucks is particularly onerous. For the well connected it’s been a heads I win tails you lose America for years.
A good example of this is Nancy Pelosi making bank on her stock trades using inside info. And of course there are probably more Gordan Geckos in business today than ever before.
I suspect main problem with Keynesian economics for most folks is the threat it represents to the decades of failed supply side trickle down economics in America. My hunch is the same folks who oppose it seem to be the same folks opposing anything beneficial for the working class (min wage increases, welfare, health care, pre-school education, school lunches, etc.).
Really mak? Are you serious? You left off sarc
In 1971, when President Nixon took the US out of the Bretton Woods system by separating the dollar from gold, he remarked, “I am now a Keynesian in economics.”
Keynes focused a lot on savings vs consumption vs investment. In general, he viewed saving, the accumulation of income as cash, to be hoarding, and he linked interest rates to the level that citizens would save. In his view, low interest rates would create more investment rather than savings. He also linked higher unemployment to higher interest rates which cause entrepreneurs to invest less in future production (back when the US economy was more industrial production based).
One thing Keynes had right, and I am an example of, is that when income (or net wealth) increases, so will spending, but not at the same rate.
Again, I had some pretty interesting debates with my Econ professor Walter Heller on these topics. On one hand, you have a man who helped create the Marshall Plan, who was JFK’s chief economics advisor, who sold LBJ on the War on Poverty Plan to kick-start the economy after JFK was killed, and who then told LBJ off after he escalated the Vietnam War without a plan to pay for it. And on the other hand, you have an 18 year street-smart kid who thought free markets without government interference was the one and only system that was superior to all others.
We’ve had low interest rates for a while. The USA has debt out the Wazoo, and income inequality keeps growing.
Printing and handing out money always juices the economy until you cross the line where people figure out it’s a ponzi scheme and they try to be first out the door.
Yes. Money itself becomes subject to the “greatest fool theory,” where each person wants that printed money because he thinks someone else wants it in exchange for his labor/goods.
Once NO one wants it, everyone races to get out of it, and it all implodes.
Think about it. People say Bitcoin’s price ascent is a sign of a declining trust in the currency, and that is true to some degree. But if you can buy a Bitcoin for $62k, that means that SOMEONE out there values the $62k in fiat currency more than the Bitcoin.
The game ends when NO one wants fiat at any amount. Then comes the collapse at the end of the crack-up boom.
DR
If you laid all economists end to end they wouldn’t reach a conclusion!
You can find an economist who will guarantee any theory is the right one. It’s not a science it’s an art.
What’s becoming scary is that this is becoming true for some ‘Scientists’ as well who “BELIEVE” in theories.
Auldyin,
I hear you about economists. Mr. Heller had an impressive curriculum vitae, and was a Keynesian.
The time of this class was right after Reagan took office and Volker raised the Fed Funds Rate back up to 20%. Interesting times for sure!
Heller was the antithesis of what I thought, and still think, is fair. He was a believer in very high and progressive tax rates, and he preached this to the class (timbers would have agreed with his philosophy I reckon). My belief is that we should all be taxed at the same percentage – flat and across the board.
Heller also thought that the government should step in and push free markets aside in times of economic stress; like we were in at the time. I did not. Look at the Fed’s balance sheet, stimulus checks and PPP loan deals for a current example of pushing free markets aside.
When the 2008 housing bust tanked the economy, the Fed and government stepped in, but that’s why we are where we are now. A reset of bankruptcy for insolvent banks – not Too Big to Fail & Bailout was what should have happened. The wealth inequality engineered by low interest rates and QE has made me a lot of money (the trick is keeping it & not going backwards), but it is not what free markets are supposed to do.
I should clarify that free markets do need to have some structure and rules. The Glass-Steagall Act was a great thing, and it would be better if it was brought back IMO. Anti-trust laws that prevent monopolies from controlling markets are a good thing too.
There is no absolute perfect system.
Gold and silver are down. Please tell me if I should buy some with my stimulus money.
If you have to ask…
But seriously, think about it this way. Do you want to own gold? Are you buying it just because someone told you to? Do you want the constant stress of thinking your a millionaire every time the price rises by a few bucks and then thinking you’re in the gutter every time the price drops by a few bucks? Yes, I’m getting philosophical on this because essentially the prices of most commodities oscillate around a range and any time it gets to the top of the range, you could sell it and every time it gets to the bottom of the range, you could buy it.
If the price rises a few bucks over the top of the range, you are richer if you sell it. If the price drops a few bucks under the range you picked up a bargain. Yet we are not talking a lot over or a lot under. They are statistical blips you are trying to take advantage of, but we are talking active trading here, not buying and holding. That means you need to know a statistical blip when you see one.
This kind of trading is dangerous in large volume trading if you don’t know what you are doing. Therefore, you need a lot of small trades that are timed to match market highs and lows. This is more like a game of poker and it becomes a hobby like poker too. And before you know it, you’ve become a gold bug who has gone all in. Then you pray to find a bigger sucker. You gotta know when to hold ’em and when to fold ’em.
Now, if you think that you should be holding gold because of imminent financial collapse, that is difficult. I personally wouldn’t because who is to say the gov won’t just confiscate your gold? Or your broker won’t be able to pony up the gold when you want it? Thieves will target you and shopkeepers will rob you. Just like in the gold rush days.
I also doubt that gold will ever back a fiat currency ever again simply because there isn’t enough gold in the whole world to back every single currency that wants to be on the gold standard. That’s why the gold standard was dropped to start with.
So look. Rent a cheap factory, buy a few second hand machines and churn out widgets that people need, even after a financial collapse. That is what capitalism is supposed to be and if it’s not possible to do so, then something is so wrong that we have to question whether we are still a capitalist society.
That is the real issue and it leads to some disturbing theories. I personally think we have become a hybrid system that takes the worst excesses of both capitalism and communism and mashes them into the worst possible outcome. KAJIRA!
I’d say with the way lobbying works it’s closer to corporatism than communism, looks at the recent bills. 80% to the industries who “need” the most and 20% to the masses. I wonder which direction this will trend in the future? I suspect less for the regular guy and more for the corporations, with “government oversight” ensuring the money is spent “appropriately” and killing the very competition that capitalism needs to function productively in the process. It would only take a more universally likeable Trumpian figurehead to transition the country into a full form corrupt dictatorship.
Oops! I meant GOJIRA! It’s the Japanese name of Godzilla. You know, a giant radioactive monster that destroys cities. Kajira are an ~interesting~ subject, but not what I had in mind (or did I?). It seems I mangled my manga-phors!
You’ll have to pay a premium of $120 per ounce. It’s not worth it. Better to own stock in mining companies.
DB
No earnings. Storage/theft/insurance problems if you hold it. The buyer will want proof it actually is gold or silver and not something you cooked up in your yard and he’ll expect you to pay for convincing him unless you have merchants on every street corner like in India. Dealers will want commission, storage fees, verification certificates etc etc.
Your choice do what you think like all of us.
We are certainly witnessing an extraordinary infusion of money.
We thought it was a lot over the past 10 years but this last year…wooooza.
Since 2010, there has now been $39 trillion of bailout/stimulus spent in the U.S. alone. It is going to take some to work off?
1) China is buying TY, because they are sharp.
2) Yesterday I bought x4 Chinese trinkets.
3) Twenty four pencils for $1, because I always draw charts with my hands.
4) Six erasers for $1, because I always make mistakes.
5) A new cell phone, because my ZTE is gone.
6) A new heater, because the climate change brought 32F in May.
7) I buy trinkets, because 1B Chinese work for me and the PBOC is buying TY with my $.
Everything you buy from China ends up in the dumpster.
Everything they buy brings them lasting ownership and control…including US Congressmen. Who’s wins in the end?
Yeah…..humans have that same problem.
All ending up six feet under or converted to ash in an urn.
John Maynard Keynes commented on this.
OTB
Are you trying to scare me off this site.
Pushing my 4 score.
You’re scared of John Maynard Keynes ????
1) Fast changes are noticed immediately. Frog cooking can be deadly.
2) The Pareto top protect themselves from slow changes with moats, especially with a gov moat and BLM envelops.
3) The top 1% of assets had no change in the last 6 years, because
of their balanced portfolio.
4) When stocks and RE are flying bonds are dying.
5) A father should lead his sons with a conservative advise, because they tend to be short sighed, to extrapolate.
6) Small doses in pulse modulation to avoid friction. In the long time
frame they will follow what their father’s footsteps.
7) The more u know the better your advise.
8) They have eyes in the back of their head. They get everything if they don’t understand it now.
9) Time is leadership keystone even if they think u are wrong.
5) “Son, if you can’t pay for it, you can’t afford it!”
Thank you dad, I’ll always remember that.
a(: Bill Gates owns the most farmland of anyone in America. I think he has a plan to repurpose that property into prairie and wetlands.
Ah yes, a nod to the Agenda 2030 proposal to reshape American land use.
It is interesting that Mr Gates was busy acquiring all that farmland using 3rd party entities to keep it under the radar– until now.
What Gates does with the land (and possibly with future land acquisitions) could change our agriculture sector/food industry in profound ways. Worth keeping an eye on developments here.
AB
Either that or he wants to be as far from cash as he can be.
1400 for you…
10% on the SPs for us
“The Retail WTF Charts of the Year”
Well, China sure is benefiting from all this stimulus…if you can take ZH seriously regarding it’s recent growth figures.
The US doesn’t make much anymore that stimulus dollars are attracted to. Except maybe patents to expensive drugs discovered by using tax dollars from govt funded research paid for by you and me (see Covid vaccines just to start) and copy writes than can be imitated in a non “rules based” parts of the world…which seems to be getting bigger over time.
timbers,
I didn’t read the ZH article, and I’m not going to read it because I’m not getting my economic info from ZH, so I don’t know what the article said, but if you just read the headline, you’re going to be misinformed.
China’s GDP edged up 0.6% in Q1 from the prior quarter. That is minuscule lousy growth.
What you got trapped in is the “Base Effect.” In Q1 2020, China’s GDP had collapsed, and compared to that collapsed GDP, Q1 GDP year-over-year rose 18%. This is the result of the “Base Effect” that I explained here:
https://wolfstreet.com/2021/04/08/get-ready-for-a-wild-base-effect-highlighted-forcefully-when-it-suits-them-as-with-inflation-silenced-forcefully-when-its-awkward-as-with-corporate-earnings/
That said, those retail sales triggered a record trade deficit in the US when the stuff was imported (that was subsequently sold by retailers):
https://wolfstreet.com/2021/04/07/power-of-stimulus-after-decades-of-offshoring-trade-deficit-hits-worst-ever-duh/
I made the same mistake Powell did – base affect!
Eyeballing the car chart: it still looks like the net lost revenue in 2020 is not made up for by the increased revenue (from longer term trend). For that matter – increased prices mean the #cars sold in 2021 is less than the #cars sold in 2020 for the same X dollars.
If so, all that we’re seeing is pent up demand driving up pricing – much as the PC/laptop market experienced a surge in buying due to WFH.
And if so, the spending increases do not correlate with the stimulus so much as demand.
c1ue,
“…. it still looks like the net lost revenue in 2020 is not made up for by the increased revenue…”
Your eyeballing is incorrect. Total retail sales in the year 2020 were up 3.4% from the year 2019! The loss in revenues in March, April, and May 2020 was completely made up, plus some, in the rest of 2020.
2020: $5.64 trillion
2019: $5.45 trillion
A wad of $100 bills in the pocket still feels pretty good but I can’t find anything to spend it on. Everything is already inflated for me. I sniff out deals and the good stuff is gone.
After a decade of stacking what most nobody else wanted including rare coins, building materials, old tools, etc, hyperinflation has already hit.
I was buying 25LB boxes of fasteners (deck screws, nailgun nails) on Ebay for less than $25 delivered for years but it’s all gone now. A dang 5LB box of deck screws is over $30 and upperds at Home Depot now.
There is a store called Savers nearby selling 2nd hand items sometimes stocking some good stuff. People are knocking down the doors to get in that place. Talk bout a spreader event but a chance at U.S.-made old junk is too good to pass up.
These charts are similar to a patient in the ER just before he or she goes into Cardiac Arrest. It may have been fun and games the last 14 months for American Spending with free money and artificially low interest rates, Covid 19 suffering and deaths aside (since wanton spending takes one’s mind off any plague AND REALITY), but the ability of U.S. consumers to keep this craziness up is being constrained by the day.
The fact that the latest and greatest Biden Deficit Spending Bill extravaganza is taking so long to make it through the disgusting Python called Congress is a case in point. Some of the budding millionaires in Congress are starting to see a South American or Zimbabwe or Weimar Germany aspect to the U.S. today and are actually getting cold feet with multi-Trillion Dollar “Everything is Infrastructure” legislation.
I will probably be proven wrong regarding any semblance of renewed prudence from the Vote Catchers in Congress, forget about the Administration, but one who balances his checkbook every month and has no debt can only hope. I may just take out a mortgage on my next property to make sure I can benefit from the Debt Reset that may now be inevitable. It will not be Debt Forgiveness, but an adjustment in monthly payment amounts that is provided by turning the 30-year mortgage into a 50-year debt instrument. Stranger things have happened. If the insiders forgive Student Debt, I want my loan principal from Michigan Grad School paid back to me; it is only fair in a Country Gone Mad.
Wolf and most of his readers/commentators see the very dark clouds coming over the horizon. IT IS HIGH TIME THE REST OF AMERICAN SEE THEM ALSO.
When Little Boy Peep Powell stated that no one uses Gold to purchase anything (in addition to Cryto’s), he was trying to jawbone the populace into not taking up this ancient practice. Don’t we have several States in the Union already that have deemed Gold and Silver legal tender within their borders??!!! Poppycock Powell.
Nationalize Amazon! Free shyte for the sheeple, depending on social credit score. Your papers, please.
Amazon+Google+ichPone+BigPhrma profits could pay for our deficits.
Corporate monopolies should be treated as Public Utilities and nationalized. Or broken up.
They are wielding the Woke shield in order to fool the sheeple and continue to increase power.
When cash is essentially worthless they begin writing blank checks to the masses.
I know what the (WTF) for book hobbies and such is. It is all the scam work from home businesses popping up. Fake demand, fake business and then we shall see. Been hit up for reselling books to schools as a business. Their business model is creating a further scarcity. This destroys affordability by buying up all the cheap ones and keeping the prices high for profit.
Also I can explain the other one in housing, gardening yada yada yada . My daughters start up construction company just landed a contract and is going from 5k a month to 80k a month. Builders are building like there is no tomorrow. My son in law will be busy for at least 6 months and will earn 6 years of income in that 6 months. Also don’t forget Harry Dent causing doomsday prep to proliferate like gremlins that fell into the pool of water LOL. Not that i dont believe in bubbles popping, they do, but this one is not being inflated by a tire pump, weekey weekey weekey. This bubble is being inflated by a furious biblical scale hurricane of money. ROARING LIKE A TORNADO. This bubble has to go up before it crashes. The money wave is so immense you need a surfboard to ride the money.
More stimulus coming for masses
Evictions and forbearance would be extended again
No more rate hikes coming
I have been waiting for home price crash and stock market crash for last 6 years but if covid19 didn’t make it happen then not sure what would
At the same time I never underestimated the FED and the desire for rich people to get richer
Hence I am in stocks cryptos and to some extent real estate
WTF-Auto-Trade-In-Values five year chart from CNBC below shows used and new car prices are rising fast, yet Trade-In-Values are as Buzz LightYear would say…”To WTF-infinity and beyond”…
https://image.cnbcfm.com/api/v1/image/106869098-1618513142260-Car_prices.png?v=1618513152&w=900&h=629
The way I see it, the answer is to take the stimulus, but continue to cut expenses wherever possible.
I’m already making plans that for every necessity that goes up…outrageuos health insurance & healthcare costs, higher housing…cut something else out. I can afford more, but I’m just not going to do it.
Eating out or even delivery will remain off limits for the remainder of the year.
When I decide to pick up some new clothing …a streaming service gets cut for a year or two.
Eventually, I may have to replace a car. But then I will have gotten the new clothes shopping out of the way so that expense will be cut again and no gift buying will happen that year.
I’m on a mission to spend as little as possible for as long as possible.
Way to go LT
Everybody should have a written monthly budget to show where and when the juice arrives and where and when it goes. Eventually it’ll be on autopilot and you’ll feel in proper control going forward.
I can look back 20 years and tell you what I spent on groceries. No hassle when its on a hard drive.
For those of us who are not filthy rich these worsening and trying financial times will require patience and adaptability/resourcefulness to survive and thrive.
Mr Powell and his elite ilk would, like the Red Queen said to Alice in “Through the Looking-Glass”, have us commoners believe in impossible things: like the Fed is working for our common good (don’t mind that wealth inequality between top 10% and the rest of us is off the charts) and a ‘little’ inflation is a nice thing to have, thank you very much.
It all boils down to either save more of what money you take in (be a miser or tightwad) or increase your income stream (or ideally both) to keep up with Fed’s shenanigans.
Saving (not speculation in frothy ‘markets’) is painful because of ZIRP financial repression. The Fed is skinning savers alive.
I expect the ‘Misery Index’ of the inflationary 1970s era will make a comeback.
Of course the Fed/politicians will say in a glittering doublespeak way that in essence, our misery will continue until economy is on a sound footing again (that is, forever).