How the Federal Reserve Broke the American Economy.
Inflation is scary.
Must listen interview (seriously)
Fed Exposed: Christopher Leonard Unveils the Shocking Impact of Quantitative Easing on Our Economy
Inflation is scary, and it’s bad for the middle-class, and it gets out of control really, really quickly and becomes embedded, and grows quickly. It’s highly, highly worrying. So this idea that the Fed is trying to punish the middle-class by hiking rates…inflation is also so destabilizing and so punishing to the middle-class that I think there’s a good case to be made that it needs to be combatted, even if it’s going to cause massive negative side effects in markets which, as you pointed out, really does trace back to these policies of the 2010’s when the Fed was just breaking down all of the guardrails, doing wild experiments in money printing - a fair way to put it, by the way - when it was all kind of good and nobody was paying attention…
[Inflation] is highly socially destabilizing. It is bad. Out of control embedded inflation is bad. It doesn’t just make life harder for working people, it reduces faith in the system in a very important way, and you don’t let that pot boil over.
Chris Leonard above concisely explains what I’ve been trying to detail for years - inflation is very bad for most people and dangerous for society. (I had not yet listened to Leonard’s podcast when I wrote this yesterday, but our points are identical.)
Christopher Leonard is one of the very, very, very few mainstream journalists who seem to understand the damage Federal Reserve policies (and Congressional complicity) have done to most Americans. His book on the subject is The Lords of Easy Money: How the Federal Reserve Broke the American Economy.
Meanwhile, this is what the shills at the WSJ and New York Times give us:
I highly recommend Leonard’s book, and these two articles by Leonard for a good overview of the points he makes.
November 2021: Jerome Powell’s Fed policies have boosted the system that made him rich
December 2021: The Fed’s Doomsday Prophet Has a Dire Warning About Where We’re Headed
Meanwhile…
The Fed is still monetizing Treasuries - probably forever - and keeping (for example) the 3-month yield lower than it would otherwise be, yet the 10-year minus the 3-month spread remains over 1.5%.
St. Louis Fed Paper from August 2021
This is how Fed economists think about inflation. It's like theoretical physics to these geeks. No mention of people struggling to pay for food, energy, rent, healthcare etc. Nope.
To these rocket scientists "the recent burst of inflation" will have just two effects.
In summary, the recent burst of inflation in the U.S. and the rest of the developed world will have two effects: It will immediately reduce the real value of existing debts, but it will also tend to raise expected inflation—and therefore yields—perhaps for years to come, which will increase the cost of borrowing in the future. The Federal Reserve’s credibility with the market will determine the extent to which the cost of borrowing increases and stays high. If markets believe that the Fed will quickly reduce inflation, then long rates will not rise too much and soon will return to levels consistent with the Fed’s inflation target of 2% in the personal consumption expenditures (PCE) price index.
Gee, the Managing Partner and Chief Investment Officer of The Bahnsen Group, “a wealth management firm based in Newport Beach, California” thinks inflation is fine and the Fed should cut rates. What a surprise. These are the type of people the Fed has been catering to since Greenspan. Now their tailwind is leaving and they all come on CNBS to whine. Shut up.
Just 16 days until the next Fed Decision®
"It's going to be ugly. It's going to be at least as bad as '08, '09.”
Patrick Carroll, CEO of real estate investing firm Carroll, on Commercial Real Estate
How federally backed financing is making mobile homes less affordable Low-interest loans supported by Fannie Mae and Freddie Mac have fueled a spree of acquisitions of mobile home parks where new owners drive up costs for longtime residents.
But wait - there’s more!
A little-noticed revamp of federal rules on mortgage fees will offer discounted rates for home buyers with riskier credit backgrounds — and force higher-credit homebuyers to foot the bill
Wealthy homebuyers and property investors with high incomes and sterling credit scores could get a mortgage from First Republic Bank with a rock-bottom rate for several years. Better yet, they didn’t have to start repaying the principal for a decade…The loans have hampered efforts to find investors or a stronger lender to acquire the company, which is now leaning on $30 billion deposited by larger banks. The debt portfolio is one of the primary reasons several would-be rescuers aren’t willing to pony up cash
On a lyric sketch page for Scary Monsters, Bowie wrote “Joy Div.”
Are private equity valuations too high—and would we know?
Looking at the numbers, from Q1 2020 to September of last year, aggregated public benchmark performance—an average of a number of indexes—generated an 18.8% return, according to data from PitchBook and Morningstar. Meanwhile, private equity saw an NAV increase of 84.9% over the same time period, according to a PitchBook analyst note.
The biggest victim of last month’s US banking crisis comes from an unlikely location: Sweden. The Scandinavian country’s largest pension fund Alecta fired its chief executive on Tuesday after a bet on niche US banks went spectacularly wrong, leading to $2bn in losses…The pension fund was the fourth-largest shareholder in Silicon Valley Bank, the fifth-largest in First Republic Bank and the sixth-biggest in Signature Bank.
No link, but I believe it. Index investors in the real world generally do not get the same returns as the indices, because they buy high and sell low. If you don’t believe me, read this.
The majority of potential homebuyers, 71%, say they will not accept a 30-year fixed mortgage rate over 5.5%, according to a survey done in March by John Burns Research and Consulting. The current rate, however, is around 6.4%.
You know, back when mortgage rates were double-digits, people still bought houses all the time, but the houses cost 1/5th or something as much, and you weren't competing with Blackstone, house flippers and yield-starved savers. Maybe house prices have to drop.
New Jeremy Grantham interview. I laugh when I see the hate he gets on places like Reddit or Twitter from people who were in high school in 2008. Truth is like poetry, right? Check out this outstanding podcast with Grantham, right near the peak, August 2021.
"Ain't Misbehavin'," arguably one of his two most popular and well-known songs (the other is "Honeysuckle Rose"), was composed for the 1929 revue "Hot Chocolates," which Waller wrote in collaboration with lyricist Andy Razaf. There seem to be several different stories describing the circumstances under which the song was written; the most apocryphal of them has Waller composing the music while serving his brief jail sentence for failure to pay alimony. Whatever the truth of the matter, the song is a genuine masterpiece and remains as popular and widely performed today by both jazz and popular musicians as it was in Waller's lifetime.
Between 1930 and 1942 alone, forty recordings of the song were made by artists with styles as diverse as Louis Armstrong, Paul Whiteman, Jelly Roll Morton, and Teddy Wilson. Such statistics testify to the song's acceptance as a "standard" by jazz musicians and provide as well a broad indicator of its commercial appeal.
There are those who believe that somewhere in the vast blackness of space, about nine billion miles from the Sun, the first human is about to cross the boundary of our Solar System into interstellar space. His body, perfectly preserved, is frozen at –270 degrees C (–454ºF); his tiny capsule has been silently sailing away from the Earth at 18,000 mph (29,000km/h) for the last 45 years. He is the original lost cosmonaut, whose rocket went up and, instead of coming back down, just kept on going. (July 2008)
“So basically what what happened was early, I don’t know maybe in the first or second year that I served in Congress, I found out that my picture and name had been placed on the WEF website under this category they have listed as young global leaders, and it I looked at it and I was like okay well they have different people of different political parties and from around the world that are on this website. I was never asked to join and I was never informed by them that they had put my my name and picture on their website and I honestly didn’t know that much about it but people have said oh well what did you learn by graduating from Klaus Schwab’s young global leaders Academy or all this stuff and it’s just it’s it’s unfortunate that there’s a lot of I don’t know false assumptions being made. I’ve never gone to any of their events, I didn’t graduate from anything, so I’ve literally not had anything to do with the WEF. I’m glad to just make clear that there is no connection between me and the world economic Forum”
Whitney Webb with Jimmy Dore on Epstein, Dimon, and JPMorgan
Robert Maxwell Goes to Texas: The Story of Bluebonnet, Part 1 As he tried to build a New York business empire, Robert Maxwell attempted to capitalize on the American savings and loans crisis, calling upon a dense web of arms dealers, money launderers, serious financial criminals and intelligence agents.
Robert Maxwell Goes to Texas: The Story of Bluebonnet, Part 2
The earliest official interaction between Jeffrey Epstein and the Clinton White House took place in 1993. For Epstein, it would be the first of 17 visits he would make to the executive residence in just under two years. Epstein’s first visit took place on February 25, 1993 and he had been invited, per visitor logs, by “Rubin.” The location of the visit was noted as “WW,” for the West Wing. The Rubin listed here is believed to be Robert Rubin, who at that time was serving as the director of the National Economic Council (NEC) as well as Assistant to the President for Economic Policy…
Right before taking his post at the National Economic Council when Bill Clinton became president, Rubin had been serving as co-chairman of Goldman Sachs, a post which he assumed in 1990. Before that he was Goldman Sachs’ Chief Operating Officer and its Vice Chairman from 1987 to 1990. That means that Rubin held the top leadership posts at the bank prior to and during its involvement with Robert Maxwell’s theft of hundreds of millions from his own companies’ pension funds to stave off the collapse of his business empire…
Furthermore, Rubin would become Treasury Secretary at the tail end of 1994, the year where Epstein made 12 of his 17 White House visits…
While Robert Rubin served as Clinton’s second Treasury Secretary, his deputy was Lawrence “Larry” Summers, who would later take over for Rubin as Treasury Secretary in 1999 and who, along with Rubin, helped engineer the repeal of the Glass-Steagall Act. This allowed an economic bubble to inflate, ultimately resulting in the 2008 crisis…
With respect to Rubin and Summers, it is worth examining a claim made by Epstein associate Leon Black, of Apollo Global Management. In 2020, Black claimed that, in addition to himself, clients of Epstein’s included various heads of state as well as a US Treasury Secretary. Though he didn’t name any of those people, it seems likely that either Rubin or Summers was the US Treasury Secretary in question.
Epstein shares a special connection with one of the most prominent figures at Harvard—University President Lawrence H. Summers.
Summers and Epstein serve together on the Trilateral Commission and the Council on Foreign Relations, two elite international relations organizations.
Their friendship began a number of years ago—before Summers became Harvard’s president and even before he was the Secretary of the Treasury—and those close to Epstein say he holds the University president in very high regard.
“He likes Larry Summers a lot,” Epstein’s friend and Frankfurter Professor of Law Alan M. Dershowitz says. “He speaks well of Larry, and I think he admires Larry’s economic thinking.”
And Summers is not the only person at Harvard whom Epstein admires—or who admires Epstein.
Harvard Crimson, Mogul Donor Gives Harvard More Than Money (May 1, 2003)
“Nobody is anticipating a big hard landing right now.”
Bob Pisani
The Joy Division burqa is the best thing I've seen all week.
It is worth pointing out that endless war and world policing are extremely inflationary as well. I would not have a problem with world policing - someone has to do it - if the US were not a pathocracy or kaikstocracy.
Gotta love that picture of Epstein and all his buddies