Keynesian Cargo Cult

You'll own nothing

The coyote was the most aware creature there was, Manson maintained, because he was completely paranoid. Being frightened of everything, he missed nothing. - Paul Watkins

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• Poll: Inflation is the Top Financial Concern for Americans

• What does the Davos Crowd Worry About? (not inflation)

• April 2021: Fed’s Kashkari says he would not panic if he saw a 4% inflation rate

• Paul Krugman, December 2021: “Is there any good reason to believe that inflation hits low-income households especially hard?” Finger on the pulse these guys…

Krugman is a special kind of IYI. He’s a winner of the NABE’s ridiculous “Adam Smith Award.”

Some other winners? (partial list): Jeff Epstein protégé Larry Summers, Motivational Bank Speaker Janet Yellen, Ken ‘Ban Cash’ Rogoff, and Citadel Ben Bernanke. Clearly a who’s-who’s of free-market capitalism.

Speaking of Adam Smith, this is from Wealth of Nations. The Adam Smith Award winners and the NABE should read it:

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

I tried to warn everyone.

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• Janet Yellen, June 8, 2022: Yellen says high U.S. inflation won't be a decade-long problem

• Janet Yellen, December 13, 2017: Yellen’s only regret as Fed chair: Low inflation

• Janet Yellen, June 27, 2017: I Don't See a Financial Crisis Occurring 'In Our Lifetimes'

I feel confident in her leadership. Also she was great in Lord of the Rings.

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually and then suddenly.”

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See, here’s the thing - everyone is down (some bigtime), and supposed to be “the most bearish since 1931,” or some other nonsense, but they haven’t sold. I commented on this in this thread.

Eclectica

• Check out my new tattoo.

• The Surging Cost of Everyday Expenses These types of articles bug me, because Bloomberg’s shills have been parroting the Fed’s “we need higher inflation” mantra for years. Shut up, Bloomberg.

• Wolf Richter on Housing. Wolf’s generally pretty good. I’d post more pictures and charts, but Substack doesn’t seem to like that.

• Podcasts you don’t see at market bottoms: ‘Just Keep Buying’ as the New Bear Market Strategy

• Highflying Tiger Global Humbled by Unraveling of Giant Tech Bet No mention though that a decade of horrific monetary policy backstopped that bet. The comments are funny.

• Don’t confuse brains with a bull market. - Humphrey B. Neill

• Flows into government bond ETFs surge to record high in May I get it, but I don’t get it. I’d rather own Dogecoin than bonds (except maybe I-Bonds.)

• European Central Bank confirms plans for first rate hike in 11 years Super. How negative will real yields be then? (fyi Eurozone PPI is running at 37.2% YOY)

• Eurozone bonds sell off on ECB’s ‘hawkish signals’. “Hawkish” means nothing anymore. It seems the ‘hawks’ want 1922 Germany and the ‘doves’ want 1923 Germany. Sometimes I’m hyperbolic.

• “Everything Bubble Poster Child”

• Selling energy drinks to under-16s could be banned in Wales. Tackling the big issues.

• UK Shoppers Face Worse Cost-of-Living Hit Than Europeans, Says Poundland Owner. I just liked the name “Poundland.” That’s where we all live now.

• What I’m reading

• Evergreen

• The ATM’s will stay open today QT is coming. Any day now…

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Sudden Debt on the “core inflation” scam:

Think about it: food, energy and shelter are the real core, it is their prices that govern consumer attitudes and, ultimately, behavior.  There are just so many repeated shocks one can take at the pump, the supermarket checkout, the gas, electric and mortgage bill, before he/she clamps down on less essential spending.

So, we really need to redefine Core Inflation.  I suggest we replace it with a weighted index of Housing, Energy, Transportation and Food prices.  After all, this is precisely where Americans spend most of their money (approx. 65%).  In a previous post I calculated that in April such an index was up 11+% from last year, almost double the 6.1% reported for the current "core".

I talked about this briefly here.

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Here’s a John Maynard Keynes quote you won’t hear from “Keynesians”:

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.

The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ** profiteers,'' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat.

As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

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Again, if you’re bored, I put other fun stuff out on Reddit, at least until they ban me.