Powell is unsustainable.
Plus, rampant goldbuggery!
Short(er) and sweet today, desk-clearing time. I don’t want to think about markets until Monday.
From the White House, June 25, 2025:
"Iran's Nuclear Facilities Have Been Obliterated — and Suggestions Otherwise are Fake News"
This cartoon is from 2017:
All-time S&P 500 index high on Tuesday, as "Consumer Confidence Plummets to Lowest Level Since 2014."
Been trying to say this for years - the stock market means nothing to most people.
Sorry, kids.
"FHFA House Price Index Jumps to New Record High in November"
Enjoying all the "Yen Surges" headlines.
The top 4 currencies in the “dollar index” (92.2% of the index):
Here’s the Krona and the Swiss Franc.
It seems to me that the only fiat currency gaining on the dollar long-term is the Franc.
They’re all big losers vs gold though, and “stuff” in general.
This is directed at those posting 1-day DXY charts
Nice try, Scott.
“When I’ve worked with central banks, they don’t make a decision based on price. They make a decision based on policy. What I’m getting at is despite the fact that we’re on all-time highs again today, central banks have decided they’re going to buy, and they’re not going to stop buying because it’s $4600.”
Who’s been buying all the gold?
”The pace of Chinese gold buying since 2022 is more clearly visible in UK export data than in official figures from the People’s Bank of China, which appears to under-report totals:”
The article ends with a classic stupid FT line:
“Whether all this rampant goldbuggery is rational is another question entirely — and as with any other form of religious fundamentalism, we’d prefer to avoid the argument.”
Gee, if only we could figure out what entity artificially price-fixed rates at zero for a decade, and monetized trillions of debt, encouraging everyone - including Congress - to get into massive unsustainable debt.
It’s a mystery.
Annotated chart of Federal Debt during Powell's FOURTEEN YEARS at the Fed.
THIS is what the Federal Reserve does.
THIS is their mandate. Lower left to upper right.
"Share of Net Worth Held by the Top 0.1% (99.9th to 100th Wealth Percentiles)"
The Latency Trap
“The $3.5 trillion deployed in private credit rests on a single metric: reported default rates of 2.46 percent. Allocators have used this number to justify billions in incremental commitments. Risk committees have cited it to approve leverage. Consultants have referenced it to recommend overweights. The number is accurate. The conclusion drawn from it is dangerously misleading.
Default rates measure when borrowers formally miss payments or file for bankruptcy. They do not measure economic insolvency. They do not capture when a company cannot cover its interest expense from operations. They do not reflect when lenders agree to accept promissory notes instead of cash, or when covenants are waived to avoid triggering events that would force recognition of losses. The 2.46 percent default rate is not evidence of health. It is evidence of warehousing.
Twenty-five percent of middle-market private credit borrowers currently have interest coverage ratios below 1.0x. This means their operating cash flow cannot pay their interest expense. They are, by any economic definition, insolvent. Yet they are not in default because their lenders have agreed to defer recognition through amendments, payment-in-kind elections, and covenant waivers. The gap between economic reality and reported metrics has never been wider. The question is not whether this gap closes. The question is when it closes, through what transmission mechanism, and which market participants will be positioned correctly when it does.
“The most essential journalism of every era is precisely that which a government attempts to silence.”
The Little-Known Power Brokers at the Federal Reserve
“Powell’s chief of staff is a woman named Michelle Smith, who has served every Fed Chair of the last 30 years in some capacity—Powell, Janet Yellen, Ben Bernanke, and Alan Greenspan. Prior to that, as a spokeswoman in Bill Clinton’s Treasury Department, she worked with the entire Rubinite gang that dominated economic policy in the Democratic Party for decades. This unappointed, rarely discussed figure is the point person for most of the Fed’s day-to-day activity, giving her extraordinary power over the actual operations of the most powerful central bank on Earth…
As a press aide to Larry Summers at Treasury, she befriended Tim Geithner and Summers chief of staff Sheryl Sandberg, and reportedly helped to pitch the fateful Time magazine story that named Summers, Greenspan, and Robert Rubin as “The Committee to Save the World.”
After the Clinton years, Greenspan recruited her to run his own press shop at the Fed, where she revolutionized how the chairman interacts with the media…
Smith still runs the Fed’s press shop, even as she simultaneously serves as Powell’s chief of staff. Meanwhile, the Division of Board Affairs, which she directs, also includes the Fed’s Congressional Liaison Office. In 2018, Linda Robertson supervised this office, but reported to Smith. Robertson now runs legislative affairs at the Treasury Department, according to the Prospect. That leaves Smith singularly in charge of the Fed’s relationships with both the press and Congress—and Smith herself answers to Powell, since she is his chief of staff.
The cloistered, out-of-touch nature of Fed leadership derives mostly from its obscure senior staff members.
But there’s one other key department that Smith oversees: the General Program Support Division—in other words, the staff economists…
By statute, the Fed chair is the only person in the Fed system who can set its governance policies, and has power over its day-to-day operations. Right now, most of that power gets delegated to one person, who is simultaneously the Fed chair’s closest personal aide, the head of the Fed’s communications office, the chief strategist for the Fed’s relationship with Congress, and the person who hand-chooses which economists get to work with which governors.
That is more power in the hands of one bureaucrat than exists in any other part of the federal government that I know of. It’s an extraordinary way to run an organization—imagine if, say, Amazon’s press secretary, top lobbyist, chief operations officer, and CEO’s secretary were all one person…
Smith herself clearly recognizes the power of her job. The Post reports that she left the private sector almost as soon as she entered it in the mid-aughts. She also appears to be setting up a potential dynasty. Her daughter, Maddie Smith, is now a special assistant in the Treasury Department, following one of Smith’s old bosses, Yellen.”
Great example of Operation Mockingbird
“For years, Maduro cast the CIA as a convenient boogey man, repeatedly accusing the agency – without evidence – of attempting to topple his regime as he clung to power despite US opposition.
Now, the CIA has helped supplant Maduro and is poised to help actively manage the Trump administration’s dealings with Venezuela’s new leadership.”
Bankers used to say that companies didn't go bankrupt, they ran out of cash. They have really buried that inconvenient saying.
Re CHF:
When the € was implemented in 2002, a Swiss Citizen had to spend 1.65 CHF to buy 1 €. That's collapsed to 0.918 as I write. No illusions, Switzerland knows Inflation as well as all Fiat currencies and since 2015, when the SNB surrendered, no longer defending the 1.20 Ratio you can call them a Bad Bank. Still so much more solid then these other currencies. The true one-eyed King in the room.