The Corruption of Money
No one asks about the balance sheet.
“Take nominal GDP less inflation - that gives you real GDP. So if inflation is being understated, as a lot of us think, that means that real growth is being overstated. Let's just say the economy is growing at 6% nominal, which includes inflation, and inflation's really four and a half percent - then you know the real GDP is only about one and a half percent. It's not that great, not that far above inflation, and I think that's why a lot of people - they look at these reports of how buoyant the U.S. economy is, and they go, ‘well, not for me.’”
Pretty good article on the USAID thing, from left-of-center Naked Capitalism: Does Trump’s Attempted “Dismantling” of Spook-Infested, Regime Change Agency USAID Herald a New Foreign Policy Era?
“Mark Ames provides maybe the simplest and most plausible explanation, especially when we consider the above rumblings about folding USAID into the State Department:”
Meanwhile…
George Washington on Fiat Currency
“If I had a voice in your legislature, it would have been given decidedly against a paper emission upon the general principles of its utility as a representative, and the necessity of it as a medium. To assign reasons for this opinion would be as unnecessary as tedious. The ground has been so often trod, that a place hardly remains untouched.
In a word, the necessity arising from a want of specie is represented as greater than it really is. I contend, that it is by the substance, not with the shadow of a thing, we are to be benefited. The wisdom of man, in my humble opinion, cannot at this time devise a plan, by which the credit of paper money would be long supported; consequent depreciation keeps pace with the quantity of the emission, and articles, for which it is exchanged, rise in a greater ratio than the sinking value of the money.
Wherein, then, is the farmer, the planter, the artisan benefited? The debtor may be, because, as I have observed, he gives the shadow in lieu of the substance; and, in proportion to his gain, the creditor or the body politic suffers. Whether it be a legal tender or not, it will, as has been observed, truly, leave no alternative. It must be that or nothing.
An evil equally great is, the door it immediately opens for speculation, by which the least designing, and perhaps most valuable, part of the community are preyed upon by the more knowing and crafty speculators.”
The last sentence reminds me of Thomas Mann in 1942:
“…there is neither system nor justice in the expropriation and redistribution of property resulting from inflation. A cynical "each man for himself" becomes the rule of life. But only the most powerful, the most resourceful and unscrupulous, the hyenas of economic life, can come through unscathed. The great mass of those who put their trust in the traditional order, the innocent and unworldly, all those who do productive and useful work, but don't know how to manipulate money, the elderly who hoped to live on what they earned in the past—all these are doomed to suffer. An experience of this kind poisons the morale of a nation.”
Compare Washington’s writing to Biden, Harris or Trump’s - or any modern politician’s - rhetoric. I asked for a “readability grade level” for the above, and this was the result:
I then asked Grok to summarize the passage “for modern readers”:
A quirk of mine (of many) is finding original sources.
I was told by Grok that Washington’s first sentence above is from Thomas Jefferson in 1813. That is false.
Trust, but verify.
The Fed's "preferred inflation gauge," PCE - which excludes food and energy, because of course -has been above their made-up 2% target now since May (actually April) 2021, almost four years.
“I think the economy is fine. I think the market goes higher. Until I see signs of recession, I'm not deviating from that position.”
Stick around for more from Dan Oliver, Grant Williams, Paul Tudor Jones, Michael Every, Joseph Wang, Melody Wright, Russell Clark, Tony Nash, Lacy Hunt, Luke Gromen, Ross Perot, Le Shrub, and others, plus gold, EV’s, Mick Jagger etc.
My search for that Washington quote was because Dan Oliver mentioned it during a podcast with Grant Williams.
Here Dan makes an important about the Fed’s direct involvement in politics, in this case by Goldman's Fed mole, Bill Dudley:
“And I want to read, which I quoted in my letter, but I think it’s worth reading here, an op-ed by William Dudley. And I’m sure your listeners know who he is, but just as a quick review, he was a partner and chief economist at Goldman Sachs, then he became the trading manager of the Fed Reserve’s portfolio, and then he became president of the New York Fed from 2009 to 2018. So this is not some blogger mouthing off, this was a Bloomberg column by an important guy.
And he wrote, this is back in 2018 during the first Trump Administration, “US President Donald Trump’s trade war with China keeps undermining the confidence that businesses and consumers, worsening the economic outlook. This manufactured disaster in the making presents the Federal Reserve with a dilemma. Should it mitigate the damage by providing off-setting stimulus or refuse to play along? Officials could state explicitly the central bank won’t bail out administration that keeps on making bad choice in trade policy, making it abundantly clear that Trump will own the consequences of his own actions.”
And this is the key sentence here, “There is even an argument that the election itself falls within the Fed’s purview. After all, Trump’s reelection arguably presents a threat to the US and the global economy to the Fed’s independence and its ability to achieve its employment and inflation objectives.” I mean that is an incredible statement by the Fed saying, “The politics is within our purview to set interest rates.”
And as you will know, Grant, when the Fed lowered rates by 50 basis points in the beginning of the cycle, everyone was surprised. Because usually it’s 25 basis points, so they did double the normal rate. Why? Going into the election. And of course they were exposed too, and I think this quotation tells you that inside the Fed they are political, and they were directly trying to help Kamala Harris win the election. And then lo and behold, Trump wins. And all of a sudden the Fed changes course and says, “You know what actually? We’re not going to cut rates as much as we said in 2025.” And so the first source of liquidity that’s reversing is that the Fed, which was on an easing framework, has now flipped around with Trump as president because they say, “Well, his policies will create inflation, therefore we need higher rates.” So this is exactly the playbook that Dudley laid out in 2018 and shows just how political the Fed is.
And when people get upset that Trump starts badgering the Federal Reserve, as he did last time he was president...And I don’t disagree with that. I don’t think that it’s a good idea to have a politician setting interest rates. But the idea that somehow the Fed is above the fray of politics and should be immune from attack is of course ludicrous because they are and they have been for decades, highly involved in US politics.”
Paul Tudor Jones on CNBC
“We could have a 30% correction in the stock market and just be back to slightly overvalued. I think Trump being Trump, I don’t know if it will play as well as it did in 1.0 because there’s no room for mistakes. He’s my president now, I pray he makes all the right decisions, because we are precariously perched from a macro standpoint. I don’t think we’ve ever had as many things that are connected in circular and could go wrong. So it’s going to take a maestro to pull this off in a way that kind of preserves where we are now in the major asset classes.”
Michael Every
Friend of the show Michael is a Global Strategist at Rabobank, and I am not.
“In November, we argued the re-election of President Trump would see a shift to economic statecraft over policy, i.e., the economic toolkit used for foreign policy goals as part of a grand strategy: this has already proved to be the case. This follow-on report cross-references subsequent Trump administration policy announcements against the economic statecraft toolkit we laid out.
To summarise, we have also updated our US historical economic statecraft heatmap vs. the long-run heuristic. In short, the breadth of US economic statecraft is matching that seen in WW2, and the heat that of the Cold War.
However, the US is also echoing earlier epochs, with elements of 19th, and even 18th century statecraft evident. A further break from the idealist liberal world order, even after recent shocks, still has huge implications for volatility in real trade flows and financial markets.”
I don’t hear much talk about the yield curve anymore but I will note again that the time between it going positive and the start of official recessions historically is fairly short.
I saw this: ISM Manufacturing Index Expands for First Time Since 2022, although “The current level of 50.9 is at or below 3 of the 12 recessions shown above.”
Office to Residential Conversions
“Since 2022, the pipeline for office-to-apartment conversions has tripled, growing from 23.1K units to 70.7K in 2025. This 28% YoY growth suggests office conversions are now a mainstream solution to the national housing shortage problem.”
“However, while more projects are announced, only a small fraction are completed yearly. In 2024, just 3.7K units were completed, leaving a large carryover of 51.63K units into 2025. This backlog underscores challenges like conversion feasibility, high construction costs, and zoning hurdles.”
I also wonder how much of these units cost buyers or renters. I can’t imagine it’s “affordable” for most.
Private Credit Valuations
Succinct.
Former New York Fed trader Joseph Wang
“I learned over time that the tools and theories of economics are not super useful in understanding the world. I mean, we've been looking at this for the past few years, right? All these economists came out with their models, and told us, “Guys, there's no inflation. It's transitory. It'll go away, but that was totally wrong, right? Then they all came up with their models and told us that when you hike rates to 5% you're going to have a recession - 99% - right? No recession. In fact, GDP numbers today were quite good. We have to be careful with anything that we get from the economist community.
I studied economics both on the undergrad and in graduate school as well, so the economic orthodoxy is that free trade is good, tariffs are bad - but we can just do a real life experiment to see how these countries that did a lot of tariffs, a lot of protectionism, are doing. China is the prime example. They have not just a lot of tariffs and protectionism, they even have a managed currency. Companies want to sell into China - not that easy. Chinese companies selling to U.S.? Much, much easier, and what they've done over the few decades is create a world-class manufacturing sector, and lifted literally hundreds of millions of people out of poverty, so that is kind of an easy example to let you know that this standard economics model about trade - maybe it's missing something? I'm really hesitant to buy into that orthodoxy since so much of that stuff has proven to be not accurate.”
“If you're a professional activist, I'm not sure that you have a lot of marketable skills.” - Wang
Again, here's clairvoyant Presidential candidate Ross Perot in 1992, explaining fair trade and NAFTA:
“Austin has over 15,000 Airbnbs listed, which is insanity, while Airbnb will only show you 1000 of those listings.”
“everybody thinks that we're much richer than we are”
“the parent of a Wall Street Journal owns realtor.com”
“with wages not rising fast enough, and folks not being able to afford that down payment, and then those increased carrying costs…this is a preventing - and I talked to them almost every day - our first-time home buyers from entering the market…”
“first time homebuyer age is now the highest age it's ever been, and we had the lowest amount of first time home buying mortgages this year since they started tracking. And so I think these things are absolutely preventing people from that household formation. And I think a lot of people you hear, they just don't believe they can achieve the things that their parents did.”
“A 20% down payment seems impossible when you know the median home prices above 400,000. But our median household income is around 80.”
On ZIRP: “I think that's what drove that speculative mania that we’ve just seen, when everybody wanted to find some passive income, either in a short-term rental Airbnb or in a long-term rental. They're buying these class B&C, they were getting on buses and buying class B&C multifamily for that massive income. So I think that is exactly what that ZIRP period sort of instigated was just a speculative mania that was way more ferocious than what we saw even during the GFC.”
Russell Clark
Trump’s “political model is basically he took the old Republican model of cutting taxes, but added in the Democratic model of giving more people money to create a huge electoral mandate, but that money has to come from somewhere.”
“I am very surprised how well U.S. equities have traded in an environment where gold is up 20% or 30%, and Treasuries are off 10% or 15% . Those macro
assets - gold doing well, and Treasuries doing poorly - are not normally market moves I would associate with S&P up 20%.”
“What I see is happening is we are going from a capital-abundant market, capital everywhere and easy to get, to a capital-scarce market. That is where interest rates are much higher. It's been much higher to get capital for you to do what you want to do, and it's been driven by this political need to rebalance labor income relative to capital values. For example, making homes cheaper relative to incomes, or making rents cheaper relative to wages. That's creating this sort of higher wage inflation, which causes interest rates to rise, which makes business more difficult. It means you're generating less capital, it means interest rates have to rise more, and that is the sort of cycle we had through the 50s, 60s, or 70s. I think that's where we're going. We're going from a capital-abundant era right now to a capital-scarce rout, and it's driven by politics, so that's where a lot of fund managers are going to struggle.”
From Tony Nash: Interesting correlations with the gold price.
I noticed that the last time gold was up this many weeks in a row seems to have been in mid-2000, before about a 20% correction.
As J.P. Morgan said in 1912, “Money is gold, and nothing else."
Gold/Yen
Gold/Euro
Gold/Yuan
Grant’s: “Freewheeling credit conditions are readily apparent in the floating-rate bank debt realm, as January domestic leveraged loan launches blew past $200 billion yesterday by Bloomberg’s count, easily eclipsing December’s $189 billion figure to mark the busiest month on record.”
My Favorite Deflationist, Lacy Hunt
”In the United States, CAPU [Global industrial capacity utilization] has plummeted to levels lower than at the start of all of the cyclical recessions since 1967. This vividly reflects a significant underutilization of resources, a circumstance which has historically led to moderating economic growth. Based on nearly complete fourth quarter 2024 data, the U.S. CAPU is estimated to have been 76.9%, a significant 3.2 percentage points lower than the post-1967 average and 6 percentage points below the historical level of 82.9%, which is the average entry level for the cyclical recessions.”
“In addition to the growing factory capacity glut and rising UR, the percent decline in modernized world dollar liquidity (WDL) reached another record low in the fourth quarter. The accelerating decline in WDL will intensify the liquidity/money squeeze domestically and globally. We estimate the trend adjusted real M2 declined further in the fourth quarter. Since the Fed's first reduction in the policy rate in September, critical consumer and small business borrowing rates have remained unchanged or increased. Such considerations argue that lower inflation will lead to a surprising drop in thirty-year Treasury bond yields in 2025.”
For more color, Lacy just did a podcast with Adam Taggart.
Luke Gromen
“The Europeans to me have been such a disappointment. I say that as someone of German descent. Their leaders have been so bad. All you needed to do was keep your nukes open, keep buying Russian crude, don't let the Americans talk you into doing dumb stuff. Buy energy cheap energy from Russia in euros, and you're fine. That's the winning strategy, and they tried to buy oil from Saddam in Euros - we didn't let that happen - e didn't let it happen for long, at least. They wanted to buy gas from from Russia in Euros, we didn't really let that happen, right? The Nordstream 2 pipeline Epsteined itself somehow. Oh, how'd that happen?
Some of that is because their leaders were naive, and and didn't want to invest in a military of their own, or they liked having American military bases there, because they were economic stimulus. They've been just so disappointing, in terms of their strategic dynamics, right? This whole green thing is just silly. Look, I'm in favor of the environment blah blah blah - end of the day, you can't run an economy if you don't have cheap base load power, full stop, especially if you're a manufacturing economy. I got 43 solar panels on my roof. I'm in Ohio, so it's not that different a latitude of Germany. I love my solar panels. They make things a little cheaper. Would I want to only run only solar? No. I've also got natural gas, and a backup natural gas powered generator.
So they've made too many bad decisions to have a seat at the table. They have completely given away their autonomy. It's a real shame. Maybe they'll get it back someday, I don't know. Maybe not, but you know the problem is the people that are actually common sense about it are deemed right-wingers, right? Look at the economic policies of AFD in Germany. They're totally like, ‘hey, let's stop war. Let's go back to fossil fuels, and buy some gas - maybe from Russia - and let's turn the nukes back on. Yet they're deemed Nazis, right?
Podcast with Greg Peters, co-CIO of PGIM, a $700bn credit manager. From December.
In my last post, Grant Williams mentioned Steve Diggle getting back into volatility after 15 years. Here Diggle is with David Lin talking about that: “Our base case is not we're going to see a 2008 financial crisis. I think what's more likely is we'll see a 2000 NASDAQ collapse style crisis.”1
A fascinating and discussion with Mike Yeagley “about how mobile advertising has evolved into a sophisticated surveillance system through the collection of precise geolocation data.” A related article: How the Pentagon Learned to Use Targeted Ads to Find Its Targets
Demetri Kofinas with Grant Williams: Financial Nihilism
Kofinas: “I’ve talked about the twin crises, the two seminal events of the 21st century, which was the illegal by international law invasion of Iraq, and it was important that it was illegal, because it was hypocritical, and it undermined the very argument for unipolarity, for the rules-based liberal order, for American foreign policy and the beneficence of American Empire; and the 2008 financial crisis and its aftermath, which once again showed that the elites in society were willing to change the rules. Everything they said about why they were doing what they were doing turned out to be just a story. And that goes back to nihilism. It’s just a story. It doesn’t matter. It doesn’t mean anything.”
"Bush II was actually the disastrous presidency that current liberals claim that Trump is. The enormity of the Iraq War fiasco alone boggles the mind."
- Tanner Hauser
Kofinas: “There was absolutely no argument for the invasion of Iraq that can possibly be made that I think is charitable. At the end of the day, the Bush administration lied to the American people. The press was complicit in doing so, and the entire nation was driven to a war of aggression against a sovereign nation that undermined the entire rules-based liberal order, undermined the United Nations, which was the key international institution for global cooperation and global international law.
Not only did it undermine the trust of Americans, which led also to many veterans returning home with PTSD, many of whom became disillusioned with American policy and with politics, but it also deeply unnerved our adversaries. It unnerved the Russians and it unnerved the Chinese. And so I think you have to begin with the war in Iraq and it also set us back, remember, it isn’t just that we lost trust. The Bush administration was much more focused on China when it entered in 2000 than it was when it exited in 2008. Because the two wars in Iraq and Afghanistan consumed American foreign policy makers, not just in the administration, but in the think tank community, in academia, in the press, everything became about the Middle East. And during that entire time, America’s adversaries were growing stronger.”
Kofinas: “On the financial side, that financial nihilism was born out of the 2008 financial crisis and the lack of consequences coming out of it, all right, and the drop to zero of interest rates and the expansion of the Fed balance sheet, and so many of the things that we thought were not supposed to happen actually happened and there were no consequences as a result of it. And that’s what breeds nihilism. That’s what breeds the cynicism. And we haven’t made any progress in that direction. We just keep going down the road of the Banana Republic and towards a patronage system. And a patronage system is not compatible with meritocracy. And those systems breed a lot of resentment. And I’m very concerned about that.”
Kofinas: “When money becomes free, the economy and the financial markets come to resemble more of a casino, and that’s I think partly what we’ve seen.”
Kofinas: “I never bought into the argument that Trump was a danger to democracy when he was first elected. In fact, what we saw was that the party that was more willing to use Lawfare was the Democrats and not Trump.”
Kofinas: “You have absolutely corrupted what money means. And because money is trust, you are corrupting the trust in everything. I mean, this is the thing that people outside the world of finance don’t perhaps understand, is that every single thing is ultimately built on money, which is trust. And you have chipped away and chipped away and chipped away at one of the very foundational backdrop pieces of society. And you’ve rendered it to a lot of people as we’re seeing now completely meaningless. And if the bedrock of society is completely meaningless, where do you go from there? What do you build anything upon if you don’t have a foundation that has meaning?”
"A man identifies himself with the unit of his money ; doubt cast on it offends him and, if it is shattered, his self-confidence is shaken. He feels slighted & humiliated by the lowering of the value of his monetary unit.." - Elias Canetti
"...next to language, money is the most important medium through which a modern society communicates. What happens when this medium does not function properly anymore, when it loses its trustworthiness and ultimately wreaks havoc?" - Bernd Widdig
Grant Williams:
“I spent some time in Montana last year with a guy who was a very senior in the Democrat party, very senior in the DNC. It’s superb guy. We had a great conversation. We were talking about the upcoming election, and I said, “Look, the way I see it, I think Trump’s going to win pretty handily. I just don’t think this is going to work out for the Democrats.” And we had a very good and open conversation until we got to the point where I said, “You know, the things really surprised me.” I said, “I knew it was going to kind of happen, but I’ve been amazed at the degree to which the media is in the tank for Harris, how hard they’ve come out and desperately tried, the second Biden stepped down, to reinvent her. The Time magazine covered his Presidential illustration, and they’ve gone, they’ve done everything.”
And he said, “I don’t see where you’re getting that from. I think that’s ludicrous. I’m not seeing that at all.”
And I said, “Look, I don’t have a dog in the hunt. I can’t vote in this election, so I’m just observing it without any dog whatsoever. But are you genuinely telling me that you don’t think that the media are pulling hard for Harris?”
He said, “No, I think the media have been pretty even-handed in their coverage.”
And that was a real a-ha moment for me, because this was was a great guy. We had a great conversation and he was very pragmatic about the shortcomings of certain parts of his party, blah, blah, blah. Until it got to that, there’s a blind spot. And so, it seems to everybody now it’s our team against their team competition. It’s not about the President anymore. It’s not about the Presidency. It’s about we’ve got to win. We’ve got to get our guy to win over their guy, and if their guy wins, we’ve got to do everything we can to make sure their guy doesn’t win next time. And to hell with who’s the President going to be? Who’s the winner?”
EV demand stalls out in California as automakers face zero-emission sales mandate
“Demand for new electric vehicles has flatlined in California, new sales figures show, raising questions as to whether automobile manufacturers can meet ambitious state mandates for zero-emission vehicle sales.
Aside from Tesla, which sells only EVs, no other major manufacturer will meet the state’s 35% threshold for zero-emission vehicles in the upcoming 2026 model year, said Brian Maas, president of the California New Car Dealers Assn.
“The data don’t lie,” Maas said. “The demand doesn’t match what the mandate requires. It’s just that simple.”
New sales figures from the dealers trade group show 387,368 zero-emission vehicles were registered in California in 2024, or roughly one out of four new cars sold…
There are potentially severe implications for automakers. Failing to meet the 35% mandate, according to Maas, means either paying penalties of $20,000 for every noncompliant vehicle sold, or restricting gasoline and diesel inventory in California so the percentage can be met.
Automakers can also reduce fines by buying state-issued emission credits from automakers who hold a surplus of them. The vast majority are held by Tesla.”
“Automakers “won’t pay the fines,” Maas said, but instead will opt for inventory control — for example, limiting sales of gas- and diesel-powered pickup trucks.
“Arizona and Nevada dealers could be flooded with internal combustion vehicles,” he said, while Californians struggle to find the car they want. And, he said, California prices would likely rise.”
Random stock I noticed, no position…
So this probably won't age well, but noticed that $TEAM was up 15% today (January 31). $80 Billion market cap, lost money in the last 12 months, 17.5x sales, founded 2002.
Something about "team collaboration and productivity software."
I guess this is normal nowadays. Oh, there's this too...
Food for thought: SPX vs M2
Some people really don’t like this chart.
Is Heartland Talent Repressed?
Another good one from Tom Owens. Hard to summarize (just read the entire article if interested), but essentially he’s saying we have plenty of home-grown talent, mostly in what I’d call, “well-rounded individuals,” but they are underutilized because employers have “outsourced their cognitive testing” to University degrees.
“The recent debate about H1B visas ignited a firestorm as tech magnates, notably Elon and Vivek, and their immigrant workers denigrated the talents and capabilities of native-born Americans. Economically, are these “skilled” immigrants predominantly a way to lower wages or a critical source of talent for American competitiveness? Is American talent effectively “tapped out” or do we do a poor job of cultivating it?
Aaron Renn, in his former life as a consultant who was involved in corporate cost-cutting efforts, who was “in the room when it happened,” firmly believes the latter, having observed the motives and actions of the organizations in utilizing these visa programs. They are designed to repress wages for entry and mid-level worker bee positions, not a scalable source of elite talent…
It’s important to note that most entrepreneurs must bootstrap and run businesses for a cash profit. Only a tiny sliver of the most privileged closest to the money printers, e.g., the Harvard and Stanford networks, can tap into venture capital willing to lose money in hopes of flipping an IPO on public investors, so it’s extremely rich for this most privileged caste — pun intended — to then demand serf labor on top of their superior access to undisciplined capital. On a cash basis, your local dentist who owns his practice is a more successful entrepreneur than most of these people.
So take their arguments about H1B being essential to American greatness with appropriate skepticism for the self-interest involved. Absent bubble economics, massive money printing, and depressed wages, we’d have different entrepreneurs solving better problems as indicated by the production of cash profits more proportional to market capitalization, and those businesses could afford to pay native employees market compensation.
Another angle on this is how so many tech founders have piled on with Elon’s call for more immigration. Elon, of course, is one of the few tech guys working on real-world problems. Most of these guys run businesses that provide marginal social value.
One tech CEO who chimed in (with a misleading comment comparing engineer wages in high-cost-of-living metros to the American median) was Aaron Levie of Box. Box is a file storage platform, basically Dropbox or Google, with more APIs bolted on to provide compatibility with corporate bloatware. No one would miss Box or half its competitors if they didn’t exist. They provide literally the most commoditized tech service imaginable, storing and downloading files, and as one can imagine in a commodity business, the profit margins are thin…
Consider two students, both of whom have 1500 SAT scores. Student A comes from a grind culture where test prep is a family tradition starting at 10 years old, accompanied by hours of after-school tutoring. Student B is a football player from a rural high school with precociously good grades who “gets” math and verbal concepts despite deficient instruction at his high school, and who took one practice test before walking into his SAT on a Saturday morning after the Friday Night Lights.
Which student would most benefit from an elite education? Clearly, Student B, whose score reflects higher aptitude, i.e., higher achievement with less effort. In fact, this was the original purpose of the SAT, to identify high-aptitude students who did not attend elite Northeast prep schools. In some sense, students who overly prep for the SAT are showing fake aptitude relative to their scores…
Eminence in one’s field requires more of an ability to respond to novel situations than overstudying existing knowledge, and high-aptitude students can catch up on high-school-level achievement in a semester or two of freshman classes. Especially if DEI is now illegal, it is extremely important that our meritocracy reflects the right kind of merit2, expending scarce elite educational resources on well-rounded students with aptitude rather than those simply willing to grind. At least, that seems more like the American way than the opposite. We want to reward and develop talent that delivers results in novel situations, not simply rewarding linear functions of effort…
Freed from the need to outsource cognitive testing through university pedigrees or worrying about disgusting nose-counting of employee demographic characteristics, businesses would be free to develop their own independent standards and internal training programs and more widely source employees without worrying about the ethnic background of potential talent. There’s no obvious reason why many jobs should require a college degree and could not be taught on the job in apprenticeship-like models. Young people could start families sooner without wasting four years of their adult life and the burden of student debt.
Let the market figure it out. There’s a huge incentive to undercut the profligate university-industrial complex.”
I need to take out a 30-year mortgage so I can buy you lunch.
A minor pet peeve - here’s a Freddie Mac house price index chart:
And here’s an FHFA house price index chart:
Which chart tells you more?
(Ignore the nonsense purple “real” line in the FHFA chart.)
For most folks, I’d say the second chart is more informative, because people care more about price LEVELS than rates of change. I think many times (CPI for example) they omit the level chart, and only show rate of change, in an intentional attempt to mislead (e.g., “disinflation!!).
“I'll tell you one quick story which you'll find interesting. I remember calling Deutsche Bank back in 2007 and I asked them about an item on their balance sheet that was called “other,” and that item was $400 billion. I called IR and the IR was like, you know, I don't know. I asked how can you not know? It's $400 billion. They said, well, no one asks us about the balance sheet.”
Just to record this for posterity, Mike Santoli said the other day, “Bitcoin is money for optimists and Gold is money for pessimists.”
One person found this phrase triggering. I’m willing to overlook it.
I’ve really come to believe all these home price trackers are fatally flawed in one way or the other. Until the cartels that control the industry are de-fanged we cannot rely on them to provide any useful information. Did you know NAR was forced to revise years of prices in 2011 showing they didn’t appreciate as much as they stated due to a challenge from Core Logic who sourced county records - the only real way to know…and even that is complicated by speculators trading houses like cards to speculate? But all that inventory we are seeing come to market will be in for some serious shock. Days on market currently at 59 for the cities I track and 67 in the South. Motivation is turning to distress. And thank you as always. Some good aha moments in this post.
Your postings are generally the scariest, and most informative, source I read each day.