The Fed is just another armchair chickenhawk.
The basic mistake was that they bailed out the people who failed.
The way the system was supposed to work, when people fail, smart, competent people come in, take over the assets, reorganize the assets, and start over again from a sound base.
What they’re doing this time around is, when people fail, they take money away from the competent people and give it to the incompetent people, and say to the incompetent people, “OK, now you can compete with the competent people with their own money.
- Jim Rogers, September 2012
The Federal Reserve is not a cabal of evil geniuses dedicated to bringing down the global order so as to create a new one with its Wall Street masters in complete control. They are instead a clown-show, a remedial class of halfwits and empty suits opining on topics they would in a just society be banished from entirely.
- Jeff Snider, August 2017
A War College for the World’s Finance Chiefs Ok, blah blah, typical Bloomberg Fed tongue-bath, but this jumped out at me:
The New Bagehot Project at Yale University is in the process of cataloging, in a standardized and “digestible” format, hundreds of rescue programs implemented in countries around the world.
They actually had the balls to name this after Walter Bagehot. Someone check on Jim Grant.
Reminds me of the NABE’s ridiculous “Adam Smith Award.”
…what's happening today has nothing to do with the Trade War, White House Tweets, the Wall, the Shutdown, Democrats, Republicans, Mexicans, Russians or Bob Mueller.....it has everything to do with a decade of horrific, politically motivated, easy way out, global monetary policy. - Deep Throat, January 2019
Meanwhile, the Fed’s vaunted Quantitative Tightening (QT) continues to impress by keeping the Fed’s balance sheet pretty much at all-time highs:
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OK, so the NBER has a new paper: COMPARING PAST AND PRESENT INFLATION
Technically, they didn’t need to do a study, because I already had the answer for them:
Since Jeff Epstein playmate Larry Summers is one of the authors, I will let laser-eyed Jim Bianco handle this one:
Last month economists Marijn A. Bolhuis Judd N. L. Cramer Lawrence H. Summers released a NBER working paper where they reversed engineered CPI back to 1949 using today's methodology. What this shows is inflation right now is HIGHER than 1974 (gas lines via the Arab Oil Embargo) and only 1979 to 1981 was higher. And not that much higher. This measure shows it is as bad as the 1970s. This chart compares today's methodology (orange) to what was reported at the time (headline CPI, blue). The bottom panel shows the difference.
So today is worse than 1949 and 1974. Again, over the last 70 years, only 1979 to 1981 was more...and not by that much. - Jim Bianco
Of course Fed rates were way higher back then, say 10%+, versus 1.58% now, but as everyone says, “We have so much more debt now.” Gee, how did that happen? It’s almost as if there’s an institution dedicated to getting everyone into more and more nonproductive debt. Yes, Congress, but also our favorite private bank cartel.
That’s the excuse now for everything (besides blaming Russia) - “We can’t raise rates, because of the debt. We can’t stop using heroin, because of the debt.”
Despite the fact that inflation is at a 40-year high by virtually any measure, the real fed funds rate is now negative to a degree that is far beyond historic averages. Measured using the consumer price index, the real fed funds rate is negative 7.5 per cent versus the 50-year average of 1 per cent. The real funds rate was more than 10 per cent at the peak of the 1980s inflation-fighting Volcker regime.
- Richard Bernstein (Good article on Fed policy - very rare)
I think if inflation went to 25% tomorrow - OK, say 50%, since 25% is too realistic - the Fed would spend the next month jawboning about whether to hike from 1.58% to 2.58% or 2.83%, and everyone (well, those heavily in stocks and real estate, on margin) would cry out, “You’ll kill the economy!”
What they mean is that higher rates would hurt the grotesquely over-financialized part of our economy, the part that CNBC and Bloomberg guests and Treasury Secretaries come from.
Meanwhile, while everyone babbles on about 75 or 100 basis points, inflation remains a severe tax on everyone - a very, very regressive tax.
…the Fed since Volcker has been pretty clueless and remains so. What has been more remarkable, though, is the persistent confidence shown toward all of these four Fed bosses despite the demonstrable ineptness in dealing with asset bubbles. - Grantham
Ginormous asset bubbles have consequences when they collapse.
Why do we keep giving the above idiots more and more power?
Absolutely Everybody Hates Stocks. Maybe It’s Time to Buy Some This is from Bloomberg. I’ll dumb this down for the CNBC people:
No, everybody does not hate stocks.
CNBC is still on the air. Mike Bloomberg’s still a billionaire.
Every day is “so what are you buying?” Stop it. This is not 1932.
I was at a stop light on Wednesday, and was daydreaming about when I’d move back into some various names, and then I mentally stepped back and thought - this is not what a bottom feels like. If this was a bottom I’d be nauseous and hate stocks and embarrassed by my holdings. That was how it was March 2009. This is not March 2009.
I heard Ted Oakley and he kinda described it here.
Saw this on the Reddit: Seriously how are most people getting by ? Incomes vs cost of living Some of the comments are interesting.
The Earth Wants Biden to Keep Gas Prices High “There’s one bold move President Biden could make to curb climate change: Find a way to put a $5-a-gallon floor on gasoline prices.”
LOL. Sure, keep putting up talking points like this. “Hey - let’s destroy poor people. Vote for us!”
By the way, Bloomberg Opinion Columnist Eduardo Porter is paid by Mike f****** Bloomberg. Get some self-awareness, bro:
Michael Bloomberg’s Many Houses: A Somewhat Complete List
He seems particularly fond, though, of his residence in Bermuda. While mayor, he was known to spend weekends on the island, traveling back and forth on private jets, and he is still a prominent figure in the community. He reportedly bought an estate there in 1998 and replaced it with a $10-million mega-mansion and pool. The property includes a private beach, but neighbors told the Times in 2010 that the billionaire is “not much for sunbathing.”
"a single four-hour private flight produces eight tons of C02 emissions, equivalent to a full year’s worth of such pollution from the average citizen" - @Grantspub
Mike Bloomberg does more damage to the environment in one weekend that I could do in 50 lifetimes. Like so many in the Davos crowd, he has zero credibility on "climate change."
Evergreen:
“It takes sellers six to nine months to figure out the market has turned, but buyers realize it right away.” - a real estate agent to me back in early June
Green: Median Home Price is below 4 times annual income. This is a common personal finance delineation for home affordability. At that price range, anyone with a halfway decent income and savings will be able to find a home to purchase in their county and not be financially stressed…
Red: Median Home Price is between 6 and 10 times annual income. At this level, housing prices become out of reach for the median household. At this level you need to be upper middle class in your area to reasonably afford a home. Those below that level will either be stuck renting or will require large sums of outside help.
Dark Red/Brown: Median Home Price greater than 10 times annual income. Shit's f*cked, yo.
I know for a fact that at least some places on that map in Brown used to be Green, decades ago, when we had sound money.
Rising Inflation ‘Bad News for Everyone’ as Food and Fuel Costs Soar
This is in the UK, but it applies just as well in the U.S.:
Food prices were rising faster than the headline rate - at 9.8% - which was a "disaster for poorer households"…fuel costs have increased 42.3% in the last year.…"While high inflation won't last forever, it is likely to be with us for some time as energy bills soar again this winter. This will mean further falls in real pay."
There is never any accountability for these un-elected central bank sociopaths:
HSBC Installs Communist Party Committee at China Unit, FT Says I was reminded of this from six years ago: HSBC escaped US money-laundering charges after Osborne's intervention “UK chancellor and a British banking regulator warned of ‘global financial disaster’ if bank were prosecuted” Too Big To Jail. Gee, where did all the populism come from?
The world isn’t prepared for a wave of sovereign debt defaults It seems as if many people in power would rather consider a “winnable” nuclear war than consider that bad debts might simply not get repaid.
As Joseph Calandro, Jr. said in 2009:
When I'm talking with friends about what to do, they would say to me, 'well, would you just let these companies fail?' That's the wrong question. These companies have already failed. It's not for me or anybody else to interfere with that - they have failed.
So if the systemic problem is too much leverage - and it seems the systemic problem is ALWAYS too much leverage - instead of us again throwing up our hands and saying, "Oh well, I guess we have to bail out the big guys so the ATM'S don't go dark," maybe we should limit leverage. Or at least let the incompetent people fail.
Larry Jeddeloh of TIS Group Interesting discussion from George Noble’s “spaces.” Both of these guys are old-school investors with a ton of experience. I’ve only listened to two of their podcasts so far (Ivy Zelman being the other) but I’ve been impressed with their content.
Econtalk: Vinay Prasad on the Pandemic 7/18/22 Along with Dr. Zubin Damania, Vinay was one of the two few sensible doctors I followed during the Covid-19 thing. Pro-vaccine but anti-insanity. Short clip here.
I can’t find any of the others right now. If you have them, send me a link.
Note that the Federal Open Mouth Committee has a bunch of new wankers on it, some of whom even I’ve never heard of. I’m sure they’re super woke and even more insane than the previous bunch of failed regulators and fortune tellers.
Just a reminder that - for the moment - I am back on that hellsite.
Comedy. True comedy . . . comes from a place of absolute rage. That’s what makes you one of the best writers on Substack. I can no longer stomach anything Twatter, so for these, albeit less-frequent posts, I am truly grateful.
As always, timely and accurate