Monday, March 8, 2021

100% Smoke And Mirrors For Everything, Alex

Over the years many people have told me that no one can predict the future. These are people I don't trust very much anymore. After the money printing insanity, comes the "we didn't know this would happen" bullshit...

None of this is about predicting the future. This is about predicting that the most asinine economic ideas in history will end badly. And that the blind followers of this gambit will be obliterated. Sure, we could choose the path of mass ignorance. We could pretend that monetary alchemy comes with no consequence. But can we really choose to ignore the truth? Can we watch the same movie over and over again, and STILL forget the ending? That takes a special mental deficiency not all of us possess. 

All of this stimulus-driven chicanery follows the path of exploitation which is the hallmark of globalization. There are winners and there are losers. The winners keep winning, and the losers keep losing. Those are the rules, and the system is rigged by continual monetary intervention on the behalf of the ultra-wealthy. Those are the people who are continually selling stock to retail bagholders in what will come to be rightly viewed as human history's biggest pump and dump. Gamestop is merely a miniature version of what is taking place in the S&P 500. In the same way that Bernie Madoff was jailed for his pissant Ponzi scheme while the real criminals got a free bailout for imploding the global financial system. 

One must ask themselves, at what point did modern democracy morph into a choice between socialism or slavery? Because that was the seminal fork in the road. Given the choice, I will gladly take socialism over slavery, however, today's conservatives still haven't figured out that it's the better choice. That will be the lesson they learn the hard way. 

Apologists for Ponzi capitalism will assert that it didn't have to be this way, but according to their own rules it did. The middle class has been systematically strip-mined of job security and job benefits for forty years straight. The new book Evil Geniuses does a great job of chronicling the recent decades of economic plunder in all of its sordid detail. A permanent stain on the Grand Old Qanon Party of McDonald Trump.  

All of which criminality exploded in 2008 leading to a perpetual state of deflationary malaise. So along came Trump in 2016 running on the idea of breaking out of the deflationary funk. His idea was to eliminate corporate taxes and borrow as much money as possible to make up the difference. Basically how he ran his businesses into the ground. By 2018, all of that "free money" had jacked up interest rates on the middle class and the market crashed into the end of the year. Fortunately in early 2019, the Fed bailed out the Casino and it was off to the races again with a few hiccups along the way as the Fed was forced to monetize a trillion dollar deficit to placate the overnight repo market. 

Then 2020 came along and we all know that story. I have said before recently that these two back to back bailouts by the Fed look very similar. Here is more proof:

Which gets us to 2021. What the Democrats are attempting right now with this current middle class bailout bill is noble, and good, and for the right reasons, however it violates ALL of the rules of Globalization. Globalization is supposed to be for the rich at the expense of the middle class. Not the other way around. This level of fiscal stimulus is surely going to blow up "the system". For good.

The seeds of destruction are documented in this article published today indicating that China and the U.S. have swapped playbooks from 2008. The Democrats remember early 2009 very well when the newly elected Obama/Biden White House was stymied by a Republican-controlled Congress which severely limited stimulus. Now it's payback time.

On the other hand, the Chinese remember all of the ghost cities that were built after 2008, and they have vowed not to do that again:

"The widening policy divergence is putting strains on exchange rates and could potentially reshape global capital flows"

Unlike many of its peers, including the Fed, China’s central bank has continued to calibrate its policy partially with a view to prevent an excessive rise in asset prices"

It's working. 

Many Chinese Tech companies are cross-listed on the Nasdaq. And they are holdings in some of the most popular Tech ETFs.

Now in meltdown week four deja vu of last year:

China pulled the world out of recession in 2008 with its massive infrastructure projects. However, the U.S. can't become the same engine of growth, because the 20% of GDP budget deficit is sucking capital out of global markets. The first order effect of higher interest rates (bond yields) is a stronger dollar. 

The Democrats remind me of Trump & Co. in 2018, totally clueless as to how global markets work. Janet Yellen reminds me as to how she was in 2015. 

Totally out to lunch.