All in Economics
The government’s COVID mandate calling for lenders to cease and desist if borrowers didn’t pay expanded the market for this bit of accounting trickery. The market, forgetting that real estate sometimes falls in value, “viewed them as a relatively safe bet.”
My friend echoed those comments, talking about how cool the scene was. Playboy had a booth, there were ladies walking about dressed only in paint. To someone who has attended plenty of stodgy gold and natural resource conferences, not to mention Austrian economics confabs, the Miami happening sounds like a Grateful Dead concert by comparison.
Supply chain breaks and increased demand are not inflation. A more clear-eyed view is from Peter Boockver, who wisely looks at price inflation, first in services, and then in goods. In an interview with Real Vision’s Ed Harrison, Boockvar said, “When it comes to services, take out energy, so call it core services, over the last 20 years, it's averaged an annual gain of 2.7%.”
According to Bianco, the plumbers working at the Eccles Building don't understand their own plumbing. In September 2019 when the repo market blew up, Powell referred to it as a technical plumbing problem, in other words, too complicated for mere mortals and leave it to the monetary gods.
Weston Nakamura in an interview with Real Vision’s Jack Farley made the trenchant point, “This is what markets look like when you don't have global central banks artificially suppressing volatility, intervention of central banks buying every dip, putting a safety net under every single slight tremor or taper tantrum or whatever it may be, this is what happens.”
How on earth did monetary matters get tangled up with environmental concerns? Perhaps Bitcoin should send a representative to the aforementioned Central Banks and Supervisors Network for Greening the Financial System. No doubt Elon would be too busy, but perhaps Mr. CryptoWhale would sit in.
The disconnect between the stock market and the economy has created a conundrum, is it hemlines or is it jeans style? Going into the COVID crash skinny jeans were all the rage, now, according to The Washington Post, “the fashionistas are going for ‘the mom’ and the flare.”
Created as a joke, goofing on Bitcoin, dogecoin has gone from .03 cents to 61 cents as I write up 109,007.44 percent. Available wherever crypto is sold. It’s enough to make you mad. Happily, there’s something for that. Last November Oregon joined Denver, Colorado in decriminalizing psychedelics. And you thought all the libertarians had moved to New Hampshire.
To the sensible and experienced, it seems late indeed. But, does piling into U.S. dollars, made less worthy each day by the Powell Fed a good idea? The US central bank now has a climate change mandate, in addition to full employment. Soundness of the currency used to be top of mind for central bankers, but that horse left the Eccles building long ago.
When the pandemic struck, banks dumped plenty in their loan-loss provisions, $60 billion, expecting the worst. The cavalry arrived led by Jerome Powell’s Fed liquidity flood, Steven Mnunchin’s PPP loans, Congress’s CARES Act, and moratoriums on foreclosures and evictions. Instead of an Austrian Business Cycle cleansing, the cracks were papered over, including bailing out money-market funds allowing us to watch the pandemic comfortably on TV.
Using the same logic as shooting a hole in the barn and then painting the target around it to determine marksmanship accuracy, the USPS is trying to achieve its goals by gaming the metrics. “Last year, first-class mail hit its service target 89.7% on average, well below its 96% goal,” write Jennifer Smith and Paul Ziobro for the WSJ.
“The serpent in the market, the beast in the market, will push him and push him until they break him again,” says McDonald. “They've broken the Fed four or five times since 2013. It's going to happen again, but just think this time, the Fed is going to be more proactive. If the Fed doesn't give the serpent enough, doesn't give that piece in the market enough, they will push and then break the Fed in the next two meetings.”
Obviously, there are just plain math problems with defined benefit pension plans. But, beyond that, see this tiny item in today’s Almost Daily Grant’s, “On Tuesday, the Danish Financial Supervisory Authority issued an executive order that cuts the maximum interest rate that pension providers can promise investors in guaranteed-rate products to minus 0.5% from the current 1%, effective July 1.”
So, what does the McLaughlin Group, the real thing led by the late John McLaughlin or SNL’s led by Carvey, have to do with the price of...well..Bitcoin. It just so happens to be the extraordinary massive spread between what the cryptocurrency’s price could fall to...zero, and how high the creme de la creme of crypto coin could go to….infinity!
Speaking to corporate financial officers, Saylor said eventually no one will ever sell their Bitcoins, because it would be irrational to do so. Bitcoin will continue to appreciate while any U.S. dollar debt incurred will be depreciated away by the Fed’s money printing.
It’s possible the pandemic will fizzle, someone will snap their fingers, and everything will revert back to the pre-Covid economy. But, indications are, commercial real estate, will take lumps, some that will be fatal.
Money velocity is the result of the equation: price level times aggregate real value of transactions in a given time frame divided by total nominal amount of money in circulation on average in the economy. Murray Rothbard scathingly wrote, “But it is absurd to dignify any quantity with a place in an equation unless it can be defined independently of the other terms in the equation.”
As it turned out, Mr. Whipple used to get more of a squeeze out of a roll Charmin than the great 2021 silver squeeze. The price went from $25 an ounce to $30 and back down within a couple of days. “Is that all there is?” Peggy Lee once sang.
Financial complexity has far outstripped the knowledge and imaginations of central bankers. Same think, group think, derivatives and herd mentality have caused markets to far overshoot reasonable valuation. Citigroup Inc.’s chief U.S. equity strategist Tobias Levkovich “panic/euphoria” index illustrates the point. On this measure, euphoria is its highest on record, exceeding even the tech bubble, reports Bloomberg.
It’s no secret Mr. Putin initiated the strategy to “de-dollarize” Russia’s economy. The yellow metal is now the second-largest component of the central bank’s reserves after the euro, which make up a third of its reserves. Chinese yuan reserves make up 12 percent.
