Were I Jerome Powell I'd issue an emergency 50bps rate hike right now, along with an immediate order to shut off all asset purchases and roll-overs. He won't do it, but he damn well should because if this data is real The Fed is going to be taking very harsh and very rapid steps.
They have to act forcefully and immediately -- unless, of course, they have information that shows this is a pure Biden-driven "knob-twisting" pack of lies.
Too many Phil Gramm types got their way, instead of the Ron Paul variety of politician. I might have to convert my bank accounts into precious metals deposited in the Texas Bullion Depository. Isn't the FED supposed to maintain the value of the US Dollar, rather than prop up banks/Wall Street institutions?
Chris is right. You should be writing about the financial mess more often, even if it means quoting others, because it is the key to everything. President Trump had the experience and ability to fine-tune the economy in a pragmatic manner, and of course everybody has a theory as to what must be done, but hard, cold reality is another matter. For some strange reason our current regime seems dedicated to sabotaging all President Trump accomplished in a doctrinaire manner, just as they abandoned Afghanistan for no reason. Going 'green' and making believe you favor the underclass may look good, but when everybody suffers as things deteriorate nobody will be happy. What sustains everything and keeps us a viable nation is GNP, real GNP, productivity. Interestingly, today the government came up with unexpected good news on the economic front. The market did not react favorably. Could be nobody believes the government.
Mark, Please please please take 30 minutes and listen to Richard Werner. He will demystify things for you I'm certain and he will reveal to you how your conservative understanding of human nature grants you untold wisdom in the area of finance large or small.
I have listened to him and have written about what I've heard in the past--in a general way. That doesn't make me qualified to hold forth on these matters in detail.
I agree with Chris' monetary analysis, but I quibble with his suggestion that Trump could have made an issue of low rates. $700B came off the Fed's balance during Trump's term. This was made possible only because Trump grew the economy organically by slashing regulations, achieving energy independence, renegotiating multilateral trade deals that were hugely disadvantageous to the U.S., shutting down the flow of cheap illegal labor, and repatriating manufacturing. I was not happy that he never pushed back hard enough on the out-of-control CR process or raising the debt ceiling, but I doubt he could have overcome the Uniparty resistance to either of those. It wasn't exactly as if Trump had enough clout with Republicans to yank away their rice bowls.
I'm a retired Mold Maker, my Industry was off shored in 1997. I do not think the Investor Class ever understood what moving production off shore cost our economy and the Clinton & Global View that America had shifted from a Agra/Manufacturing Based Economy to a service based one I found to be one of the most appalling unchallenged things he did. I Felt we are still paying for it today. Something most of the Investor Class do not know is it takes 8 top 10 years to become a proficient Mold Maker and not at Trade Schools. So we don't need them anymore? They Cost too much? In the recent Pandemic and the lack of Ventilators my last Employer produced one, it took 30 Injection Molds and 10 Metal Stamping Dies to produce them. I'm 4 years retired and never passed on the Trade because no kids were coming in, we lost a generation into the Industrial Trades because they cost to much. At what price is independence and self reliance?
Actually the roots of this go back well before Clinton, although he helped put the process on steroids. I well remember as a new agent talking to an engineer--I forget why--and hearing about what was happening in his industry already. That was around 1980.
Agreed BUT.........Just for a time frame I walked into the Shop in 1973 and bounced around from Forge Dies to Oil Tools to Production Machining to finally settling into a formal Apprenticeship in 1976 in Mold Making. In 1973/74 I got sent home for a week due to a lack of Tool Steel which happened again closer to 1980 as the EPA was closing down Domestic Production, this would be when we started getting Japanese Tool Steel, it has issues. In the 80s there were 2 lunges to China BUTTTTT it had to be filtered through Taiwan and Hong Kong. The latter one was in full swing around 86. I recall a friend of my Mentor's gave me his card and told me to go to 9th Street in Upland, California. I was an Orange County person and knew little of that area. To my surprise the entire length of it, at that time, was Mold and Die Shops or Molding Plants, I had no idea there was so much in that area. Well I went up and down and most shops were dark in the middle of the day. Well Companies got tired of sending Reps over every other week to straighten things out so it started coming back. By March of 1990 I quit my job and hung out MY Shingle with 1 Bridgeport Mill and 1 Harig 6 x 12 Surface Grinder and a 31/2 Hp Phase Converter and a very long extension cord and a steel bench. I busted my hump, pulled all nighters and worked my ass off and built a solid reputation for building good Molds and Tooling., in 94 I hired a guy full time and in 97 we shipped the Biggest Mold I'd built to date and took a few days off but then I could find nothing. No Work for a couple of months and then just enough to get caught up on the house payment then back to nothing. I decided to close and get a job. Cardinal Health Care had 1 open position in their Tool Room, 50 people applied, I made the final 5 but still got eliminated. We allowed the EPA to kill off domestic Steel rather than let them comply at a pace they could absorb.
In all it's an extreme lack of understanding about the Domestic Economy. I've never read Wealth of Nations but I do know of Adam Smith and his general thoughts and I've read people that have READ it, one being PJ O'Rourke's explicit treatment of it. Some where inside Lloyd Billingsley quoted it saying "It's best to support Domestic Manufacturing over imports for the health of your domestic economy." No all the conservative Pundits since then have either touted us to Compete (I can not compete with someone working for 5 bucks a day and keep my house and eat) or find a new profession, kinda hard at 45 or better especially when you entered a field that gives you a myriad of skills that for some time was a guarantee that you could always find a job, boy was that one wrong. I hoped and prayed the GW would fix it but he kept talking bout "HARRRRRD Wrkin Mercans" and after 8 years I realized he was a Globalist like his Dad. Obama was clueless on it then TRUMP hit with Steve Bannon. I thought I'd better look into Bannon, the first thing I found was a speech he gave at a Vatican Conference, he flat out nailed it and even got the dates right. I do not care what anybody says about those 2, they get it and so many don't.
1. Fed does nothing, and let inflation rage. Bad politically as wages don't keep up with inflation. Risks the US status as the world's reserve currency. Good news is other areas are in just as terrible shape. Europe and China. Positive is real cost to service US Debt becomes cheaper, and cheaper dollars are used to pay interest.
2. Congress starts cutting costs. Chance of this happening is Zero at this time. Free money is too attractive, and cost is too high politically. Instead I expect more spending to buy the mid terms, and kick the can down the street. Congress has been doing this for years.
3. Fed increases interest rates enough to stop inflation. Result is a recession and popping of lots of financial bubbles due to over leveraging in our economy, from stock prices, companies that are over leveraged going bankrupt, and increase in cost to service the 30 Trillion US Debt.
4. Fed does minimal needed, trying to not cause a recession, but to stop inflation. I don't think this will work, but I see this as most likely.
Coming Soon:
- Food shortages / huge increase in food prices due to increased fertilizer costs around the world.
- China invading Taiwan.
- Iran getting Nukes
- Continued lock downs in China destroying the US Supply Chain from China
- Trump's Social Media launch bypassing the US Media / Internet Censorship
- Economic Growth grinding to a halt. This is already happening. See the huge "Adjustment" just done to the employment numbers. This means the US Economy is hurting.
- More economic damage due to port issues, especially parts. For want of a nail... This is very true in manufacturing. For want of chips, autos could not be finished.
With an economic slow down, there will be deflation pressures.
What I am not understanding, is why is there such a labor shortage right now? How can people afford not to work? And at the same time the amount of openings is going down.
The unfortunate dead and disabled folks would like to work. The folks that took early retirement said in essence, screw this I'm out of here. Huge numbers of "off the books" workers.
Decades ago I attended a supply chain software symposium where the keynote speaker threw shade on the viability of a "service economy" outside of the context of an economy that actually produces goods. There was another flippant comment going around back then that eventually our economy would fail if we were all just serving each other hamburgers.
Welcome to the Hamburger Economy where we killed all the hamburger joints by lockdown. When you drop $7 trillion from helicopters you can incentivize a lot of marginally employed workers to drop out. Did the younger folks move back in with their parents? Did a few hundred thousand of us die or suffer serious injuries thanks to the vax?
Government data has always been horribly corrupted in the service of big government (Democrats). Recall how the Bureau of Labor Statistics manipulated the data so that the horrendous unemployment that had persisted for months through summer and fall of 2012 suddenly dropped below 8% in the last NFP report before the election? Everybody knew that no president had every won re-election when unemployment was greater than 8%. BLS manufactured the number Obama needed. One of the biggest scandals to emerge in the last two years is that our government data is complete and utter shiite. Not just Covid data--although that is in a class of its own of purposeful opacity. I cannot think of any data source anymore that isn't either outright corrupted (NASA surface temperature data), concealed (Covid trials data), or hopelessly redacted (FBI/DoJ Russiagate).
Finance will be to 2022 what public health was to 2020. It's going to be a bumpy ride.
KD today re the employment numbers:
Were I Jerome Powell I'd issue an emergency 50bps rate hike right now, along with an immediate order to shut off all asset purchases and roll-overs. He won't do it, but he damn well should because if this data is real The Fed is going to be taking very harsh and very rapid steps.
They have to act forcefully and immediately -- unless, of course, they have information that shows this is a pure Biden-driven "knob-twisting" pack of lies.
Too many Phil Gramm types got their way, instead of the Ron Paul variety of politician. I might have to convert my bank accounts into precious metals deposited in the Texas Bullion Depository. Isn't the FED supposed to maintain the value of the US Dollar, rather than prop up banks/Wall Street institutions?
Ah, yes. Phil Gramm.
The Texas version of Elmer Fudd.
Chris is right. You should be writing about the financial mess more often, even if it means quoting others, because it is the key to everything. President Trump had the experience and ability to fine-tune the economy in a pragmatic manner, and of course everybody has a theory as to what must be done, but hard, cold reality is another matter. For some strange reason our current regime seems dedicated to sabotaging all President Trump accomplished in a doctrinaire manner, just as they abandoned Afghanistan for no reason. Going 'green' and making believe you favor the underclass may look good, but when everybody suffers as things deteriorate nobody will be happy. What sustains everything and keeps us a viable nation is GNP, real GNP, productivity. Interestingly, today the government came up with unexpected good news on the economic front. The market did not react favorably. Could be nobody believes the government.
I totally get where you and Chris are coming from but it's not my area of experience or comfort. Here's part of my reply to Chris:
"I've never doubted the importance of the "financial stuff"--although it
is in a sense simply symptomatic, i.e. an expression of, the deeper
human corruption."
Mark, Please please please take 30 minutes and listen to Richard Werner. He will demystify things for you I'm certain and he will reveal to you how your conservative understanding of human nature grants you untold wisdom in the area of finance large or small.
https://m.youtube.com/watch?v=CXCMifLZsjs
I have listened to him and have written about what I've heard in the past--in a general way. That doesn't make me qualified to hold forth on these matters in detail.
Love your response. Honest commerce and labor are ennobling, but as practiced you often only see human corruption.
I agree with Chris' monetary analysis, but I quibble with his suggestion that Trump could have made an issue of low rates. $700B came off the Fed's balance during Trump's term. This was made possible only because Trump grew the economy organically by slashing regulations, achieving energy independence, renegotiating multilateral trade deals that were hugely disadvantageous to the U.S., shutting down the flow of cheap illegal labor, and repatriating manufacturing. I was not happy that he never pushed back hard enough on the out-of-control CR process or raising the debt ceiling, but I doubt he could have overcome the Uniparty resistance to either of those. It wasn't exactly as if Trump had enough clout with Republicans to yank away their rice bowls.
I'm a retired Mold Maker, my Industry was off shored in 1997. I do not think the Investor Class ever understood what moving production off shore cost our economy and the Clinton & Global View that America had shifted from a Agra/Manufacturing Based Economy to a service based one I found to be one of the most appalling unchallenged things he did. I Felt we are still paying for it today. Something most of the Investor Class do not know is it takes 8 top 10 years to become a proficient Mold Maker and not at Trade Schools. So we don't need them anymore? They Cost too much? In the recent Pandemic and the lack of Ventilators my last Employer produced one, it took 30 Injection Molds and 10 Metal Stamping Dies to produce them. I'm 4 years retired and never passed on the Trade because no kids were coming in, we lost a generation into the Industrial Trades because they cost to much. At what price is independence and self reliance?
Thanks for that. The free trade fallacy at work.
Have I got tales of this!!!!!
Actually the roots of this go back well before Clinton, although he helped put the process on steroids. I well remember as a new agent talking to an engineer--I forget why--and hearing about what was happening in his industry already. That was around 1980.
Agreed BUT.........Just for a time frame I walked into the Shop in 1973 and bounced around from Forge Dies to Oil Tools to Production Machining to finally settling into a formal Apprenticeship in 1976 in Mold Making. In 1973/74 I got sent home for a week due to a lack of Tool Steel which happened again closer to 1980 as the EPA was closing down Domestic Production, this would be when we started getting Japanese Tool Steel, it has issues. In the 80s there were 2 lunges to China BUTTTTT it had to be filtered through Taiwan and Hong Kong. The latter one was in full swing around 86. I recall a friend of my Mentor's gave me his card and told me to go to 9th Street in Upland, California. I was an Orange County person and knew little of that area. To my surprise the entire length of it, at that time, was Mold and Die Shops or Molding Plants, I had no idea there was so much in that area. Well I went up and down and most shops were dark in the middle of the day. Well Companies got tired of sending Reps over every other week to straighten things out so it started coming back. By March of 1990 I quit my job and hung out MY Shingle with 1 Bridgeport Mill and 1 Harig 6 x 12 Surface Grinder and a 31/2 Hp Phase Converter and a very long extension cord and a steel bench. I busted my hump, pulled all nighters and worked my ass off and built a solid reputation for building good Molds and Tooling., in 94 I hired a guy full time and in 97 we shipped the Biggest Mold I'd built to date and took a few days off but then I could find nothing. No Work for a couple of months and then just enough to get caught up on the house payment then back to nothing. I decided to close and get a job. Cardinal Health Care had 1 open position in their Tool Room, 50 people applied, I made the final 5 but still got eliminated. We allowed the EPA to kill off domestic Steel rather than let them comply at a pace they could absorb.
In all it's an extreme lack of understanding about the Domestic Economy. I've never read Wealth of Nations but I do know of Adam Smith and his general thoughts and I've read people that have READ it, one being PJ O'Rourke's explicit treatment of it. Some where inside Lloyd Billingsley quoted it saying "It's best to support Domestic Manufacturing over imports for the health of your domestic economy." No all the conservative Pundits since then have either touted us to Compete (I can not compete with someone working for 5 bucks a day and keep my house and eat) or find a new profession, kinda hard at 45 or better especially when you entered a field that gives you a myriad of skills that for some time was a guarantee that you could always find a job, boy was that one wrong. I hoped and prayed the GW would fix it but he kept talking bout "HARRRRRD Wrkin Mercans" and after 8 years I realized he was a Globalist like his Dad. Obama was clueless on it then TRUMP hit with Steve Bannon. I thought I'd better look into Bannon, the first thing I found was a speech he gave at a Vatican Conference, he flat out nailed it and even got the dates right. I do not care what anybody says about those 2, they get it and so many don't.
I'll add that a few years after this Cardinal Health Care merged with another Medical Conglomerate and moved to Mexico and nobody moved with it.
I agree the Fed is trapped.
Options:
1. Fed does nothing, and let inflation rage. Bad politically as wages don't keep up with inflation. Risks the US status as the world's reserve currency. Good news is other areas are in just as terrible shape. Europe and China. Positive is real cost to service US Debt becomes cheaper, and cheaper dollars are used to pay interest.
2. Congress starts cutting costs. Chance of this happening is Zero at this time. Free money is too attractive, and cost is too high politically. Instead I expect more spending to buy the mid terms, and kick the can down the street. Congress has been doing this for years.
3. Fed increases interest rates enough to stop inflation. Result is a recession and popping of lots of financial bubbles due to over leveraging in our economy, from stock prices, companies that are over leveraged going bankrupt, and increase in cost to service the 30 Trillion US Debt.
4. Fed does minimal needed, trying to not cause a recession, but to stop inflation. I don't think this will work, but I see this as most likely.
Coming Soon:
- Food shortages / huge increase in food prices due to increased fertilizer costs around the world.
- China invading Taiwan.
- Iran getting Nukes
- Continued lock downs in China destroying the US Supply Chain from China
- Trump's Social Media launch bypassing the US Media / Internet Censorship
- Economic Growth grinding to a halt. This is already happening. See the huge "Adjustment" just done to the employment numbers. This means the US Economy is hurting.
- More economic damage due to port issues, especially parts. For want of a nail... This is very true in manufacturing. For want of chips, autos could not be finished.
With an economic slow down, there will be deflation pressures.
What I am not understanding, is why is there such a labor shortage right now? How can people afford not to work? And at the same time the amount of openings is going down.
The unfortunate dead and disabled folks would like to work. The folks that took early retirement said in essence, screw this I'm out of here. Huge numbers of "off the books" workers.
Decades ago I attended a supply chain software symposium where the keynote speaker threw shade on the viability of a "service economy" outside of the context of an economy that actually produces goods. There was another flippant comment going around back then that eventually our economy would fail if we were all just serving each other hamburgers.
Welcome to the Hamburger Economy where we killed all the hamburger joints by lockdown. When you drop $7 trillion from helicopters you can incentivize a lot of marginally employed workers to drop out. Did the younger folks move back in with their parents? Did a few hundred thousand of us die or suffer serious injuries thanks to the vax?
Government data has always been horribly corrupted in the service of big government (Democrats). Recall how the Bureau of Labor Statistics manipulated the data so that the horrendous unemployment that had persisted for months through summer and fall of 2012 suddenly dropped below 8% in the last NFP report before the election? Everybody knew that no president had every won re-election when unemployment was greater than 8%. BLS manufactured the number Obama needed. One of the biggest scandals to emerge in the last two years is that our government data is complete and utter shiite. Not just Covid data--although that is in a class of its own of purposeful opacity. I cannot think of any data source anymore that isn't either outright corrupted (NASA surface temperature data), concealed (Covid trials data), or hopelessly redacted (FBI/DoJ Russiagate).
We are living in a hall of mirrors.
Or a wilderness of mirrors.