OUZILLY, France – Last week’s U.S. jobs report came in better than expected. Stocks rose to new records.
As we laid out on Friday, a better jobs picture should lead the Fed to raise rates. This should cause canny investors to dump stocks.
But the stock market paid no attention. It follows logic of its own. Headlines told us that last Friday’s report “boosted confidence” and sent the Dow up 191 points.
Wait… what about the Fed?
Now, with unemployment dropping… and the economy appearing to finally recover… isn’t it time to go “back to normal” with interest rate policy?
Won’t that mean that today’s stock prices – resting on the brittle reed of super-low rates and buybacks – will collapse?
Maybe. But investors seem to have realized that, as we’ve been saying, the Fed will never normalize interest rates. It operates a fake economy, with fake money, and fake interest rates, and fake statistics, too.
And now, there is no retreat. The bridges have been burned. The ships have been sunk. The return address has been lost. Now, the Fed is so deep into make-believe, the shock of reality would be too much for it.
It is like a crazy person you try to protect from the truth:
“I hear this awful woman, Hillary Clinton, is running for president. Imagine, a woman in the White House! The next thing you know they’ll want to put up a black guy, but Americans would never stand for that.”
“Don’t worry about it, Uncle Frank. Ronald Reagan will win again. He always does.”
Hold on… fake economy? Fake money? Fake interest rates?
The 30-mph Plan
Visiting this weekend were two of our colleagues – Chris Lowe from Berlin and Vern Gowdie from the Gold Coast of Australia.
While many in our group went swimming at the river or sightseeing in the nearby city of Limoges, the three of us kept up a lively debate.
“You talk about ‘fake money,’” said Chris. “But it’s not fake. At the end of the day, money is whatever the government says it is.”
Chris and another colleague, Chris Mayer, have been following the work of former hedge fund manager and economist Warren Mosler.
Mosler is known for his work on how the fiat money system functions.
For many months, after hearing about Mosler, we were puzzled. His ideas didn’t quite make sense to us. But we gave him the benefit of the doubt, as we do to reports of subatomic particles, newsletter gurus, and people who claim to have met Hitler in South America.
Then, we found something that clarified the situation. And now we know: Mosler is a quack.
You may form your own view. But we will give you the detail that shaped our opinion: He proposed to lower the speed limit nationally to 30 mph. This was supposed to allow autos to run more efficiently and reduce demand for oil.
Clear, Simple, and Wrong
We don’t know what problem Mosler was trying to solve with his 30-mph plan. But we know that no sensible person would ever suggest such a thing.
You might as well tie your shoelaces together and hop to work.
For a moment, we thought that maybe Mosler was just pulling our leg.
Nope. Look at the rest of his oeuvre. “Government should do this…” he says. “Government should do that…”
Mosler is full of ideas.
“For every complex problem,” said Baltimore newspaper man H.L. Mencken, “there is an answer that is clear, simple, and wrong.”
Mosler seems to find every one of them. There is scarcely any part of the economy or the financial system he doesn’t want to fiddle with.
For example, he believes the feds should buy houses in foreclosure, guarantee all bank deposits, and meet economic recessions – in classic Keynesian fashion – by more government spending.
The feds don’t have enough money for all that?
That’s not a problem, says Mosler. “Federal checks don’t bounce,” he says.
The 180-Degree Rule
Mosler points out that the feds are the source of money.
They are currency issuers, while the rest of us are mere currency users.
That means, says Mosler, they can do what they want… with no natural limits – other than inflation – on their ability to use their money to make a better world.
“Not true,” we replied to Chris.
“Just because the feds want something doesn’t mean they will get it. And just because they say something doesn’t make it true.
“Hunter S. Thompson proposed a ‘180-degree rule’: When the feds say something, usually, the truth is the exact opposite.
“There is good money and there is bad money,” we went on. “The feds can declare anything money, but that doesn’t make it good money.
“In Zimbabwe, just 10 years ago, the government printed up 100 trillion dollar notes.
“The government said it was money. But nobody used it as money. Because it wouldn’t buy anything. It was not ‘money’ at all. It was just paper.”
Mosler is an activist, and a world improver; that is, by definition, he is a moron.
Further Reading: The Fed’s fake money system is just another tool of the Deep State. In his latest warning message, Bill explains exactly how this shadowy group of unelected elites is corrupting our financial system… and pushing the U.S. economy closer and closer to an imminent breakdown.
But he also offers some individual financial solutions you can put in place on your own to help you and your children live in a safe, prosperous, and free country.
BY CHRIS LOWE, EDITOR AT LARGE
Stocks do best when there’s gridlock in Washington.
That’s the message from today’s chart.
It tracks average returns for the S&P 500 based on which party controls the White House and Congress.
As you can see, the worst returns have been under a Republican president with a Republican-controlled Congress.
The best returns have been under a Democratic president and a Republican-controlled Congress.
Why Hillary Could Start WWIII…
In a private interview, Bill Clinton’s former classmate talks U.S. politics, his personal encounters with the Clintons, and why Hillary is more likely to start World War III than Donald Trump…
These Stocks Are at Dot-Com Boom Valuations
Today, investors are displaying a euphoria no less impressive than that during the dot-com boom. Except, today’s euphoria isn’t directed at the tech sector, but at ordinarily “boring” utility stocks.
Rising Sea Levels Could Cost U.S. Homeowners $1 Trillion
Rising sea levels could soak homeowners for $882 billion, according to a new report from real estate website Zillow. One of the worst-hit states will be Florida, where 1 million homes are at risk.
James and his Grandpa – this is one lucky child.
To start James on the path of connecting the dots at such a young age will provide this wonderful child all he needs to navigate the world he has been born into. Who knows what this messy world will be like when he is an adult. But we all can see that he will be innately prepared.
Well done Grandpa and daughter… Look forward to hearing more bedtime stories as he gets older. In the meantime, also let him be a child with all the wonders outside of the deep state nonsense.
– John W.
When you start reading books to James, if he’s drowsy at the end of the book, but not quite asleep, just read the copyright page to him… that’s a sure way to “close the deal.”
– Ed P.
Exceptional and enlightening as usual.
– John L.
We have a library/nursery like yours, but with more toys on the floor!
– Dixie H.
This present credit system takes the resources (earned cash savings) away from the greater populace… and concentrates it in under the control of finance industry speculators. In the same way, gold mines and oil wells benefit only the wealthy few when they are expropriated from private ownership into the control of oligarchs or governments.
Our money system is booming and busting while the people are getting poorer and poorer in just the same way as single resource economies like Russia or Venezuela. No wonder things are getting worse. All the U.S. makes is money and the people have no part in making it.
– Samuel H.
In Case You Missed It…
Oil and energy expert Dr. Kent Moors has uncovered what he’s calling “The Biggest Energy Play of the Decade”… and falling oil prices only make it more profitable.
But he doesn’t expect that favorable market conditions will last much longer… That’s why he’s encouraging everyone to watch his presentation before this profitable opportunity vanishes for another seven years.