GUALFIN, ARGENTINA – Let’s see…
…the yield curve inverted…
…the feds’ monthly deficit hit a new record…
…the trade deficit hit a new annual record…
…the Fed said the economy was weaker than expected… so it said it would lay off the rate increases…
…home sales are falling to new lows… with the sales/population ratio at a record low…
…and still, the stock market refuses to fall apart.
Standing Up for Half-wits
In the meantime – which could be months… or even years – we watch, we wait, and we wonder what the hell is going on.
But we think we’ve figured out something important… about why the feds’ stimulus measures don’t really stimulate… and why the low-interest/EZ-money course favored by Trump, the Fed, the Deep State, and practically all the powers-that-be will lead to disaster.
Friday, The Donald said he would appoint Stephen Moore to the Fed.
President Donald Trump said on Friday he picked Stephen Moore, an economic commentator affiliated with a conservative think tank and a critic of the Federal Reserve’s interest rate hikes, for a seat on the U.S. central bank’s Board of Governors.
In a Wall Street Journal article here last week, Moore and a co-author argued that the Fed’s rate hikes promoted deflation and described the central bank as the “last major obstacle” to the United States staying on a good path.
Immediately, the right-thinking, left-leaning media fell over, indignant… calling Mr. Moore an “idiot” and a “laughingstock” of the profession.
But here at the Diary, we stand up for him, just as we do for all half-wits.
Yes, he is less highly regarded as an academic economist than Fed members such as Clarida, Brainard, Bullard, and the rest. But he is no more idiotic!
Take Away the Punch Bowl
The idea of putting Mr. Moore in at the Fed is to make sure it stays in line. The Fed today is by, for, and of the Deep State. The Donald doesn’t want it getting any ideas to the contrary.
Politicians always want low interest rates – the EZ money helps them get re-elected. Wall Street, too, always favors lower rates; they push up asset prices.
But until 30 years ago, when Alan Greenspan invented the so-called “Greenspan Put” after the crash of 1987, the Fed didn’t always come through.
After all, Eisenhower era Fed Chief William McChesney Martin famously said his job was to “take away the punch bowl” when the party started getting out of hand.
And that’s what the Fed did. Faced with 10% annual inflation, Paul Volcker put the fed funds rate up to 19% in 1980.
Even more recently, the Fed still had the lingering sense of duty, putting the key rate up over 6% before the dot-com crash of 2000… and over 5% before the mortgage crisis of 2008/2009.
But now, all trace of prudence is gone. The fed funds rate is only 2.4% (barely above inflation) and will no-doubt be there when the next crisis hits.
For the last 10 years, the Fed has provided funds at rates below zero, after inflation. Nobody even thought of putting the punch bowl away until the Fed started “normalizing” two years ago.
And then, it never did get around to it. It just promised to do it… and started clearing a place for it in the cupboard.
But then, when the party started to wind down last autumn, the Fed quickly reversed itself… saying it might not put the punch bowl away after all. And last week, it said, in effect, the punch bowl was there to stay.
So you see, there was no need for Mr. Trump to pack the Fed with shills like Moore, anyway. The Fed never had any intention of really following through on its normalization plan. Instead, it stood ready to dump more liquor in the punch bowl whenever the music dies down.
But the difference between the typical Fed guy and Moore, is that the existing Fed members go along with the EZ-money scam somewhat reluctantly and somewhat ashamedly.
Moore, on the other hand, is a believer. He thinks an economy really can be made to run faster and better by a bunch of old jackasses sitting around a mahogany table.
He’s a “stimulus” guy. Tax cuts, bigger deficits, lower interest rates, and free money from the Fed – all are supposed to put people to work and boost GDP.
Is it true? Does it work? Tune in tomorrow…
ECONOMIC INSIGHT: HOW THE GREEN NEW DEAL BANKRUPTS AMERICA
Editor’s Note: As Bill has been warning readers, America has a bumpy road ahead of it. And if the U.S. isn’t careful, it could go “full Argentina,” where the inflation rate is estimated to be as high as 100%.
Today, Crisis Investing editor Nick Giambruno agrees. America is eying a path toward certain financial ruin. And one proposed piece of legislation could get it there…
By Nick Giambruno, Editor, Crisis Investing
As Bill has been telling you, if you want a glimpse of where America is headed, take a look at Argentina.
Ideas that wouldn’t be out of place in Perónist Argentina – ones deeply out of touch with reality – are reaching critical mass in the U.S.
The Green New Deal is Exhibit A. It was proposed by a group of politicians in Washington. But its loudest proponent is Alexandria Ocasio-Cortez, a Democratic Socialist congresswoman from New York. (Ocasio-Cortez is well on her way to becoming the U.S. version of Eva Perón or Cristina Fernández de Kirchner – two of Argentina’s most destructive Perónists.)
As you likely know, the Green New Deal is a way for politicians to tack on “pie in the sky” solutions to the issue of climate change. It includes nonsensical, childish proposals like rebuilding every building in the U.S. and constructing railways over the oceans, among other things.
The goal would be to eliminate carbon emissions and move towards 100% renewable energy (otherwise, the world will end in about 10 years, according to its proponents).
Then, there are the promises that aren’t even related to the environment. According to one study, despite the Green New Deal’s name, its most expensive proposals have nothing to do with climate change. It’s a clear indication that advocates are scaremongering the climate issue to push a separate, radical agenda.
The deal promises well-paying, government-guaranteed jobs and an end to poverty. It promises social justice and gender equality. It promises affordable housing for all, free education for all, free medical care for all, and paid vacations for all. No surprise, it also promises subsidies for select industries, among other freebies.
The Green New Deal sounds exactly like something an Argentine socialist would propose – bizarre, economically suicidal, and rooted in fantasy. It stops just shy of promising everyone a free pony. So of course, it’s skyrocketing in popularity.
Prominent members of Congress have also endorsed it, including numerous 2020 presidential candidates like Bernie Sanders, Elizabeth Warren, and Kamala Harris.
Of course, all of these people have their heads in the sand on the issue of cost…
The Green New Deal could cost up to $93 trillion over 10 years.
The additional cost of the Green New Deal would be $9 trillion per year, which is more than double the current entire federal budget – which is already bloated – of around $4 trillion.
In other words, the Green New Deal would more than double the size of the federal government.
Taxing the rich to the limit wouldn’t even put a dent in the Green New Deal’s bill. According to Investor’s Business Daily, “… even taking every single penny earned by tax filers with adjusted gross incomes over $50,000 would not be enough money to pay the costs.”
When asked, “How are you going to pay for this?” the Green New Dealers have the same answer as Argentina’s Perónists: We’ll just print money!
As Bill has been telling you, these socialist programs are ultimately paid by you, either in the form of tax hikes, or indirectly through inflation, thanks to money-printing.
In Argentina, some estimates of annual inflation are coming in at 100%. There are plenty of Argentines who wished they’d stocked up on gold early.
You might consider the same…
– Nick Giambruno
P.S. As I said above, radical socialist ideas are flourishing in the U.S… and I think this is an unstoppable trend. But I’m not the only one who thinks that…
I’m about to sit down with Doug Casey, the founder of Casey Research. Doug is a living legend. And he has five politically incorrect predictions for 2019 and beyond that he wants to address…
But, these forecasts are just too controversial to reveal to you right now. You’ll have to watch the world premiere of what we’re calling Totally Incorrect: LIVE to see for yourself. It airs on Wednesday, March 27, at 8 p.m. ET.
And if you sign up now, you’ll get to see some “behind the scenes” footage on how he’s brought in once-in-a-lifetime gains of up to 86,900%. Sign up for this free event now.
Nobody’s Ringing the Yield Curve Alarm…
As Joe Withrow has been showing readers, the spread, or difference, between long-term and short-term government yields has been closing quickly. Last Friday, the yield curve “inverted.” A 10-year government bond now yields less than a 3-month note. This has historically signaled a recession. But the Big Banks, at least in public, don’t seem worried…
Why is Google Exempt From Transparency?
Last year, it was revealed that tech giant Google was in cahoots with the U.S. government. Google was using its facial recognition technology to help the Pentagon more efficiently assassinate people via drone strike. But good luck learning any more. According to the feds, details about “Project Maven” are exempt from the Freedom of Information Act.
Modern Monetary Theory Will Destroy Money
Our editor has referred to Modern Monetary Theory (MMT) as “a substitute for common sense.” But Doug Casey thinks it’s worse than that. MMT isn’t just a failed doctrine. It is morally bankrupt… and its supporters should be ashamed.
In the mailbag, “we’re all suffering under the yoke of centralized control now…”
None of us can justify defending our corporations controlling government through their lobbyists. It’s the best government money can buy. Nor can we justify stealing the savings and pensions of those who have worked their whole life, just to pay for someone else’s women’s study major. The first is fascist, the second is socialist. We are suffering under the yoke of both centralized systems, now. Both are destroying opportunities for small businesses, upward mobility for the middle class, and hope of a better future for all people.
– Bill K.
Lately, I’ve noticed some subtle but telling indications of inflation. Last summer, a box of corn flakes cost $1.59. Recently, they went up to $1.99, and last weekend they were $2.39, for a total increase of about 50%. Cat food has gone up 12.5%, and cat litter went up 5%. You’ve pointed out that the government’s measure of inflation seems rigged, and it troubled me recently to read that the Federal Reserve is considering a revision of its inflation target above the old 2% mark. I’m not an expert on economics or investment, but it sounds as if this would be an excuse not to raise interest rates, even if inflation becomes more obvious.
– Arden D.
These criminals need Trump more than ever. They have gutted the economy and can’t fix it but they can blame it all on Trump. Eighty percent of this pop. The government has cooked the books so hard that it’s on fire. Unemployment at 2%? More like 22%. Debt at $22 trillion? More like $220 trillion.
– Allan H.
You are erudite and incredibly articulate – refreshing always, offering an outstanding humanities-type daily read. In your own unique way, you are somewhat of a “lighthouse” of international diplomacy in a world that seems out of whack.
IN CASE YOU MISSED IT…
If you’re easily offended, do NOT attend this event.
Legendary speculator Doug Casey is laying it all on the line: What takes down President Trump… the crashing of the “everything bubble”… and how civil unrest comes to America.
These are bold predictions. But nobody ever accused Doug of being a timid man. See for yourself right here.