The BoE has made its pivot much too soon…and now they will make their economy even more dysfunctional than the US. But here, we are grateful to drug addicts, dumbbell central bankers, and bitter ex-spouses. The world needs jackasses…to show it where not to go and what not to do.
Pulling Punches
Over the last 12 months, the interest on federal debt rose above US$700 billion per year. As the Fed raises interest rates, the number will soon go over the cost of Social Security and Pentagon spending — combined. Meanwhile, inflation reached 40-year highs.
Lower Lows
As predicted last week, stocks began trading yesterday with the Dow at less than 30,000. Next target: 20,000.
30 Trillion Reasons
Inflation is a policy. It’s a tax. Like all taxes, it lands on some harder than others. And the farther you go down the wealth mountain, the harder it falls.
The Fed’s Fix
Larry Summers, ex US Secretary of the Treasury, went way out on a limb on Wednesday, Fox News was there: ‘Former Treasury Secretary Larry Summers predicts there will “almost certainly” be a “downturn in the economy”’:
After the Party
Inflation is always and everywhere a political phenomenon. We get inflation when the politicians spend more than they can afford…and then ‘print’ money to fill the gap. It is fundamentally a default to creditors
A Tale of Two Englands
England on Monday was closed. The streets were quiet. Few people moved about. No shops were open here in Blenheim. Instead, each had a photo of Elizabeth II in the window, with a reminder of the funeral.
Following the Leader
Looking at a long-term chart of wages, adjusted for inflation, we see that real US earnings stopped going up in the early ‘70s. Today, an average American worker earns about the same as he did in 1972. Now, that’s a Long-term Primary Trend!…a trip to nowhere over half a century.
Mr Powell: Iron Man?
Getting back to normal probably won’t happen. Too much of our economy now depends on very abnormal interest rates. As real rates go up, businesses, households, and the federal government will be unable to refinance. They will go broke, default, or, in the case of the feds, print more money.
The Ultimate Negative Feedback Loop
The Fed is expected to raise its key rate by 75 basis points (0.75%) at its meeting next week, putting more pressure on debtors. Some people are urging the Fed to go easy, fearing — correctly — that they might drive the economy into a deeper recession.
