Last week’s big news came on Friday. In short, the Fed didn’t ‘pivot’. Not yet. And bringing our conclusion right up front: the pain has only just begun. It’s later — when inflation-adjusted interest rates are higher than the CPI (consumer price index) — that we’ll find out what a twirl the Fed can do.
The Great Debt Transfer
The Fed lent money at such low rates that Wall Street firms were able to turn single family homes into an asset class. The builder made money. The realtor made money. The mortgage lender made money. And now a whole new intermediary was in the picture — making even more money off the middle class.
Student Debt: Cancelled
Thanks to the Fed’s ultra-low interest rates and its ‘money printing’, our economy is burdened by US$90 trillion in debt. And Mr Biden has just shown us all how to get rid of it.
Termites in the Woodwork
The US middle class stores its wealth in its houses. But now termites have gotten into the woodwork. In July, new house sales hit a six-year low. Existing house sales are down 20% from last year. And the median sales price has already dropped 5% since last year.
Let Them Buy Solar
As Jean-Marie Le Pen put it, ‘ecologists are green on the outside, and pink (socialist) on the inside’. The rind may be about protecting the planet; the juicy fruit on the inside, though, goes to themselves and their friends.
The All Unclear
The generally accepted view of inflation is probably mostly correct: Add more ‘money’ and prices will rise. There’s a lot more to the story, of course, but if you get too deep into the details, you’re likely to miss the main point.
Back to the USSA
The feds and the educated elite are putting on such a great show…such a rollicking, frolicking display; every day is a laugh fest! A great Carnival of Claptrap. A Jamboree of Jackassery.
The IRA: Doomed to Abject Failure
Last week, the TV news reported that President Biden signed what is officially called the Inflation Reduction Act
What We’re Doing with Our OWN Money
The first six months of the year were almost unbelievably bad. Stocks and bonds went down. Cryptos vanished. A traditional, balanced portfolio — 60% stocks, 40% bonds — had never had such a bad time of it. And a recession began.
Dr Doom Looms
What now? Uncontrolled inflation? Or a hard landing? Which will it be? Our guess: both. A hard landing…and then uncontrolled inflation.
