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The Era of Easy Money Ruined Us

The Era of Easy Money Ruined Us

The rot caused by easy money will only become fully visible when the hollowed out institutions start collapsing under the weight of incompetence, debt and hubris.

We have yet to reach a full reckoning of the consequences of the era of easy money, but it’s abundantly clear that it ruined us. The damage was incremental at first, but the perverse incentives and distortions of easy money–zero-interest rate policy (ZIRP), credit available without limits to those who are more equal than others–accelerated the institutionalization of these toxic dynamics throughout the economy and society.

Fifteen long years later, the damage cannot be undone because the entire status quo is now dependent on the easy-money bubble for its survival. Should the bubbles inflated by easy money pop, the financial system and the economy will collapse into a putrid heap, undone by the perversions and distortions of endless easy money.

Easy money created destructive, mutually reinforcing distortions on multiple fronts. Let’s examine the primary ways easy money led to ruin.

1. The near-zero rate credit was distributed asymmetrically; only the wealthiest few had access to the open spigot of “free money.” The rest of us saw mortgage rates decline, but we were still paying much higher rates of interest than corporations, banks and financiers.

If we’d all been given the opportunity to borrow a couple million dollars at 1% and put the easy money into bonds yielding 2.5%, skimming a low-risk 1.5% for producing nothing, we’d have jumped on it. But that opportunity was only available to banks, the super-wealthy, corporations and financiers.

The charts below show the perverse consequences of offering the wealthiest few limitless money at near-zero rates while the rest of us paid much higher interest. The wealthiest few could buy income-producing assets on the cheap at carrying costs no ordinary investor could match…

…click on the above link to read the rest…

“This Is Off The Charts”: Economist Claims 2024 Will Bring ‘Biggest Crash Of Our Lifetime’ In US

“This Is Off The Charts”: Economist Claims 2024 Will Bring ‘Biggest Crash Of Our Lifetime’ In US

An economist who focuses on consumer spending has issued a dire warning about the U.S. economy in the coming year.

Since 2009, this has been 100 percent artificial, unprecedented money printing and deficits: $27 trillion over 15 years, to be exact,” economist Harry Dent told Fox Business on Dec. 19. “This is off the charts, 100 percent artificial, which means we’re in a dangerous state.

“I think 2024 is going to be the biggest single crash year we’ll see in our lifetime.

“We need to get back down to normal, and we need to send a message to central banks,” he said. “This should be a lesson I don’t think we’ll ever revisit. I don’t think we’ll ever see a bubble for any of our lifetimes again.”

A trader looks over his cellphone outside the New York Stock Exchange in New York on Sept. 14, 2022. (Mary Altaffer/AP Photo)

As Jack Phillips reports at The Epoch TimesMr. Dent, who owns the HS Dent Investment Management firm, told the outlet that U.S. markets are currently in a bubble that started in late 2021 amid the COVID-19 pandemic.

“Things are not going to come back to normal in a few years. We may never see these levels again. And this crash is not going to be a correction,” he said.

It’s going to be more in the ’29 to ’32 level. And anybody who sat through that would have shot their stockbroker,” Mr. Dent said, making references to the stock market crash in 1929 that led to the Great Depression throughout the 1930s.

“If I’m right, it is going to be the biggest crash of our lifetime, most of it happening in 2024. You’re going to see it start and be more obvious by May.

…click on the above link to read the rest…

Confetti Dollar End of Ponzi Scheme – Bill Holter

Confetti Dollar End of Ponzi Scheme – Bill Holter

Precious metals expert and financial writer Bill Holter says the recent underreported announcement by the UBS CEO Sergio Ermotti in Switzerland that his bank might need a “rescue” is yet another sign on the short road to the end of the global Ponzi scheme backed by the US dollar reserve currency.  Holter points out, “You’ve got a sick bank (Credit Suisse) that is being bailed out by another bank (UBS) that may turn out to be sick.  My question is who is going to bail out these central banks?  You have got the Fed with a $9 trillion balance sheet.  The last time, the Fed went from $900 billion to $9 trillion.  Can the Fed now go from $9 trillion to $90 trillion?  Who is going to bail out the Fed?  Who is going to bail out the US Treasury?  Who is going to bail out the Bank of England, the ECB or the Bank of Japan?  These central banks have completely blown up their balance sheet and have no ability to save anything.  My question is who is going to save them?”

Can’t they cut interest rates again like they did in 2009?  Holter says, “If they cut interest rates from here, you would see the dollar absolutely crash.  The only reason the dollar has not crashed is interest rates have basically gone from 0% to 5%.   They have done that in a year and a half which is the fastest increase in interest rates in all of history.”

So, rate cuts will devalue the dollar.  Can you pay trillions of dollars borrowed in Treasury Bond back in confetti dollars?  Holter says, “Yes, you absolutely can pay back your debt in confetti.  It’s been done many, many times before as currencies get lost…

…click on the above link to read the rest…

The Great Simplification Ahead

The Great Simplification Ahead

“Until debt tear us apart”

There is no denying that a major economic downturn is now in the books, and that lacking an energy miracle, the world economy is about to go through a major shift. After discussing the faulty nature of prevailing economic metrics (GDP) in last week’s essay, and understanding how economic growth has turned into stagnation 18 years ago already, let’s turn our eyes towards the future. What might the world economy look like after the onset of the coming crisis? How would world leaders react? Could gold or bitcoin save the day? Let’s dive in.


There is a yawning gap between real economic productivity and debt in the world economy. Despite the fact that GDP seems to be growing, real economic output (best measured by energy consumption) has been stagnating for almost two decades now. As a result Western nations have lost their dominance in the world economy, and now face a steep decline due to an ever worsening energy balance and their colossal import dependence.

You see, this is not a matter of money or the lack thereof. Governments all around the world had the chance to print all the money they wanted in the past two decades. There were two thing they could not conjure up, however: cheap raw materials and energy. Contrary to common wisdom, the green energy transition is not a miracle waiting to happen, only an expensive and utterly unsustainable addition to the existing fossil fuel energy infrastructure. Shale oil, the much heralded “solution” to peak oil, has also run its course and now is close to reaching its all time high… Only to embark on a steep decline afterwards. None of this is a monetary question, only a matter of geology and economics: resource depletion and the resulting cost increase. Printing money does not solve any of these issues, only creates more inflation.

…click on the above link to read the rest…

Today’s Contemplation: Collapse Cometh XXX–Ecological Overshoot and Political Responses


Today’s Contemplation: Collapse Cometh XXX

September 21, 2021

Tulum, Mexico (1986) Photo by author

Ecological Overshoot and Political Responses

Today’s post has been prompted by some thoughts regarding the inability of our political systems to respond in a timely manner to our plight of ecological overshoot penned by Rex Weyler, co-founder of Greenpeace, and posted by Alice Friedemann of energyskeptic.com.


I agree with virtually everything Rex argues, especially the role of self-interest by our political class for their apparent rejection of the notion of ecological overshoot and what needs to be done to address the negative impacts this predicament will have on our societies (we can’t avoid these impacts but we might be capable of mitigating their worst outcomes somewhat). My experience with government (I spent many years involved with unions/federations/councils and their political action committees, including chairing some and being directly involved in negotiating contracts, thus having to deal directly with senior administrators and politicians) and readings pertaining to various sociocultural areas (e.g., economics, geopolitics, political systems, pre/history, etc.) have solidified for me the notion that our sociopolitical institutions are for a variety of reasons the last place we should be looking to ‘correct our course’ and attempt to confront the many complex issues of our overshoot and that are beginning to become more obvious. In fact, it is likely (I believe guaranteed) that our ‘ruling class’ will continue to do the exact opposite of what is needed.

Government systems appear to be a means to an end for maintaining the power (and thus wealth) structures within our complex societies. The ‘elite’ of society uses the various governmental bureaucracies/institutions/agencies (as well as other areas they tend to control such as media, education, entertainment, etc.) to meet their primary objective: the control and/or expansion of the wealth-generating systems that provide their revenue streams. Everything they do more or less is to help meet that end. And, yes, they do throw some bones to the masses periodically if only to keep them mollified, distracted, and less likely to rebel (as Noam Chomsky has argued so well, control of the people is one of the most important concerns of those who hold power and privilege); one of the more ‘effective’ means in my view is the theatrical performance we refer to as ‘elections’ — convincing the masses in ‘representative democracies’ that they have agency via the ballot box is perhaps one of the most successful scams the ruling class has accomplished for as Johann von Goethe observed: the easiest slave is the one who believes he is free.

Growth, the very antithesis of addressing ecological overshoot, is promoted by government to help in their pursuit of both wealth and power. But it also addresses the unfortunate consequence of the way we have sustained growth the last few decades: exponentially-exploding debt (somewhat north of 200 trillion U.S. dollars at present for the globe, and the larger the debt the larger and more sustained the payments to the ‘lenders/creators’ of the world’s various currencies — the financial institutions that seem to work hand-in-glove with our governments). This debt has not only turned our financial/economic/monetary systems into gargantuan Ponzi schemes, it has necessitated the continuation of growth in perpetuity to help pay off the debt (significant revenue for the financiers) and keep the Ponzi schemes from collapsing.

Of course, such infinite growth is a tad difficult on a finite planet so the other options of addressing our financial dilemmas is to increase taxes and/or inflate away the debt. Our feckless ‘leaders’ are attempting all three of these approaches to keep things from collapsing. They cheerlead and encourage growth, telling the masses it has only beneficial properties and minimising, ignoring, or denying the negative aspects. Taxes are expanded continually and applied to increasing numbers of economic interactions, although the wealthy have an almost infinite number of ways to minimise their tax obligations, unlike the masses. Inflation (which in its original form refers to ever-increasing money/credit printing but eventually results in price inflation which is what most people think of) is, in perfect Orwellian language use, said to be a positive force for our economy while it actually debases our currency which serves the purposes of the large debtors (governments and large corporations) but harms the masses because of the debauching of their ‘money’ as is becoming increasingly obvious as wealth inequality continues to explode.

For all of these reasons (and more) it is unlikely (I would actually put the likelihood at zero) our political systems would ever intentionally curtail the pursuit of growth for it is their seed corn. They will pursue and cheerlead it right up until collapse can no longer be denied, and then attempt to push it some more as they tell those experiencing precipitous decline to stop believing their lying eyes; and/or blame our failing societies on some foreign/domestic bogeymen, but certainly not them and their policies.

The government, as with the rest of the ruling class and unfortunately most people, will not hear the arguments about ecological overshoot at all. It matters not how much ‘science’, data, or evidence is thrown at them. Almost everyone but especially the elite are in total denial (or at least feigning it, perhaps just to reduce their cognitive dissonance). This is why I have abandoned any ‘hope’ that our ‘leaders’ will in any way address ecological overshoot even if they do admit it exists — if they do, it will likely be leveraged to pursue activities that not only enrich the ruling class further but make our overshoot worse, such as ‘clean’ energy which is anything but clean and certainly not sustainable as sold. And, unfortunately, the political systems (at least in so-called ‘representative’ democracies) have morphed into out-promising the other parties for what ‘goodies’ they will provide freely to citizens. More. More. More. Which, again, is the opposite of what is needed to counter our going even further into overshoot…not that it may matter much at this point given how far we are likely already past the most important tipping points.

As Rex argues, the ‘solutions’ that will matter most to people will be at the local level. Relocalistion of as much production and distribution of goods as possible (but especially potable water, food, and shelter needs — including that which is needed to deal with local weather/climate, such as wood for winter heating) is the best approach to be taking to help one’s community mitigate as much as possible the coming storm. It’s likely to get ugly and ‘government’ will be nowhere to be found to turn to; you will need to depend upon immediate family, friends, and community members so cultivate those relationships and work on getting them to understand our predicament and begin making your local community as self-sufficient and resilient as possible.

The Specter of Hyperinflation Looms over the Economy

The Specter of Hyperinflation Looms over the Economy

money going down hole

The threat of hyperinflation has haunted fiat money economies throughout history. Although past empires crumbled under the weight of unrestrained money printing, modern bankers at the Federal Reserve assure us that today’s financial system is immune to such a fate. Austrian business cycle theory, however, reveals that current economic stimulation may be propelling us toward a crisis of catastrophic proportions: a crack-up boom that marks the dramatic end of this boom-and-bust cycle. When a central bank expands the money supply to reinflate bubbles, it destroys the currency’s purchasing power. This endgame, in which the monetary system crumbles beneath a weak economy, represents the ultimate failure of interventionism. Once the public expects prices to keep rising, hyperinflation becomes a self-fulfilling prophecy.

The Expanding Boom-and-Bust Cycle Ends in a Crack-Up Boom

To comprehend the precarious state of America’s monetary system, we must first review the boom-and-bust cycle as formulated by Ludwig von Mises and the Austrian school. The Austrians observed that the artificial suppression of interest rates by a central bank initiates an unsustainable economic boom by promoting malinvestment. Pushing rates below natural market levels sends a distorted signal to businesses that long-term capital investment is more profitable than the economy can actually support. In the euphoric boom phase, jobs multiply and GDP grows with investment. But the investments lack economic merit, so the house of cards eventually collapses.

With the liquidation of malinvestments, the bust phase emerges: unemployment soars, output contracts, and a recession begins. Since the investments were built on quicksand, they must unwind. Each failed business further curtails consumer spending, rippling the bust through the economy. But rather than letting liquidation and market corrections occur, policymakers add stimulus, setting up a larger bubble and more painful bust down the line.

…click on the above link to read the rest…

Will This Fall Be the Fall of Falls?

WILL THIS FALL BE THE FALL OF FALLS?

MAMChat Egon von Greyerz & Matt Piepenburg

This 25 minute video with Matthew Piepenburg and myself is probably one of the most important discussions that we have had.

For years we have both warned investors about the consequences of a system based on unlimited money printing, debt creation and money debasement.

The world economy and the financial system is now on the cusp of a precipice. 

No one can forecast when the coming violent turn will come. 

It can take years or it can happen tomorrow.

Future historians will tell us when it happened.

In the meantime investors have one duty to themselves and their dependents which is to protect their wealth from total destruction.

Money printing and debt creation have taken markets to dizzy and unsustainable levels.

Since Nixon closed the gold window in 1971, both global and US debt is up over 80X!

And asset markets have been inflated by this fake money with the Nasdaq up 120X and the S&P up 44X since 1971.

But the bubbles are not just in stocks but also in bonds,  property, art, other collectibles etc, etc.

In our view, the time to pay the Piper is here and now. The consequences will be costly, even very costly for the investors who ignore this major risk.

Just as bubble assets can go up exponentially they can implode even faster.

RISK OF MARKETS FALLING 50-90%

Sustained corrections of 50% to 90% in stocks and bonds are very possible and when the bubble bursts it will go so fast that there won’t be time to get out or to buy insurance.

Whether the Everything Bubble turns to theEverything Collapse today or tomorrow, the time to protect your assets is before it happens which means NOW.

…click on the above link to read the rest…

I Have a Very Bad Feeling About This

I Have a Very Bad Feeling About This

Unexpected things tend to happen when the real source of problems are papered over and then suddenly reality intrudes.

What an interesting juncture we’ve reached. We’re constantly assured all is well with what matters–the economy–as the all-powerful Federal Reserve has managed not just the hoped-for “soft landing” but a resurgence of growth: yowza, no recession.

The list of good things is striking: unemployment is low, wages are rising, the wealth effect from explosive increases in housing prices has fattened the home equity of households and the soaring stock market has pushed the economy to giddy heights of wealth and confidence.

The spot of bother with inflation has receded and everyone anticipates interest rates will soon follow inflation back towards zero. China has entered a rough patch but it won’t affect us. And so on.

Despite all this uniformly good news, something about the situation is setting off alarms: I have a very bad feeling about this.

Perhaps the root of the feeling that danger is far closer than we discern is the universal confidence that finance can always fix any and all real-world problems. Whatever the problem, central banks can solve it by lowering interest rates and flooding the financial / banking system with liquidity, i.e. monetary easing, making it easier and cheaper for enterprises and households to borrow more money.

On the government-spending side, the central state can fix any and all problems by borrowing and spending however many trillions are needed–fiscal stimulus.

In other words, we don’t need to suffer any inconvenient sacrifices or systemic changes, we simply need to borrow more and spend more. This is certainly a tidy solution to all problems: borrow more and spend more. Everything in the real world can be fixed with monetary and fiscal easing and stimulus.

…click on the above link to read the rest…

Doug Casey on How Economic Witch Doctors Convince Everyone They’re Neurosurgeons

Doug Casey on How Economic Witch Doctors Convince Everyone They’re Neurosurgeons

Economic Witch Doctors

International Man: The average person doesn’t care about economics. But to the extent that he does, he only reads mainstream publications like The Economist and editorials in The New York Times.

In these publications, the average person will find so-called economists advocating upside-down and destructive concepts like negative interest rates, banning cash, debt-fueled consumption, government spending, and rampant money printing as the cures to economic ailments.

And if those methods don’t work—or inflict damage—the establishment economists’ response is to simply call for more money printing, more debt, and even lower interest rates.

What’s your take on conventional economic thinking and methods?

Doug Casey: Frankly, most “economists” today are only political apologists masquerading as economists.

An economist is somebody that describes the way the world works—how people go about producing, consuming, buying, selling, and living their lives. That’s not, however, what most of today’s PhD economists do. Instead, they prescribe the way they would like the world to work and tailor theories to help politicians demonstrate the virtue and necessity of their quest for more power.

As a result, legitimate economics barely exists today. What passes for economics has a very bad reputation, and it’s well deserved. Economics has become degraded. It’s not quite a laughingstock like gender studies, but it’s on a level with political science—which isn’t a science at all.

Every individual has vastly differing likes and dislikes and wants and needs. But these so-called economists like to treat people as if they were standardized atoms. They think they can manipulate people as if they were chemicals and treat the economy as something they can heat up or cool down. And they’re the ones who decide what the masses need.

Economics has become an excuse for central planning, and economists have become social engineers.

…click on the above link to read the rest…

The Long Wave Versus the Printing Press

The Long Wave Versus the Printing Press

Winter has been coming for a very long time. Here’s why

The fascinating thing about “long wave” analysis (broadly defined to include Kondratieff waves,  Elliott waves, and William Strauss and Neil Howe’s Fourth Turning) is that while each theory uses its own indicators and terminology to show how societies move through recurring cultural/psychological/financial stages, they’ve all reached the same conclusion: we’re toast.

The first decade of this century marked the theoretical end of an Elliott Wave Grand Supercycle — and of an even bigger wave that began in the Dark Ages…

…the start of Kondratiff winter…

…and the beginning of a Fourth “Crisis” Turning. As Strauss and Howe put it in 1997:

Around the year 2005 [give or take a few years], a sudden spark will catalyze a Crisis mood.  Remnants of the old social order will disintegrate. Political and economic trust will implode.  Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire.…Sometime before the year 2025, America will pass through a great gate in history, commensurate with the American Revolution, Civil War, and twin emergencies of the Great Depression and World War II….The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort – in other words, total war

But a funny thing happened on the way to the Greater Depression: We’ve somehow kept it together, inflating the 2000s housing bubble and, when that burst, replacing it with the everything bubble. Policymakers, talking heads, and most investors (judging by the past year’s stock market action) seem to think that a normal recovery is underway and that a crash remains a low-probability event.

…click on the above link to read the rest…

ANALYSIS: Will Zimbabwe Pave the Way for Gold-Backed Money?

ANALYSIS: Will Zimbabwe Pave the Way for Gold-Backed Money?

Will gold rescue Zimbabwe from the ashes of economic despair and usher in a new economic era?

Since Zimbabwe declared independence from the former Republic of Rhodesia in 1980, the southern African country has been ravaged by inflation and overall economic turmoil. Over the past 40 years, the annual inflation rate has only touched single-digit territory twice: 1980 (7 percent) and 1988 (7 percent).

Excessive money printing, fiscal mismanagement, economic sanctions, and currency instability have been the root causes of its perpetual financial crisis, resulting in political and social upheaval.

In 2008, Zimbabwe was given the unfortunate record of the highest inflation rate in the world, touching 250 million percent. This forced then-President Robert Mugabe and his government to abandon the Zimbabwe dollar and begin relying on nine foreign currencies, particularly the U.S. dollar and the South African rand. In 2019, Harare introduced a new Zimbabwean currency, but it did not take long for the revival of hyperinflation, with the inflation rate surpassing 600 percent by March 2020.

After numerous trials and errors on the monetary policy front, the Reserve Bank of Zimbabwe (RBZ) experimented with something old and something new: a gold-backed digital currency.

“Pursuant to the resolution of the Monetary Policy Committee (the MPC) on 28 March 2023 to complement the issuance of physical gold coins with gold-backed digital products, the Bank wishes to advise that it will be issuing gold-backed digital tokens with effect from 8 May 2023,” said RBZ Governor John Mangudya in a statement. “The gold-backed tokens will be fully backed by physical gold held by the Bank.”

Central bank officials say this money will be supported by 140 kilograms (4,900 ounces) of gold.

…click on the above link to read the rest…

A Pyrrhic End to 130 Years of Vicious Bad Money and Banking Crises

A Pyrrhic End to 130 Years of Vicious Bad Money and Banking Crisesmoney printingThe original vicious circle starts with inflationary interventions in an up-to-then well-anchored monetary regime. Consequent asset inflation spawns a banking crisis. That leads to the installation of anticrisis safety structures (one illustration is a novel or enhanced lender of last resort). Alongside a possible monetary regime shift, these damage the money’s anchoring system. A great asset inflation emerges and leads on to an eruption of another banking crisis, devastating in comparison with the first.

An array of additional safety structures is put in place which makes the now-bad money worse than before. After a long and variable lag, a long and violent monetary storm means the safety structures fail, a banking crisis again erupts but this time milder than the previous.

Then a further tinkering with the safety structures causes money to deteriorate even more in quality. Another shift in monetary regime coincidentally does much additional damage. Consequently, in time, a new crisis erupts much worse than the last one.

The safety engineers do more work, causing yet more damage to the mechanisms essential to sound money. But now the safety structures are so pervasive and strong across the banking industry that there is widespread belief that bank crisis eruptions will be smaller or, more likely, totally repressed.

Subsequent events demonstrate those beliefs to be hollow. There is a new round of safety structure elaboration leading to further monetary deterioration. Regime officials declare the end of bank crises.

The cumulative economic cost of this vaunted triumph over bank crisis is an advance of monopoly capitalism and monetary statism that throttles the essential dynamism of free market capitalism. Malinvestment becomes cumulatively larger. Living standards in general suffer. The severely ailing money which subsists is beyond any cure except the most radical.

…click on the above link to read the rest…

Role Reversal: The Collapse of the Dollar-Enforced Empire

Role Reversal: The Collapse of the Dollar-Enforced Empireold soviet money

The Soviet empire started to crumble around 1989. The time period between the forming of the North Atlantic Treaty Organization (NATO) in the late 1940s and the retreat of Russia from Eastern Europe with the eventual collapse of communism in Russia is known as the Cold War. There was a great power confrontation in Europe that did not result in war.

Essentially, US-led NATO stood its ground to prevent further Soviet expansion from the territory it occupied at the end of World War II and waited for the inevitable collapse. Now, perhaps not everyone saw the collapse of the Soviet empire as inevitable. But all one had to do was view the Soviet empire for oneself, up close and personal, which is what I did in the early 1970s as a young Air Force officer.

The State of the Communist Economy

The Russian economy at that time is painful to describe. Moscow and Leningrad (Saint Petersburg), the so-called jewels of the Soviet Union, were depressing. Everything was shoddily built. There were very few cars on the streets. There were no retail shops deserving of the name. Lines formed in the middle of the night awaiting the opening of the few bakeries. I saw this for myself from my hotel window on the Nevsky Prospekt in Leningrad. GUM, the “world’s largest department store” near Moscow’s Red Square, sold nothing that was equal to what could be found in any garage sale in the West.

Actually, that should not be a surprise since at one time all those garage-sale goods were marketable. I did not visit Berlin, but those who did say that crossing the Brandenburg Gate from West Berlin to East Berlin was shocking…

…click on the above link to read the rest…

Are You Prepared for a Hard Landing?

Are You Prepared for a Hard Landing?

The New Year brings both optimism and hope.  A chance to start fresh.  To turn over a new leaf.

The sentiment is welcome.  The outcome, however, can be a grave disappointment.

If you recall, 2022 was supposed to be a year of redemption and prosperity.  After the ugly coronavirus fiasco, the economy was finally reopening.  The general belief was that the resurgence of economic activity was going to bring a new boom and a new cycle of prosperity.

But then something unexpected happened.  On the first day of market trading, January 3, 2022, the S&P 500 hit a closing peak of 4,796.  Yesterday, just over a year later, the S&P 500 closed at 3,808.  Down over 20 percent.

Over this duration, the yield on the 10-Year Treasury note spiked from 1.66 percent to 3.70 percent.  In other words, Uncle Sam’s borrowing costs have more than doubled.

At the same time, transitory inflation proved to be enduring.  And gross domestic product (GDP) went negative for the first two quarters of 2022.

What happened?

The calendar year may have started anew.  But past actions remained.  And there was plenty of wreckage from the past to be reconciled.

Much of this wreckage was created by the central planners at the U.S. Treasury Department and the Federal Reserve.  Decades of money printing are not without consequences.  And, unfortunately, the consequences dramatically impact your life and your livelihood.

The wreckage doesn’t magically disappear when the calendar hits January 1.  Rather, it piles up from one year to the next like rotting refuse at a municipal landfill.

How will the central planners manipulate your livelihood in 2023?  How will Federal Reserve monetary policy influence your job, investments, and discretionary income?

Here we scratch for answers…

Foolish Ideas

…click on the above link to read the rest…

Inflation, recession, and declining US hegemony

Inflation, recession, and declining US hegemony

In the distant future, we might look back on 2022 and 2023 as pivotal years. So far, we have seen the conflict between America and the two Asian hegemons emerge into the open, leading to a self-inflicted energy crisis on the western alliance. The forty-year trend of declining interest rates has ended, replaced by a new rising trend the full consequences and duration of which are as yet unknown.

The western alliance enters the New Year with increasing fears of recession. Monetary policy makers face an acute dilemma: do they prioritise inflation of prices by raising interest rates, or do they lean towards yet more monetary stimulation to ensure that financial markets stabilise, their economies do not suffer recession, and government finances are not driven into crisis?

This is the conundrum that will play out in 2023 for the US, UK, EU, Japan, and others in the alliance camp. But economic conditions are starkly different in continental Asia. China is showing the early stages of making an economic comeback. Russia’s economy has not been badly damaged by sanctions, as the western media would have us believe. All members of Asian trade organisations are enjoying the benefits of cheap oil and gas while the western alliance turns its back on fossil fuels.

The message sent to Saudi Arabia, the Gulf Cooperation Council, and even to OPEC+ is that their future markets are with the Asian hegemons. Predictably, they are all gravitating into this camp. They are abandoning the American-led sphere of influence.

2023 will see the consequences of Saudi Arabia ending the petrodollar. Energy exporters are feeling their way towards new commercial arrangements in a bid to replace yesterday’s dollar. There’s talk of a new Asian trade settlement currency…

…click on the above link to read the rest…

Olduvai IV: Courage
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