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This Double Whammy Will Unleash Unprecedented Money Printing… or Break the U.S. Economy

April 11, 2024

This Double Whammy Will Unleash Unprecedented Money Printing… or Break the U.S. Economy

Deficits, Deficits, and More Deficits, Unravelling Social Security, Money Printer Going Brrr

“A government big enough to give you everything you want is a government big enough to take from you everything you have.”

~ Gerald Ford

The Federal Reserve is gearing up to cut rates and fire up the money printer this year. And you can see why…

You have Joe Biden, who’s in dire need of a push to turn the tide in the upcoming election. Then you have U.S. banks sitting on a hefty $480 billion in unrealized losses on government securities. The Fed is poised to lend a helping hand to both.

But then there’s another reason that tells me that the Fed won’t likely stop soon once it starts up the proverbial money printer.

Let me elaborate.

Numbers Straight Out of a Horror Flick

Every six months, the Congressional Budget Office (CBO) releases a rolling 10-year “Budget and Economic Outlook.” Most people ignore reading material of this sort, but I’m always eager for it because it showcases just how utterly incompetent governments can be.

If you open the most recent report, and scroll to Page 10, you’ll find Table 1-1: CBO’s Baseline Budget Projections. Look for the line labeled “Total Deficit.” These are government deficits, and I’ve marked them in the next image.

The first thing that should catch your eye from the table above is that the deficits will consistently worsen, starting at $1.5 trillion in 2024 and reaching about $2.6 trillion by 2024. That’s an increase of 71% in just a decade.

Alarmingly, this also means that the total cumulative deficit between 2024 and 2034 would hit an astounding $21.6 trillion.

If this isn’t a damning indication that the U.S. is rapidly heading towards complete fiscal ruin, I don’t know what is. But it gets even worse.





…click on the above link to read the rest of the article…















	
Weekly Commentary: Pondering the New Secretary of the Treasury

	

		November 28, 2020 	

	
Weekly Commentary: Pondering the New Secretary of the Treasury




The U.S. Goods Trade Deficit jumped to a then record $76 billion back in July 2008. A few short months later, financial chaos unleashed the “great recession” economic crisis. Traditionally, large trade deficits are evidence of loose monetary conditions and resulting unsustainable spending patterns. By May 2009 – only 10 months from an all-time record – the Goods Trade Deficit had shrunk to a seven-year low $35 billion. It’s worth noting, as well, that M2 money supply expanded $253 billion, or 3.1%, during 2009.





Fast forward to the current crisis period. M2 has surged $419 billion in only six weeks. Over the past 38 weeks, M2 has expanded an unprecedented $3.60 TN, with year-over-year growth of $3.785 TN, or 24.7%. October’s Goods Trade Deficit was reported Wednesday at $80.3 billion, lagging only August’s record $83.1 billion. Last month’s Trade Deficit was actually 21% ahead of pre-crisis October 2019.


No doubt about it, this crisis period is unique. More than three Trillion worth of Fed liquidity injections coupled with more than a Three Trillion fiscal deficit has thrown traditional crisis dynamics on its head. In this New Age Crisis backdrop, financial conditions have actually dramatically loosened. Money supply has skyrocketed, and stocks have gone on a wild speculative moonshot. Corporate bond issues surged to new records. And, as noted above, booming imports pushed the Goods Trade Deficit to an all-time high. At $170 billion, the second quarter Current Account Deficit was the largest since 2008.


The bloated services sector has accounted for a majority of historic job losses. Massive stimulus has bolstered spending on goods – which has led to the rapid recovery of imports. Home sales have boomed, with the strongest house price inflation in years. It’s only fitting that stimulus-induced “Terminal Phase” Bubble excess now engulfs the housing sector as well. That asset inflation and Bubble excess run rampant in the throes of crisis should have us all worried.




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The Prophet

	

		February 10, 2020 	

	


The Prophet










Oh how I miss George Carlin. Yes he was mainly known as a stand up comedian, but he was more than that, much more. He was a social critic, he challenged that status quo, he dared to go where society wasn’t prepared to go: Look at ourselves critically. He did it with biting humor, masterful oration and a directness digging into core truths that were not only uncomfortable at times, but needed to be heard and said.





His voice has fallen silent as he passed away a few years ago and I’m sorry to say: We don’t have anyone like George today. I didn’t agree with everything George said and I don’t need to, nor does anybody else, but his talent was to make us think and to view the world with a different perspective and yes he was a prophet.





He saw long ago where this was all heading. The political charades and manufactured dramas that are sold to the public as choice, the illusion of choice as the agendas have long been in play.





“What do they want?” he asked. “More for themselves and less for everybody else.”





He spoke of the owners of this country, the owners that control everything, the media, what to believe what to think, and the great business and lobbying interests that spend billions of dollars lobbying for ever more benefits for themselves.





And lobby they do:










And boy did they succeed. Under the mantle of populism and draining the swamp they got themselves the biggest tax cuts in corporate history, a historic killing:










Wall Street celebrated and celebrates to this day.





Wealth inequality skyrocketing for years and now trillion dollar deficits as far as the eye can see and debt through the roof:





…click on the above link to read the rest of the article…









	
How Faux Capitalism Works in America

	

		December 15, 2018 	

	




How Faux Capitalism Works in America


Stars in the Night Sky


The U.S. stock market’s recent zigs and zags have provoked much squawking and screeching.  Wall Street pros, private money managers, and Millennial index fund enthusiasts all find themselves on the wrong side of the market’s swift movements.  Even the best and brightest can’t escape President Trump’s tweet precipitated short squeezes.


The Donald mercilessly hits the shorts with a well-timed tweet. But as it turns out, this market is in a really bad mood at the moment. [PT]


The short-term significance of the DJIA’s 8 percent decline since early-October is uncertain.  For all we know, stocks could run up through the end of the year.  Stranger things have happened.


What is also uncertain is the nature of this purge: Is this another soft decline like that of mid-2015 to early-2016, when the DJIA fell 12 percent before quickly resuming its uptrend?  Or is this the start of a brutal bear market – the kind that wipes out portfolios and blows up investment funds?


The stars in the night sky tell us this is the latter.  For example, when peering out into the night sky even the most untrained eye can identify the three ominous stars that are lining up with mechanical precision.


These stars include a stock market top, followed by a monster corporate debt buildup, and a fading economy.  In short, the stock market’s latest break is presaging a corporate credit crisis and global recession.


 


BofA/Merrill Lynch US high yield Master II Index yield – this looks like a quite convincing breakout, impossible to tweet down. In other words, the corporate debt build-up is beginning to bite back – and rather bigly, if we may say so (ed note, in case you’re wondering: the little poems are from a Spectator competition in which people used phrases from actual tweets to put together Donald haikus and poems). [PT]


…click on the above link to read the rest of the article…








	


	

		
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