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Are You Willing to Starve for the Greater Good?

Are You Willing to Starve for the Greater Good?

Central planners are pulling double shifts.  Contriving plans and proposals to control what you consume, how you travel and cook, where your money is spent, and much, much more.

You know who we’re talking about.  The Davos WEF crowd.  The UN, IMF, World Bank, and central bankers.  Washington lobbyists, NGOs, public/private partnerships, technical advisory committees, nonprofits, and everything in between.  We’re also talking about your meddling neighbor, and many others.

What’s their deal?  Do they think they’re making the world a better place?  And, if so, a better place for who – them or you?

Could something more devious be guiding their advancements?

In Das Kapital, for example, Karl Marx bemoans capitalism for exploiting labor to produce surplus value.  His main gripe was that 19th century laborers worked for mere wages while some factory owners got incredibly rich.

To eradicate this class struggle, as he perceived it, Marx proposed a socialist mode of production coordinated through conscious economic planning.  He believed that distributing products “from each according to his ability, to each according to his needs” would bring about his vision of a workers’ paradise.

Many people took the bait hook, line, and sinker.  They were all in.  The promise of something for nothing administered by the state was too enticing to pass up.

Yet any country that has ever attempted to put these ridiculous ideas into practice has been left with an economy that fails to deliver the abundance for all which Marx advertised.  Moreover, this comes at the expense of individual freedom and liberty.

Das Schnitzel

In this regard, what would Marx think of the political economy that’s currently pervading much of the western world?

Would he be in favor of the vast, elite political class that’s living off the surplus value produced by capitalism?  Would he deduce that the political class is, therefore, exploiting labor?

…click on the above link to read the rest…

Are You the Collateral Damage of Central Planners?

Are You the Collateral Damage of Central Planners?

The Conference Board – a nonprofit think tank that delivers cutting edge research – recently published its latest Leading Economic Index (LEI) for the United States.  The findings were a giant bummer.  In December, the LEI dropped for the tenth consecutive month.

The LEI, if you’re unfamiliar with it, consolidates various measures of economic activity, including credit, interest rate spreads, consumer expectations, building permits, new orders of goods and materials, and several other items, to assess which way the economic winds are blowing.  Over the past six months, the LEI has fallen by 4.2 percent.  This is the fastest six-month decline since the great coronavirus panic.

This week, the Bureau of Economic Analysis provided its advance estimate of Q4 U.S. gross domestic product (GDP).  For the final quarter of 2022, real GDP increased at an annual rate of 2.9 percent.

How could it be that GDP is expanding while the LEI is contracting?

The most probable answer we can think of is the massive expansion of consumer debt.  For example, credit card balances hit a new record of $866 billion during Q3 2022.  That marks a year-over-year increase of 19 percent.

Americans are borrowing from their future to make ends meet today.  This may give GDP the appearance that it’s expanding.  But, in reality, the GDP expansion is merely a measurement of the rate that consumers are going broke.

The fact is the U.S. economy is traversing headlong into a recession at the worst possible time.  We expect things will get especially ugly, as consumers are operating in a world of chaos…

World of Chaos

In a centrally planned economy, decisions are not made between individuals through free market mechanisms.  Instead, they’re made by politicians and bureaucrats through policies of mass market intervention.

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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

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One Great Big Nasty Prediction for 2023

One Great Big Nasty Prediction for 2023

Welcome to 2023!

The New Year’s edition of the Economic Prism is a place of wild conjecture and rough suppositions.  A place where abstract thinking is celebrated.  Imaginative cycle theories, deep metaphysics, fractal wave patterns, happy accidents, and amateur fortune tellers of all stripes are invited too.

Today, with perfect 20/20 vision, we set our sights on the year ahead.  After all, the New Year’s here.  What better time than now to peer out 12 months through our proprietary prism and report back what we see?

On the periphery, we find new dreams, new directions, and new delusions, swirling about like storm clouds interspersed with warm radiant light.  We see opportunities and contretemps.  We see doom and despair.  And we also see hope and redemption.

But what else?  What are the essential insights you should take along as you set out to make another pass around the sun?

What does the New Year have slated for stocks, the 10-Year Treasury note, gold, oil, bitcoin, and everything else?  Will junk bonds be roiled by massive corporate defaults?

Will Joe Biden’s recession turn into a depression?  Will Federal Reserve issued digital dollars – a Central Bank Digital Currency (CBDC) that’s traceable and programmable – replace the privacy of cash?

Will there be a painful inflation flareup?  Will Sam Bankman-Fried mysteriously perish?  What about Maxine Waters…will she croak too?

Will there be riots in your city?  Will the power grid meltdown?  Will California finally dry up and blow away?  Will your social credit score be tarnished for not recycling your food waste?

Are we fated for complete societal breakdown?  Will 2023 culminate in the second coming of Jesus?

The questions are limitless.  The answers are exponentially limitless.

Where to begin…

Believe In Yourself

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Are You Ready for the Coming U.S. Government Default?

Are You Ready for the Coming U.S. Government Default?

The vast herd of investors are a deluded crowd.  Following the Federal Reserve’s much anticipated 75 basis point rate hike on Wednesday the major stock market indexes jumped upward.

Optimistic investors keyed in on the Federal Open Market Committee (FOMC) statement and, in particular, the remark that the Fed, “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation and economic and financial developments.”

Somehow this was perceived as being the precursor to a policy pivot.  Yet during the post-FOMC statement press conference, Powell clarified that, “It’s very premature to be thinking about pausing.”

Stocks then fell off a cliff.  The Dow Jones Industrial Average (DJIA) closing out the day with a loss of 505 points.

Will there be a pivot, pause, or no pivot?  This is the wrong question to be asking.  The reality is the major stock market indexes have much farther to fall before the bear market is over, regardless of if the Fed pivots anytime soon.

If you recall, the Fed began cutting interest rates in September of 2007.  Yet the stock market didn’t bottom out until March of 2009.  Similarly, the Fed began cutting interest rates in January of 2001.  Still, the stock market didn’t bottom out until October of 2002.

Thus, using these two most recent bear markets as a guide, once the Fed finally begins cutting interest rates, which would come after inflation has begun to abate and a period of interest rate pause, the stock market will continue to fall for another 18 to 22 months.

In other words, this bear market may not bottom out until well into 2025.  What’s more, the entire dollar based financial system will likely blow up sometime beforehand.

How’s that for a grim outlook?

…click on the above link to read the rest…

Countdown to U.S. Government Default

Countdown to U.S. Government Default

Central Bank Digital Currencies (CBDC) are coming.  And they’re coming much faster than most people care to think about.  Are you ready?

At the moment, roughly 90 central banks – including the European Central Banks and the Federal Reserve – are either experimenting with, or are in varying stages of CBDC implementation.  Moreover, these CBDC friendly central banks include all G20 economies.  And together, represent more than 90 percent of global GDP.

What’s important to understand is the adoption of a CBDC in your country of residence would accompany the abolition of cash.  This would be for your own good, of course.  To eliminate nefarious transactions and black markets.

If you value financial privacy and the liberty to spend your money as you please, then the rapidly approaching rollout of CBDCs is a major red flag.  Compulsory use of a CBDC, like a digital dollar for example, would give central planners complete oversight and control over your finances.

You see, under a CBDC regime – free of cash – all of your transactions would be subject to government surveillance.  All remnants of financial freedom, privacy, and anonymity would be destroyed.  But that’s not all…

CBDCs would allow control freak, power mad central planners to do much more than spy and surveil your financial transactions.  CBDCs would allow them to control how and when you spend your money.

This may sound crazy to a sane person, who operates with a modicum of modesty and integrity.  But, in truth, this is one of the main intents of CBDCs.  In fact, several years ago Bank for International Settlements General Manager Agustin Carstens outlined the extraordinary powers CBDCs would afford central planners.  Here are the particulars from Carstens himself:

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The Greatest Crackup the World’s Ever Known

The Greatest Crackup the World’s Ever Known

By now, anyone with half an inkling of curiosity about why prices and values don’t add up has traced the divide back to the money itself.  It’s not hard to see.

Asset prices, like houses and the major stock market indexes, have lost all visible connection with the underlying economy.  However, wage growth has stagnated; over the last 40 years low level wages have only increased by $0.32 per hour in real inflation adjusted terms.  Stocks and residential real estate, at the same time, have gone to the moon.

Even with the NASDAQ’s 11.2 percent decline from its all-time closing high set on November 19, the index is still up over 110 percent from its March 2020 low.  What will it take for the NASDAQ to crash back to earth?

Something else that has gone to the moon is government debt.  In 1980, the national debt was $908 billion.  Today it’s over $29.8 trillion.  That’s an increase of over 3,181 percent.  Over this time, however, gross domestic product (GDP) has only increased 632 percent – from $2.86 trillion to $20.94 trillion.

Of course, these are merely the facts and figures.  The effects to countless Americans are hard to measure.  But, by and large, the last 40 years have been a great disappointment for the American worker – and an absolute boon for the political elites.

In addition to asset prices and government debt, social discontent has also gone to the moon.  Here in the LA Basin, for example, some of America’s most resourceful fellows have taken to emulating the corruption found in Washington and on Wall Street.  They’re looting stores and plundering freight trains as a matter of business.  Daring professions like these flourish when hard work and playing by the rules no longer pays.

What’s really going on…

Spineless Money

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

How to Survive the Mega Collapse of 2022

How to Survive the Mega Collapse of 2022

Welcome to 2022!

The New Year’s edition of the Economic Prism is a place of wild guesses and rough suppositions.  Today we focus our eyes through our proprietary prism.  We set our sights over a 12 month viewshed.  What do we see?

First off, 2022 will be a year where everything under the sun happens precisely as it should.  Some good.  Some bad.  Each day shall unfold before you with symbiotic disharmony.  You can bet your bottom bitcoins on it.

But what else?

Will gold top $3,000 per ounce?  Will Beeple sell another digital art medley NFT for $69 million?  Will a paper cup full of Starbucks coffee mixed with syrup and milk froth hit $10 before the year’s over?

What about the S&P 500, the yield on the 10-Year Treasury note, and the price of oil?

Will Fed tapering cause a simultaneous tantrum in both the stock and bond markets?  Will Fauci finally be run out of Washington on a rail like a 19th century con man?  Will China invade Taiwan?  Did WWIII just commence in the Ukraine?  Are we fated for complete social distortion?

You likely have opinions on these matters.  Many people do.  The answers to these questions, no doubt, will be revealed in due course.  In the meantime, our advice is to trust your gut.  Your guesses are better than most.

After a deranged 2021, and with Jen Psaki as White House Press Secretary, anything and everything can happen in 2022 – including a mega collapse!

Thus we’re eschewing a broad range of predictions for the 12 months before us.  But not to worry, we won’t leave you empty handed…

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

Central Bank Visions of Absolute Control

Central Bank Visions of Absolute Control

There’s not much you can do in the year 2021 that doesn’t leave a digital trail.  The collusion of big tech and big government has assured this.

Still, there does remain one simple way to elude the busybodies.  In fact, one of the last ways to preserve some level of economic privacy is to pay with cash.

Because when you pay with cash the authorities cannot monitor and track what you buy.  They don’t know if the cash you pulled from the ATM was stuffed in your mattress, or used to buy groceries or ammo or silver coins.  What’s more, the authorities don’t like this.

The control freak central planners want to know what you are buying, and where and when you are buying.  They also want to know how much you spend down to the very last cent.  A digital dollar, coupled with the abolition of cash, would allow them to do this.  Moreover, it would provide them the ability to have full control over every transaction you make.

For example, if a purchase falls outside of the parameters established by the digital dollar’s monitoring algorithm, it could be cancelled on the spot.  Should an attempted purchase not align with the buyers social credit score it would not go through.  Are you overweight?  Then no glazed donuts for you.

To be clear, digital dollars would have nothing to do with cryptocurrencies or decentralized finance.  Rather, digital dollars would be issued by the Federal Reserve and would allow the Fed to monitor and control every transaction you make.

Absolute Control

Certainly, with digital dollars, control over how you spend your money could be executed in countless ways.  Monthly limits could be placed on how much you’re allowed to spend.

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

How to Buffer the Fallout from America’s Third World Death Spiral

How to Buffer the Fallout from America’s Third World Death Spiral

“What the hell?!” – President Joe Biden, June 16, 2021

Out of Control

American workers are trying to make their way in an economy that’s rigged against them.  We made this claim many years ago.  Today, for fun and for free, we revisit this assertion…starting with the latest from those doing the rigging.

This week, after a two day meeting, the Federal Open Market Committee (FOMC) released their statement.  Nothing material changed.  The Fed will continue to hold the federal funds rate near zero.  The Fed will also continue to create at least $120 billion per month from thin air to buy Treasuries and mortgage-backed securities.

Bond yields spiked and the price of gold dropped because 13 Fed officials now plot dots that project two hikes to the federal funds rate in 2023.  Fed Chair Jay Powell also mentioned the Fed is “talking about talking about” bond tapering.  These technocrats likely know – though they won’t admit – they’ve already lost control.

Consumer price inflation is ‘officially’ rising at a 5 percent annualized rate.  However, the ‘unofficial’ rate of consumer price inflation, as calculated using methodologies in place in 1980, is about 13 percent.  This rate of inflation is remarkably destructive to household budgets.

‘Talking about talking about’ tapering and telegraphing federal funds rate increases some two years from now will do little to contain consumer price inflation.  The fact is, it has already veered out of control.  We expect gas prices to top $5 per gallon in California this summer.  Many Americans are not prepared for sustained, unrelenting price inflation.

Here’s the hard, back of the napkin math they are facing…

Sour Grapes

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Karl Marx’s Road to Hell is Paved with Fake Money

Karl Marx’s Road to Hell is Paved with Fake Money

“The way to Hell is paved with good intentions,” remarked Karl Marx in Das Kapital.

The devious fellow was bemoaning evil capitalists for having the gall to use their own money for the express purpose of making more money.

Marx, a rambling busybody, was habitually wrong.  The road to hell is paved with something much more than good intentions.  Grift, graft, larceny, corruption and fake money are what primarily composes the pavement.  Good intentions are merely dusted in to better the aesthetic.

If you want to understand what’s going on with exploding price inflation then you must understand this…

Right now in the United States we have a scam currency that’s controlled by central planners.  Specifically, we have what Marx envisioned in Plank No. 5 of his Communist Manifesto:

“No. 5.  Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.”

The Federal Reserve System, created by the Federal Reserve Act of Congress in 1913, is indeed a ‘national bank’ and it politically manipulates interest rates and holds a monopoly on legal counterfeiting in the United States.

Without the Fed’s policies of mass credit creation the U.S. government could have never run up a national debt over $28 trillion.  Without the Fed’s policies of extreme credit market intervention the U.S. trade deficit for March of $74.4 billion – a new record – would have never been possible.  Without the Fed’s printing press money the U.S. government could have never run annual budget deficits over $3 trillion.

The fact is centralized credit in the hands of a central bank always leads to money supply inflation.  Asset price inflation and consumer price inflation then follow in strange and unpredictable ways.

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

There’s a Serious Flaw to the Team Powell-Yellen Inflation Scheme

There’s a Serious Flaw to the Team Powell-Yellen Inflation Scheme

If you’re a wage earner, retiree, or a lowly saver, your wealth is in imminent danger.

A lifetime of schlepping and saving could be rapidly vaporized over the next several years.  In fact, the forces towards this end have already been set in motion.

Indeed, there are many forces at work.  But at the moment, the force above all forces is the extreme levels of money printing being jointly carried out by the Federal Reserve and the U.S. Treasury.

Fed Chairman Jay Powell and Treasury Secretary Janet Yellen have linked arms to crank up the printing presses in tandem.

This is what’s driving markets to price things – from copper to digital NFT art – in strange and shocking ways.  But what’s behind the money printing?

Surely it’s more than progressive politics – under the guise of virus recovery – run amok.

Where to begin?

The U.S. national debt is a good place to start.  And the U.S. national debt is now over $28 trillion.  Is that a big number?

As far as we can tell, $28 trillion is a really big number…even in the year 2021.  How do we know it’s a big number, aside from counting the twelve zeros that fall after the 28?

We know $28 trillion is a big number based on our everyday experience using dollars to buy goods and services.  You can still buy a lot of stuff with $28 trillion.  In truth, $28 trillion is so big it’s hard to comprehend.

Nonetheless, $28 trillion is not as big a number today as it was in 1950.  Back then, the relative bigness of $28 trillion was much larger.  It was unfathomable.

Crime of the Century

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economic prism, mn gordon, janet yellen, inflation, jerome powell, fed, us federal reserve, central bank, stimulus, government stimulus, united states

Jerome von Havenstein: Inflation Or Bust

Jerome von Havenstein: Inflation Or Bust

This week brought forth new evidence that – to be perfectly frank – we’re all screwed.

On Thursday, the yield on the 10 year Treasury note topped 1.55 percent.  Subsequently, the Dow Jones Industrial Average, after hitting an all-time high on Wednesday, dropped 559 points.  Wall Street must not be listening to Federal Reserve Chairman Jerome Powell.

Earlier in the week, Powell, in testimony to the Senate Banking Committee, confirmed that the central bank would keep the federal funds rate near zero until maximum employment is achieved.  In addition, the Fed, in its recently released semiannual Monetary Policy Report, confirmed it would continue to create credit from thin air to buy $80 billion per month of Treasuries and $40 billion per month of mortgage backed securities (MBS).

What’s more, the Report specified the Fed’s purchases of Treasuries and MBS “…will continue at least at this pace until substantial further progress has been made toward its maximum employment and price stability goals.”  The operative words being, “at least.”

What to make of it…

Central banking is a form of central planning.  And central planning is a form of state control.  And state control, as practiced in the United States, pertains not so much to the economics of producing income; but, rather, the methods for redistributing it.

State control, through inflationism, takes money saved and earned by individuals and covertly redistributes it to the central authority – i.e., Washington.  There it is consumed by ever expanding government social programs and colossal pentagon budgets.  What remains is wasted away by the endless array of bureaucracies and agencies.

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

 

What To Do When The Planets Diverge

What To Do When The Planets Diverge

Planets Jupiter and Saturn came into closer alignment than any time since 1226 this week.  Yet the planets in Washington did not align.  The federal government was unable to ‘Christmas tree’ its stimulus bill.

At the 11th hour, President Trump called bull pucky on the contents of Congresses hideous creation.  Too much pork.  Not enough relief.

Congress will return next week and attempt to salvage a deal.  Likewise, we’ll save fiscal stimulus and its consequential economic distortions for reckoning with another day.

It’s Christmas, after all.  We’d prefer to delve into the esoteric.  Thus, today, for fun and for free, we seek meaning through numerology and astrology.  Where to begin…

Not long ago, if you recall, a Dow Jones Industrial Average (DJIA) above 30,000 was impossible.  Nothing could touch it.  But here it is, in the flesh, a DJIA that’s a peppermint stick above this “sacred” number.

A DJIA above 30,000 is, indeed, quite impressive.  But equally impressive is a distinct, yet somehow related milestone that’s rapidly approaching.  The U.S. National Debt is over $27.5 trillion.  At the current spending rate, the national debt will surpass a round and rotund $30 trillion within nine months.

The reality, however, is that the national debt exceeded $30 trillion a long time ago.  In fact, it’s really 568 percent higher.  Remember, current unfunded liabilities, including Social Security and Medicare, now total over $156.2 trillion.

Added together, the national debt and current unfunded liabilities total $183.7 trillion.  Truly, this number is so large it’s near impossible to comprehend.  Thus, for simplicity and for the sake of numerological harmony, today’s ruminations are limited in breadth and scope to DJIA 30,000 and U.S. National Debt $30 trillion.

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

The U.S. Government Will Inflate To The Bitter End

The U.S. Government Will Inflate To The Bitter End

The big news organizations say Joe Biden’s the next president of the USA.  That claims of election fraud and fixing are baseless.  Do you believe them?  Do you trust them?

Regardless, Biden’s acting as if.  He’s talking to foreign leaders.  He’s meeting with vaccine makers.  He’s making big plans.  He’s planning big things.  But, apparently, he’s not progressive enough.

This week, for example, an organization called Justice Democrats accused Biden of appointing corporate-friendly insiders.  They say these “corporate-friendly insiders […] will not help usher in the most progressive Democratic administration in generations.”

Certainly, Biden’s getting plenty of advice.  The political puppet has left many strings to be pulled.  Elizabeth Warren and Chuck Schumer want Biden to erase the first $50,000 of a person’s student loan debt.  According to Schumer“Joe Biden can do that with the pen as opposed to legislation.”

Will Biden listen to them?  Will he listen to progressive superstar Alexandria Ocasio-Cortez?  On Monday, Ms. Ocasio-Cortez, tweeted:

“Student loan forgiveness is good, actually.

“We should also push for tuition-free public colleges to avoid this huge debt bubble from financially decimating ppl every generation.  It’s one of the easiest progressive policies to ‘pay for,’ w/ multiple avenues from a Wall St transaction tax to an ultra-wealth tax to cover it.”

Wow!  Biden hasn’t even moved into the White House and things have gone stoopid silly.  Where to begin?

Cut It Off

Without question, the student debt crisis is a disgrace.  There are roughly 45 million student loan borrowers who owe on the order of $1.6 trillion.  Most of this debt is from federal student loans.

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

Olduvai IV: Courage
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Olduvai II: Exodus
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