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Senior Advisor

Re: So what if they're just pushing on a string?

BTW again. Buying bonds from junk companies probably does make some sort of sense from some sort of 50,000 ft macro/financial view.

But there's a reason why they're junk.

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Honored Advisor

Re: So what if they're just pushing on a string?

The "poor people" seem to be doing just fine, rich people do fine as always.  It`s the middleclass that`s had a 40 year war waged against them.  "poor people" get aid and don`t owe income tax, rich people have loopholes, it`s the shrinking middleclass that gets shafted by the taxman.  College and healthcare costs more than it should because middleclass students and hospital patients pay their own way plus everyone else too "poor" to pay their way.   And they all be sure to send in their "mail in ballots" really doing their patriotic duty, voting for the party with the most lucrative promises.

"poor people" in the US aren`t oppressed as the actual poor that lead to the French Revolution.   "poor people" today are greedy and vote for the most skilled pick pocketers (politicians).

The fed can`t stop the river, but they can redirect the river in new channels.   If the fed or (government) wants to create inflation, the best way is bring jobs back to the US as Trump did.  If foreign goods such as roller chain were made in the US, they would cost 3X`s more ...but be better quality and gainfully employ American workers who would in turn have the "extra dollars" to "chase the goods" domestically.

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Senior Advisor

Re: So what if they're just pushing on a string?

BA  - Would  that  include  $25.oo  slaughter plant jobs ?  - Due  to  packer  margins of $300 - $400 on  each  fed  steer ? 

  Know how to make a '' Congress  Person "  stutter   -  ?   Start  a  " COOL "  conversation  Smiley Frustrated- - -    

Honored Advisor

Re: So what if they're just pushing on a string?

Well, Dave you certainly go off the deep end in a hurry. Blaming it on any one party is certainly ridiculous, no one has the courage to stand up to the media and point out the obvious. They certainly aren't willing to indure the wrath of Savannah, or the View, or even the NPR staff that is ruthless about it. 

No, the pain of the current path must get worse than the alternatives before it will matter. That will take some time I suppose, but it will happen in flash when it does.

Senior Advisor

Re: Is the big jump in fertilizer prices inflation or just ...

Is the recent big jump in fertilizer prices inflation or just ordinary price gouging?

Maybe everybody will be trying to catch up at once and that inflation will come for a different reason.

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Honored Advisor

Re: Is the big jump in fertilizer prices inflation or just ...

We study the markets in hopes that "we" are the ones that "gouge" the traders, no one wants to be the guy that sold $8.50 beans, we all want to haul in $12 or $15 beans.

I think what happened in fertilizer is 2020 had a good and profitable fall, more fertilizer got spread than was anticipated.  If you were expecting $3 corn and then got $4 for your corn, after years of skimping on fertilizer of course you`ll put on more, if nothing else spend money to delay taxes.  Fertilizer like with grain has to be rationed through price or a few big operators will put on a 3 year supply and there won`t be any left for everyone else. 

Senior Advisor

Re: Is the big jump in fertilizer prices inflation or just ...

I don't think these assertions should be particularly controversial.

The capacity for monetary policy to actually influence growth and employment is very weak, particularly when near the 0 bound where we've been stuck for almost 20 years.

"Inflation" is not in and of itself a positive outcome- it is only when is is a (controlled) side effect of high economic growth and employment.

Extreme monetary policy does always engender wild speculation, which is always destructive in the long term.

BTW, there were several pennies in the fuseboxes that should have stopped the GFC, but the essential background element was ultra-low rates which make sketchy securities look attractive since there's no yield to be found anywhere else. Currently we're not just encouraging investors to buy junk bonds, the Fed is actively buying them. But as I said, there's a reason why they're called junk. Diverting capital to bad bets is not a sound policy.

This part might be more controversial but is true.

The Fed got itself rolled. Extreme monetary measures might have been justified if they were done in concert with equally robust fiscal and public health efforts. The Fed came through- perhaps to excess- and Congress did for a bit. As soon as the administration got money to prop the economy it did a volte face and proceeded on a campaign of disinformation and actively fanned the flames of the pandemic, hoping that economic indicators and particularly the stock index levels would ensure re-election.

Mass negligent homicide and sabotage of many elements of the economy ensued. I.e., the public health measures didn't kill small businesses, the virus did.

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US Currency is no longer money

"The problem with Socialism is that you eventually run out of other peoples' money."  ~Margaret Thatcher.

"No Fiat currency has ever survived a full credit cycle."  ~Bill Bonner

When you untether a currency (which is easy to expand) from it's underlying asset (which is hard to expand), you have a Fiat Currency. That piece of paper with Benjamin Franklin's portrait on it is worth about 50 gallons of Ag diesel because we all agree it is. But it is really just a piece of paper (or numbers on your computer screen). When Nixon took the USD off the gold standard in 1971, we were already about 20 years into the current credit cycle, which is from bottom to top to bottom to top again in interest rates. Interest rates bottomed after WWII, peaked in 1981, and are bottoming again now. As we enter the final stage of the credit cycle - rising rates - the debt levels in the US economy (both government and highly leveraged private sector) will not be able to service that debt without more credit and the money printing will REALLY go ballistic until the whole thing collapses. Then we will be introduced to the "New Dollar" and it will all start over again.

Neither party is fully responsible for this at all. Yes, Congress initiates all spending and democrats are more likely to be "tax and spend", but it is really the unbelievably stupid PhD economists who think politicians or the public could be constrained by a Fiat currency. We the People for the most part have demanded government spending without taxes, and in a democracy, we get the government we deserve. We will also get the financial ruin we deserve. 

Advisor

Re: US Currency is no longer money........ re: that

From almost 10 years ago, before this latest surge in creative response:

https://www.macrobusiness.com.au/2011/05/overruled/

Honored Advisor

Re: US Currency is no longer money........ re: that

It`s too late for "austerity" or whatever it was in hindsight that we 'shoulda did".  It was a lot of fun tinging the champagne glasses and throwing another roll of hundreds in the fireplace.  Ross Perot and Ron Paul were all big jokes ha ha ha "buncha tinfoil hat kooks!  No, we want Bill Clinton and Alan Greenspan running the show, they`re really really smart".  You don`t get elected in politics saying the truth (except Trump) but all this "Congress didn`t do their job with policy, now the Fed has to use Bandaids"  Well, whadda expect???

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