The Nature of NIRP
AIKEN, South Carolina – Up down, down up. The Dow ended Tuesday down 189 points… or just over a 1% fall. Reuters has the story: “Wall Street slides as oil prices hit again.”
But it is the deeper story that interests us. What is going on? Where does it lead? Which dots should be connected to which other dots? The last couple days have found us cogitating on the nature of NIRP. (Catch up here and here.)
The road to NIRP
Most readers surely have better things to do… such as washing their dogs. We do, too. But each time we try to forget about it, it surges back into our consciousness like a vivid memory of a gruesome accident. The poor driver’s head smashed on the door frame… the caved-in front of the car… the skid marks and sirens.
NIRP is more than just another goofy policy. It is a warning: “Watch out… ice on the road… fog, too… and maybe a police speed trap.” Today, we draw the line from NIRP to the two most innovative figures in U.S. political history: Donald Trump and Bernie Sanders. We begin with praise; we’ll see how far that takes us.
Koch Feels the Bern
Both Donald Trump and his rival Bernie Sanders have a point: The system is corrupt. Here is business magnate and libertarian donor Charles Koch on Bernie Sanders:
“The senator is upset with a political and economic system that is often rigged to help the privileged few at the expense of everyone else, particularly the least advantaged.
He believes that we have a two-tiered society that increasingly dooms millions of our fellow citizens to lives of poverty and hopelessness. He thinks many corporations seek and benefit from corporate welfare while ordinary citizens are denied opportunities and a level playing field. I agree with him.”
Now even David Koch is feeling the Bern… who would have thought? We wonder what the socialists will make of this…
To their credit, neither Trump nor Sanders has been completely captured by the Deep State. Trump has lots of money. Sanders finances his campaign with small donations from his supporters. It’s Hillary who sucks up the big money from Wall Street and defense contractors.
But politics is never quite what it seems. The slogans are claptrap. The promises are empty. The claims are bogus. And many of the “facts” wheeled out in the debates are proven to be false within a matter of hours.
Bernie bases his candidacy on a theory… which is bogus. Trump bases his candidacy on a personality… which is a part fraud, part genuine, loveable oaf.
If you met either of them at an alumni event or a bull roast, you would probably find him insufferable – Bernie because he is a hack politician with a one-track mind… and Donald because he is a big-mouthed bore.
Most likely, neither of them understands what is really going on. And almost certainly, neither will want to. Give up the system of Deep State finance, and Sanders will have less of other people’s money to redistribute. As for Trump, he will probably go broke…
When a politician offers you stuff for “free”, there has to be a flaw, since the universe in which free stuff exists hasn’t been discovered quite yet…
State of the Union
The presidential election reflects the souls of the people and the state of their union. On the evidence, in America in 2016, both are in trouble. Still, Sanders and Trump are the best candidates; at least they are at odds with Deep State favorites Clinton and Rubio.
Hillary is feeling the Bern in her own terribly way
Sanders’ appeal is obvious. Young lefties know they are getting the short end of the stick. The system loads them with debt… largely to pay off older voters. They start with student debt… graduate to auto and credit card debt… advance to mortgage debt… and spend the rest of their lives trying to pay it off. They know instinctively, if not analytically, that politics is to blame. So, they look to politics to get them more of the stick.
Trump’s appeal is a little harder to understand. But he’s a fighter. And his target voter feels beaten up… and unappreciated. The Mexicans and Chinese take his job. Wall Street (or someone; he’s not sure who) takes his money. And popular TV shows, such as Duck Dynasty and Trailer Park Boys, make him the laughing stock of the entire world.
He used to be able to feel superior to blacks, Hispanics, and other minorities. Now, TV portrays them as doctors, scientists, and police chiefs… and almost always portrays him as a yahoo goofball.
The Donald keeps surging in the polls…and no-one seems to know why.
Big Man on Campus
Even worse, the latest studies show that the white working class is dropping dead. No kidding. According to two Princeton economists, Anne Case and Angus Deaton, from 1999 to 2014, mortality rates for middle-aged whites with no more than a high school education shot up by 134 deaths per 100,000 people.
Why? Drugs? Despair? Who knows. But The Donald tells them it doesn’t have to be that way. “I’m just like you,” he says. “I got $10 billion… a hot wife… big buildings with my name on them…”
We grabbed one of Trump’s books, Think Big, to draw a measure of the man. He describes his business experience. He explains what he did and how he did it. It reminded us of the expression “big man on campus.
Trump doesn’t think deeply. But he thinks big. He’s not afraid of appearing to be an idiot. He’s not afraid of complications or setbacks, either. His brain focuses on the fight… the negotiation. There are no win-wins in Donald’s world, only win-lose. And he aims to be on the winning side.
The unabridged version of “Think Big”….
Image credit: Jaime Putorti
He’s a brawler – big, boisterous, buffoonish. He’s even a sympathetic example of the genre. In any community, he’s the sort of guy who’d be a success. In small towns, he’d have the biggest auto dealership…
“Come on down to Big Don’s Deals! If you’ve got a pulse, we’ve got your wheels.” If he were here in Aiken, he’d probably have a big modern house on the edge of town… with a swimming pool and probably an indoor arena where his wife could ride horses.
He would be a backslapper and a member of the local Kiwanis, perhaps head of the local school board and often a candidate for mayor or town council. Everybody in town would know “Big Don.” And for the most part, they’d like him.
It might have gone no further than that. But Trump was ambitious. He was in Brooklyn, not Aiken. And he knew he wanted to sail across the East River to the Big Apple – that was the real challenge in front of him. What he didn’t know was what he had behind him – one of the windiest money systems the world has ever seen.
It was a system not for creating wealth but for transferring it. And much of it shifted in his direction. The financial industry, located in Manhattan, the very place that Trump had chosen for his base, was the biggest winner of all.
The credit-money system bailed him out of his bad deals… and helped him make money and build a reputation so large he could run for president. But the system has a fatal flaw. Credit expands. But it also contracts.
NIRP is a desperate attempt to prevent a correction. No one knows what it will do. But it won’t protect Donald’s fortune forever. More to come…
Countries producing almost a quarter of global GDP have adopted “NIRP” by now… the Hail Mary of central banking.
Charts by WSJ
Chart and image captions by PT
The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.
You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.
Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke
Most read in the last 20 days:
- Gold - Ready to Spring Another Surprise
Sentiment Extremes Below is an update of a number of interesting data points related to the gold market. Whether “interesting” will become “meaningful” remains to be seen, as most of gold's fundamental drivers aren't yet bullishly aligned. One must keep in mind though that gold is very sensitive with respect to anticipating future developments in market liquidity and the reaction these will elicit from central banks. Often this involves very long lead times. Blackbeard's...
- Modi’s Great Leap Forward
India’s Currency Ban – Part VIII India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, Part-V, Part-VI and Part-VII, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions. India’s Pride and Joy Indians are...
- Global Recession and Other Visions for 2017
Conjuring Up Visions Today’s a day for considering new hopes, new dreams, and new hallucinations. The New Year is here, after all. Now is the time to turn over a new leaf and start afresh. Naturally, 2017 will be the year you get exactly what’s coming to you. Both good and bad. But what else will happen? Image of a recently discarded vision... Image by Michael Del Mundo Here we begin by closing our eyes and slowing our breath. We let our mind...
- The Great El Monte Public Pension Swindle
Nowhere City California There are places in Southern California where, although the sun always shines, they haven’t seen a ray of light for over 50-years. There’s a no man’s land of urban blight along Interstate 10, from East Los Angeles through the San Gabriel Valley, where cities you’ve never heard of and would never go to, are jumbled together like shipping containers on Terminal Island. El Monte, California, is one of those places. Advice dispensed on Interstate...
- A Trade Deal Trump Cannot Improve
Worst in Class BALTIMORE – People can believe whatever they want. But sooner or later, real life intervenes. We just like to see the looks on their faces when it does. By that measure, 2017 may be our best year ever. Rarely have so many people believed so many impossible things. Alice laughed. "There's no use trying," she said: "one can't believe impossible things." "I daresay you haven't had much practice," said the Queen. "When I was your age, I always did it for...
- Pope Francis Now International Monetary Guru
Neo-Marxist Pope Francis Argues for Global Central Bank As the new year dawns, it seems the current occupant of St. Peter’s Chair will take on a new function which is outside the purview of the office that the Divine Founder of his institution had clearly mandated. Neo-Papist transmogrification. We highly recommend the economic thought of one of Francis' storied predecessors, John Paul II, which we have written about on previous occasions. In “A Tale of Two Popes” and...
- Where’s the Outrage?
Blind to Crony Socialism Whenever a failed CEO is fired with a cushy payoff, the outrage is swift and voluminous. The liberal press usually misrepresents this as a hypocritical “jobs for the boys” program within the capitalist class. In reality, the payoffs are almost always contractual obligations, often for deferred compensation, that the companies vigorously try to avoid. Believe me. I’ve been on both sides of this kind of dispute (except, of course, for the “failed”...
- Trump’s Trade Catastrophe?
“Trade Cheaters” It is worse than “voodoo economics,” says former Treasury Secretary Larry Summers. It is the “economic equivalent of creationism.” Wait a minute - Larry Summers is wrong about almost everything. Could he be right about this? Larry Summers, the man who is usually wrong about almost everything. As we have always argued, the economy is much safer when he sleeps, so his tendency to fall asleep on all sorts of occasions should definitely be welcomed....
- Money Creation and the Boom-Bust Cycle
A Difference of Opinions In his various writings, Murray Rothbard argued that in a free market economy that operates on a gold standard, the creation of credit that is not fully backed up by gold (fractional-reserve banking) sets in motion the menace of the boom-bust cycle. In his The Case for 100 Percent Gold Dollar Rothbard wrote: I therefore advocate as the soundest monetary system and the only one fully compatible with the free market and with the absence of force or fraud...
- Silver’s Got Fundamentals - Precious Metals Supply-Demand Report
Supply-Demand Fundamentals Improve Noticeably Last week was another short week, due to the New Year holiday. We look forward to getting back to our regularly scheduled market action. Photo via thedailycoin.org The prices of both metals moved up again this week. Something very noticeable is occurring in the supply and demand fundamentals. We will give an update on that, but first, here’s the graph of the metals’ prices. Prices of gold and silver...
- Trump’s Plan to Close the Trade Deficit with China
Rags to Riches Jack Ma is an amiable fellow. Back in 1994, while visiting the United States he decided to give that newfangled internet thing a whirl. At a moment of peak inspiration, he executed his first search engine request by typing in the word beer. Jack Ma, founder and CEO of Alibaba, China's largest e-commerce firm. Once he was a school teacher, but it turned out that he had enormous entrepreneurial talent and that the world of wheelers, dealers, movers and...
- Side Notes, January 14 - Red Flags Over Goldman Sachs
Red Flags Over Goldman Sachs Just to prove that I am an even-handed insulter, here is a rant about my former employer, Goldman Sachs. The scandal at 1MDB, the Malaysian sovereign wealth fund from which it appears that billions were stolen by politicians all the way up to the Prime Minister, continues to unfold. The main players in the 1MDB scandal. Irony alert: apparently money siphoned off from 1MDB was used to inter alia finance Martin Scorcese's movie “The Wolf of...