What Have You Done for Me Lately?

Swing voters are a fickle bunch.  One election they vote Democrat.  The next they vote Republican. For they have no particular ideology or political philosophy to base their judgment upon.

 

swing-voterThe primacy of the wallet.

 

They don’t give a rip about questions of small government or big government.  Nor do they have any druthers about the welfare or warfare state.

In effect, they really don’t care.  What’s important to the swing voter is much simpler.  In fact, it can be boiled down to the following essential question.  What have you done for me lately?

The answer to this question, of course, comes back to money.  As far as the swing voter’s concerned, if their brokerage account’s growing they vote the incumbent party.  If it’s shrinking, they vote the challenger party.

It doesn’t matter if the source of the stock market inflation is a fraud.  Nor does it matter that a stock market correction will help reestablish financial markets on a firmer foundation.

In this respect, the mere trajectory of the swing voter’s portfolio tells them everything they need to know about whom to vote for.

 

Truth and Denial

Earlier this week Republican Presidential Candidate Donald Trump took issue with the Federal Reserve’s stock market inflation games.

He remarked on CNBC that the Fed has created a “false stock market,” and that Fed Chair Janet Yellen and central bank policymakers are very political, and should be “ashamed” of what they’re doing to the country, “The Fed is not even close to being independent.

Certainly, the idea that the Federal Reserve influences elections is not a novel concept.  For this reason, at the recent central banker’s summit in Jackson Hole, Wyoming, former Democrat Congressman, and overall repulsive being, Barney Frank, told the Fed, “Don’t raise rates before election.

 

cartoon-my-impact-alg-600With his tireless work for the poor and the middle class finally done, Barney Frank waved good-bye, to sail off into the well-appointed retirement of a Congressman. Recently he felt the need to pipe up again, dispensing advice to the “independent” Federal Reserve.

 

Obviously, a monetary policy change toward tighter credit, and the subsequent stock market swoon prior to an election can mean death for an incumbent party.  Just ask former President George H.W. Bush.  He’ll tell you that former Fed Chairman Alan Greenspan cost him the 1992 election.

From an axiomatic perspective, the truth of a political accusation is equal to the denial that follows.  In other words, the greater the subsequent denial is, the greater the truth of the allegation.

Shortly after Trump’s shaming of Fed Chair Yellen, Minneapolis Fed President Neel Kashkari took to Squawk Box to offer this denial:

“Politics simply does not come up,” said Kashkari.  We suppose Kashkari had his fingers crossed behind his back when he uttered this.  Because given his checkered past, he’s simply not a man to be trusted.

Kashkari, without question, is an extreme economic interventionist.  If you recall, as federal bailout chief, he functioned as the highly visible hand of the market.  In early-2009, he awoke each morning, put on his pants, drank his coffee, and rapidly dispersed Henry Paulson’s $700 billion of TARP funds to the government’s preferred corporations.

 

paulsonKashkari’s former partner in crime, Hank Paulson. They had to destroy the village to save it – or so they said, anyway.

Photo via google.co.jp

 

Incidentally, the experience had an ill effect on Kashkari’s mental health.  Following his position of federal bailout chief, he became a hermit, took to a cabin in the Sierra Nevada Mountains – near Donner Pass – and found his purpose in life chopping wood (for an image of Kashkari the wood-chopper, see here).

We thought we’d seen the last of him. But alas, after a failed gubernatorial campaign in California in 2014, Kashkari resurfaced earlier this year as Minneapolis Fed President.  The world is a worse place because of it.

 

Why the Fed Destroyed the Market Economy

Kashkari’s a man with crazy eyes.  But he’s also a man with even crazier ideas.  After stating that politics is not part of presidential election year Fed policy, Kashkari explained how Fed policy is set.

 

neelNeel Kashkari: Crazy eyes and even crazier ideas.

Photo credit: Kevin Lamarque / Reuters

 

We look at the data,” he said.  In hindsight, this clarification was more revealing than the initial denial.

Clearly, Kashkari  has never thought about what exactly it is he is looking at when looking at the data.  If he had, he’d likely conclude that the approach of using data to identify apparent aggregate demand insufficiency and perceived supply gluts is crazy.

Unemployment.  Gross domestic product.  Price inflation.  These data points are all fabricated and fudged to the government number crunchers’ liking.  What’s more, for each headline number there is a long list of footnotes and qualifiers.

Hedonic price adjustments.  Price deflators.  Seasonal adjustments.  Discouraged worker disappearances.  These subjective adjustments greatly affect the results.

Yet what’s even crazier is that Kashkari believes that by finagling around with the price of money the Fed can improve the output of bogus data.  According to central planners, better data – i.e. higher GDP, greater consumer demand, 2 percent inflation – means a better economy.

But after 100-years of mismanagement, the last eight being in the radically extreme, the Fed has scored a big fat rotten tomato.  The data still stinks – GDP’s still anemic.  But the downside of their actions is downright putrid.

 

purchasing-power-and-debtHow much economic progress has monetary central planning actually cost us? This cannot be quantified, but we are willing to bet that in combination with the socialistic welfare/ warfare state that is partly funded by this surreptitious theft,  we have lost the equivalent of one or two centuries of real wealth creation as a result of compounding effects and historical political developments (primarily war) that would have been impossible without limitless credit expansion. Once this gigantic bubble implodes for good the damage will become even greater – click to enlarge.

 

Policy makers have pushed public and private debt well past their serviceable limits.  They’ve debased the dollar to less than 5 percent of its former value and propagated bubbles and busts in real estate, stock markets, emerging markets, mining, oil and gas, and just about every other market there is.

Aside from enriching private bankers, we now know the answer to why the Fed destroyed the market economy.  According to Kashkari, the data told them to.

 

Chart by: St. Louis Federal Rseerve Research

 

Chart and image captions by PT

 

Addendum: Have you Seen this Man?

 

mafioso-barneyWe came across this excellent mugshot of the above-mentioned Barney the Destroyer which we didn’t want to keep from you…

Photo credit: Martin Schoeller

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

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: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

2 Responses to “Why the Fed Destroyed the Market Economy”

  • SavvyGuy:

    Excellent post, articulating how the economy has been grossly distorted with impunity over the past 8 years…with the peasants barely noticing how they’ve been had!

    However, the laws of entropy dictate that artificial distortions automatically create a balancing counter-force. Pump air into a tire or balloon, and it wants to leak out as soon as possible. Pump “fake money” into anything…houses, stocks, bonds, whatever…and an automatic invisible balancing counter-force is created.

    IMHO, the key to financial survival is to stay close to the exits while the party rages on!

  • No6:

    Nice mug shots.
    Will look good on a Wanted poster. Dead or Alive. (When this debtburg blows up the mob will come looking)

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Stock Market Manias of the Past vs the Echo Bubble
      The Big Picture The diverging performance of major US stock market indexes which has been in place since the late January peak in DJIA and SPX has become even more extreme in recent months. In terms of duration and extent it is one of the most pronounced such divergences in history. It also happens to be accompanied by weakening market internals, some of the most extreme sentiment and positioning readings ever seen and an ever more hostile monetary backdrop.   Who's who in the zoo in...
  • All the Makings of a Major Economic Fiasco
      Mud Wrestling: Trump vs. Xi About 6,940 miles west of Washington DC, and at roughly the same latitude, sits Beijing.  Within China’s massive capital city, sits the country's paramount leader, Xi Jinping.  According to Forbes, Xi is currently the most powerful and influential person in the world.   Papa Xi, the new emperor of China. [PT]   Xi, no doubt, is one savvy fellow.  He always knows the right things to say.  He offers the citizens of his nation the...
  • How the Global Trade Contraction Begins
    Historical Evidence The world grows increasingly at odds with itself, with each passing day.  Divided special elections.  Speech censorship by Silicon Valley social media companies.  Increased shrieking from Anderson Cooper.  You name it, a great pileup is upon us.   It was probably Putin's fault (just a wild guess) [PT]   From our perch overlooking San Pedro Bay, the main port of entry for Chinese made goods into the USA, facets of the mounting economic catastrophe come...
  • TARGET-2 Revisited
      Capital Flight vs. The Effect of QE Mish recently discussed the ever increasing imbalances of the euro zone's TARGET-2 payment system again in response to a few articles which played down  their significance. He followed this up with a nice plug for us by posting a comment we made on the subject. Here is a chart of the most recent data on TARGET-2 available from the ECB; we included the four largest balances, namely those of  Germany, Italy, Spain and the ECB itself.   The...
  • When the Freaks Run Wild
      Conditioned to Absurdity The unpleasant sight of a physical absurdity is both grotesque and interesting.  Only the most disciplined individual can resist an extra peek at a three-legged hunch back with face tattoos.  The disfigurement has the odd effect of turning the stomach and twisting the mind in unison.   Francesco Lentini, the three-legged man. Born in Sicily in 1881 with “three legs, four feet, sixteen toes and two pair of functioning genitals” he made a career of...
  • Gold Sector – An Obscure Indicator Provides a Signal
    The Goldminbi In recent weeks gold apparently decided it would be a good time to masquerade as an emerging market currency and it started mirroring the Chinese yuan of all things. Since the latter is non-convertible this almost feels like an insult of sorts. As an aside to this, bitcoin seems to be frantically searching for a new position somewhere between the South African rand the Turkish lira. The bears are busy dancing on their graves.   Generally speaking bears have little to...
  • Separating Signal from Noise
      Claudio Grass in Conversation with Todd “Bubba” Horwitz Todd Horwitz is known as Bubba and is chief market strategist of  Bubba Trading.com. He is a regular contributor on Fox, CNBC, BNN, Kitco, and Bloomberg. He also hosts a daily podcast, ‘The Bubba Show.’ He is a 36-year member of the Chicago exchanges and was one of the original market makers in the SPX.   Todd “Bubba” Horwitz and Claudio Grass   Before you listen to the podcast, I would like to...
  • What Have You Done For Me Lately? Precious Metals Supply and Demand
      Aragorn's Law or the Mysterious Absence of the Mad Rush Last week the price of gold dropped $8, and that of silver 4 cents.  There is an interesting feature of our very marvel of a modern monetary system. We have written about this before. It sets up a conflict, between the perverse incentive it administers, and the desire to protect yourself in the long term.   Answer: usually when it is too late... [PT]   Consider gold. Many people know they should own it. They...
  • The Midas Touch Gold Model
      Introductory Remarks by PT Dear readers, we are hereby beginning to publish material from a new author, Florian Grummes of Midas Touch Consulting. Some of you may already know Florian from his contributions to recent issues of the annual “In Gold We Trust” report by Incrementum. He is a well-known and highly respected market analyst (particularly of gold and cryptocurrency markets) in the German-speaking parts of the world and we hope we will be able to contribute a bit to making his...
  • An Inquiry into Austrian Investing: Profits, Protection and Pitfalls
    Incrementum Advisory Board Discussion Q3 2018 with Special Guest Kevin Duffy “From a marketing perspective it pays to be overconfident, especially in the short term. The higher your conviction the easier it will be to market your investment ideas. I think the Austrian School is at a disadvantage here because it’s more difficult to be confident about your qualitative predictions and even in terms of investment advice it is particularly difficult to be confident in these times because we...
  • Climbing the Milligram Ladder - Precious Metals Supply and Demand
    FRN Muscle Flexing Shh, don’t tell the dollar-paradigm folks that the dollar went up 0.2mg gold this week. Or if that hasn’t blown your mind, the dollar went up 0.01 grams of silver. It’s less uncomfortable to say that gold went down $10, and silver fell $0.08. It doesn’t force anyone to confront their deeply-held beliefs about money. But it does have its own Medieval retrograde motion to explain.   Even the freaking leprechaun is now offering government scrip...  this really...
  • Introducing the Seasonax Web App
      Closing the Affordability Gap Up until recently, the Seasonax app was only available to users of Bloomberg or Reuters terminals, putting it out of reach of most non-institutional investors. This has now changed. A  HYPERLINK "https://app.seasonax.com/"web-based version has become available which anyone can use, and it comes at a much lower price point as well. When visiting the site where the app is hosted, this is the welcome screen:   Featured patterns at the Seasonax web app...

Support Acting Man

Item Guides

j9TJzzN

The Review Insider

Dog Blow

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com