Supply shortages

40,000 people know what’s going on. It may seem like a lot, but in a country of 330,000,000 people, its a drop in the bucket. That’s the number of people that see a typical Keiser Report video. They have 4.3 million subscribers. In this episode Max takes a look at how in the coming era of hyper inflation, what we experienced in the late 70’s is not happening this time.

In the Jimmy Carter years of the late 1970’s when inflation ruled the roost, traditional economic principles prevailed. One being wages had to go up. That’s not the case now. Another aspect is interest paid to savers. Back then 8% on a certificate of deposit was typical. You may have been getting charged 13% on a home loan, but at least you got paid real money on a CD. That’s no longer the case, the banks use your money for free. Back then 3.5% – 4.5% on a simple savings account was typical.

Now neither a CD or a savings account goes above 1%.

Max is able to put the “why” to what is happening. A lot of people lately have been wanting to use the simplistic comparison of the Biden administration to that of the Carter era. But that as Max explains is completely missing what is going on. The rules have changed. Economic law used to be in charge, it isn’t now.

He loses me on the particulars. But its exactly what I’ve been saying for years. You can only ‘fudge’ it for so long. You can pretend there’s a new paradigm, but eventually the piper has to be paid. As an example Indian culture used to highly value gold as a personal store of wealth. Its now bitcoin. El Salvador is abandoning the idea of the dollar as the global reserve currency. Ditto for Russia.

Max uses supply shortages as evidence of what is really going on when they can no longer mask the effects of their money printing. Lumber, microchips, car parts, those products that tell the man on the street something is going on. All of this is economic gobble-dy-gook, until you can’t get your house built or your car fixed, then it becomes real.

Another interesting point he had was tying the political into the economic: ‘woke-ism’. All this societal distraction of transgenderism, BLM, defunding cops, Antifa, Trump prosecutions, the cancel culture for Tweeting the wrong Tweet 10 years ago. Its all a distraction and a disguise so that the people don’t focus on what has been going on. So that blame is never assessed to the guilty.

As he said towards the end, it may manifest in its death throes as a civil war, or as a world war. Me and 40K other people have an idea what’s coming, too bad more people didn’t, we might have averted the pain.

The one issue that matters

The chart is of the French CAC index, a mirror of the DJIA

It didn’t start out well this morning listening to CNBC. The first words I heard were “sector diversity”. What they mean by that of course are stocks grouped by category like industrials, banking, retail, transportation, etc. All you have to do is look at 100 year charts of the market. 2001 and 2008 being prime examples. There was no protection through diversification, everything crashed. Stocks, bonds, metals. There was no difference growth and value stocks. Large caps and small caps all crashed. There were no safe havens in overseas stocks. Every chart could be laid on top of the other.

Then I realized that every show on CNBC is like every financial show you hear on the radio: they’re all liars. Because they fail to address the 1 issue that matters. With 0 to near 0% interest rates the past 20 years (thus destroying bonds and cash as investment options), the Federal Reserve has removed 2 legs of the investment stool. Because there is no longer any competition for the investment dollar, there is nothing to hold stocks in-check.

Because there is no longer anywhere for money to flee, stocks have gone rogue. No dividends, no innovation and nothing but stock buy-backs benefitting senior management. And because these shows fail to address the ONE issue that matters, everything else they say is bullshit. There has to be competition. It is so basic. So fundamental. But they want to ignore the elephant in the room. You can’t throw out the window the principles of borrowing and lending. That is the basis of all business.

You destroy the most basic principle of business, the relationship between borrower and lender (with 0% interest rates), and you expect everything to work right? On top of this is the preposterous notion that a central bank can set the interest rates more knowledgeably than the market?? That is so ignorant its incomprehensible.

Debt slaves

President Trump was on Facebook this morning touting the “record stock market”. Its all a house of cards of course. Business in this country is so fake it makes me sick. For some reason we have a country full of people that think you can have a vibrant economy built on service. Banking, insurance, retail, software… hardly. On top of that, they are so poorly run we have to subsidize them in various ways.

It wasn’t clear whether the Fed is pumping $72 billion a week or a month into the stock market. Between that and the 0% interest money we’ve been subsidizing them with the last 20 years. We had to do that after they crashed the economy with the dot com bubble during 2001-2003. Then we had to keep the border open to supply them with cheap labor.

There’s probably not a more incompetent collection of crooks on the planet. ‘The gang that couldn’t shoot straight’. Business couldn’t stand on their own 2 feet to save their lives. Labor has had to survive onslaught after onslaught of off shoring, flooding with refugees and flooding with Mexicans. You’re so full of it Trump its coming out your ears. Time after time after time those MFs drive a business into the ground, they’re handed a Golden Parachute and the employee is handed an unemployment slip right before Christmas.

The most obvious ripoff of America is in executive compensation. Whereas labor has risen roughly 10x since 1955 ($4K a year to $40K a year, the rate of inflation) CEO salaries are 100x (10 times the rate of inflation). $150K annual in 1955 to $13 million annual in 2019. That’s why they had to offshore production and quit paying dividends to shareholders: They are in effect stealing from the company. The business motto used to be make the company rich, now its make themselves rich. Whereas CEO to line worker ratio used to be 30x, its now 300x.

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