"Beginning of the End?"

"Beginning of the End?"

by Bill Bonner

"Not Normal: Yesterday, America’s investors were sans souci. The Dow leapt to absurdity, coming to rest only 50 points shy of 30,000 – a new record. What is driving stocks higher? Two things…

First, there was more “good news” about a coronavirus vaccine. According to the popular narrative, the economy will soon get a shot in the arm and life will return to normal. But it is not normal for stocks to be so expensive. And it is not normal for an economy to depend on printing-press money. Businesses have had the life crushed out of them. Jobs have been permanently lost. Habits have changed. States are telling families not to get together for Thanksgiving. Santa is shopping for a face-protector.

The second reason is even more absurd. Now that Sleepy Joe Biden is packing up for his move into the White House, investors expect the fake money to flow as promiscuously as it did under Trump. There may even be more of it. Nancy Pelosi and Chuck Schumer announced last week that their last proposal – $3.4 trillion of additional fake money – was now just a “starting point.” Is this “normal?” And the Federal Reserve is “printing” new money – debasing its own currency – at the rate of $11 billion per day. Is that “normal?”

Grotesque and Unnatural: Far from it. The whole program – spend, borrow, print… boom, bubble, crash… pain, panic, bailout… spend, borrow, print… boom, bubble, crash… pain, panic, bailout… – is grotesque and unnatural. And the weak link in this freakish chain is the U.S. dollar. The feds can print ‘em. But they can’t control their value.

COVID-19, along with lockdowns and lockups, have caused people to be fearful. Savings rates have gone up. The velocity of money – a key to the value of the dollar – went down sharply… exaggerating a trend that has been going on for almost a quarter of a century.

Consumer spending, meanwhile, went up – thanks to the feds’ excessive giveaways. Economists, naturally, mistook this spending for “growth”… and a “recovery.” But it was nothing of the sort. It was as fake as the whole shebang. The recovery… the dollar… interest rates… stimulus – all phony baloney.

Faster Money: But wait… what’s this? The St. Louis Fed reports that the “velocity” of money – the rate at which money changes hands – has suddenly turned up. Is it a blip? Or a trend? Nothing worth mentioning? Or time to high-tail it out of town?

We don’t know. But the smart money is selling dollars. Here’s Zero Hedge: "In a Friday note from Goldman’s chief FX strategist Zach Pandal, he predicts that “depreciation in the broad Dollar can continue in 2021” and writes that his USD cross forecasts translate into a 6% decline in the broad trade-weighted Dollar index over the next 12 months, and a “sustained but orderly” 15% real depreciation from its 2020 peak to the end of 2024."

Is this the beginning of the end for the fake dollar… the fake interest rates… the fake stimulus… the fake bailouts… the fake recovery… the fake stock market boom… and all the rest of the fakiness? It is too early to tell."

- www.rogueeconomics.com