The press says inflation is beat…and the coast is now clear;
the Fed can get back to doing what it has been doing for
the last thirty years - supporting Wall Street with artificially cheap credit.
by Bill Bonner
Poitou, France: "The parade of lies and claptrap goes on. Here’s the news from MarketWatch: "Federal Reserve Chair Jerome Powell on Friday delivered his clearest message yet to financial markets that the time has arrived for lower interest rates. The three major U.S equity indexes ended Friday near record territory after Powell’s brief speech at Jackson Hole, Wyo., the dollar traded at its lowest level in more than a year against a basket of major currencies and prices for U.S. bonds jumped as yields fell."
Yes, the Fed has won the fight against inflation. In those famous words of George W. Bush - Mission Accomplished! Never mind that prices are up 39% since 2012 (when the Fed first announced its 2% target). And never mind that they’re still going up at 3.3% per year... 65% above the target. The press says inflation is beat…and the coast is now clear; the Fed can get back to doing what it has been doing for the last thirty years - supporting Wall Street with artificially cheap credit.
Stocks are already anticipating the return of EZ money, with the Dow over 41,000. Pundits and stock mongers are calling for another big bull market. But remember, what really counts is the Primary Trend - the sustained, long-term direction of asset prices, in real, inflation-adjusted terms. That trend has been down for the last three years. Most likely, it will continue going down, even as nominal stock prices get goosed up by the Fed.
In October 2021, you could sell the Dow stocks and get enough money to buy 20 ounces of gold. Today, you’ll get only 16 ounces – a 20% loss. The authorities can boost nominal prices, but not real prices. And they can ‘manage’ the economy by manipulating interest rates; but they can’t improve it.
At dinner on Saturday night a companion remarked: “They always think they know better. The ‘educators’ don’t want any input from parents. Doctors don’t listen to patients. The agricultural bureaucracy doesn’t pay any attention to farmers. “They are in their own bubbles... protected from the real world, imagining that they can control it.”
She had in mind France’s leadership; our thoughts drifted to the other side of the Atlantic, where the frauds are gaudier, more flamboyant…and more absurd. Presidential contender Ms. Kamala Harris, for example, says she is going to protect America’s democracy...even though she is the least democratically-selected candidate in modern history. She was chosen, not by voters... not by ‘The People’... but by a handful of party honchos. Insiders. Elites.
What does she really think? What does she ‘stand for?’ How did she come to stand before the American people, portraying herself (plausibly) as the only sane choice for president? Nobody knows. But there she was, last Thursday, heading up the Democrats’ ticket... the last act in their big DNC circus. She said we can count on her to put the country first... to protect ‘free and fair elections’. It was a ‘fight for America’s future,’ she said... in what was billed as an ‘historic’ speech. But it was all blah-blah, claptrap and lies.
Americans can now go to the polls in November and choose between a grotesque nincompoop and a stuffed pantsuit. It is a choice between someone who says a lot of things that aren't true... and someone who says nothing at all. “It is a choice between the plague and cholera,” said our dinner companion.
Ms. Harris said a lot of silly things in her speech, accepting the Democratic nomination. But probably the silliest was her proposal to lower consumer prices by putting a stop to ‘price gouging’ by greedy corporations. How dumb does she think we are? Stay tuned."
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