Well, our readers do. For years I've been amazed at how smart, funny (and good looking) they are.
Maybe,not so much amazed as impressed.
And our patient readers are probably listening with only one ear as their RIA talks about the recent move off the recent lows and the "broad sunlit uplands" to follow.
Well, to quote some more of that same "Finest Hour" speech, last seen here on Feb. 1:
"Are we in for a repeat of the ‘Long Depression’?"
Nah.
Probably something more Churchillian:
"then the whole world, including the United States, including all that we have known and cared for, will sink into the abyss of a new Dark Age made more sinister, and perhaps more protracted, by the lights of perverted science."
—in the House of Commons, June 18, 1940
From Harley Bassman, the Convexity Maven, April 14, 2020:
"Sending in the Snakes”
My children have accused me of being a “COVID-19 denier”,which is false;all I have said, which I suppose is un-PC, is that this is not some horror movie disease which makes your skin melt off or your eyeballs pop out of your head.Moreover, this will not be a 1918 Spanish flu redux that kills integer percentages of the population; not because this flu is less contagious or dangerous, but rather that science and health management have vastly improved.....MUCH MORE
As a bit of morbid but relevant trivia, the mortality rate of the Spanish flu peaked slightly before the November 1918 armistice; a war that was fought mainly in tightly packed trenches filled with soldiers transported in poorly ventilated ships and trains–social distancing does work, so do it!
I have often used the short hand of “QE~” as a snarky jab at the Federal Reserve (FED) to stand for “infinite Quantitative Easing”; but hey, I thought I was just kidding. Presently, a variation of QE~ has been announced: Hhhhmmm....Thus, to borrow from the Department of “no good deed goes unpunished”, and as a comment I will surely regret at a later date, at some point one must consider whether the FED’s latest cure is worse than the disease.
A few years back, at exactly the wrong time, our dishwasher conked out. (Check that, is there ever a good time ?) In any event, after scrutinizing the fuse box (the extent of my skill set) we called in the repair service. It was quickly diagnosed: A mouse had nibbled the cloth wrapper on the power wire to secure some nesting material for a cold winter
Afew ideas were offered to prevent a re-occurrence, but one that was refused out of hand was sourcing a few snakes to rid the house of mice.Indeed, the snakes would have solved the mouse problem, but then I would be left with a house full of snakes.
As a card-carrying graduate of UChicago, I will stipulate (again) that a fiat currency cannot be created at a faster rate than the growth of the economy without inflation. Over 5000 years of collective civilization, we have no record of the Sovereign printing the coin of the realm at such a pace without the currency becoming devalued.
So,while inflation, as measured by the CPI, has been rather somnambulant over the decade, the -vanadium line-measure of the M-2 money supply should give one pause. For the calendar year 2019, M-2 grew at a 6.5% annual rate; as the first quarter of 2020 closed, M-2 grew at nearly a 35% annual rate
*****While it does seem hard to reconcile ten years of M-2 growth at 6.25% with a decade of CPI at less than 2.0%, perhaps we are using the wrong metric.
The FED’s master plan, which I endorsed at the time, was to combine a Zero Interest Rate Policy (ZIRP) with QE to create wage inflation for the middle class. Banks were supposed to be the conduit, but for various reasons unforeseen at the time, the money jammed up and Monetary Velocity collapsed.
Contrary to good public policy, Corporations borrowed these funds and recycled them into stock buybacks that soon funded the purchase of real estate, art, etc.It is the asset market where one can find the missing inflation....
The Fed and other Central Banks have not yet done enough to cause a rise in consumer prices.
There are some oddities in the food supply that may lead to higher prices in coming months i.e. the fact that at least a half-dozen countries have stopped exporting food, preferring to hoard for domestic consumption, and the bottle neck of U.S. meatpacking plants closing causing the perverse effect of lower prices to farmers at the same time retail supply is shrinking and thus raising prices at the grocery store.
Be all that as it may be, we are teetering on the edge of a depression which is why, even though we jumped on board the rally and got lucky enough to call the exact day the major equity indices bottomed, that was just a trade. The heart of the matter is in a couple paragraphs appended to yesterday's "Oil price war spurs biggest drop in import prices in three years and slams U.S. energy industry":
As noted in the intro to "Crisis Chronicles: The Long Depression and the Panic of 1873":
This is what we would like to avoid.And the outro from Saturday's "Stocks will revisit their coronavirus crash low, and here’s when to expect it":
For 24 years, until shaking off the 1893 panic, the world experienced a general decline in prices, the so-called "good deflation", accompanied by spasms of unemployment and enlivened by the inflationary gold rushes that expanded the money supply: South Africa, Deadwood, some of the later Australian strikes and culminating in the Klondike and Nome discoveries.
Combined with the price-reducing effects of the second industrial revolution it was a recipe for disruption....
From the Federal Reserve Bank of New York's Liberty Street Economics blog, February 5, 2016
...What Mr. Hulbert is doing here is basic algorithmic trading stuff where you take past data and use it to try to shade the odds a little bit in your favor.If interested see also:
The next step up is some of the black box AI magic that attempts to tease out correlations that humans don't perceive.
The next step down from the algo stuff is to grab your calculator and add up all the stimulus monies, subtract all the economic losses and hope you have a positive number.
We aren't there yet. The measures taken so far are just liquidity pumps aimed at keeping the economy's head above water.
Stay tuned.
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