The idea the the central bank is going to be able to constrain the effects of Congress' fiscal adventures seems rather far-fetched. The Fed is going to have a hard-enough time addressing the results of its own monetary actions, balance sheet growth and interest rate repression; much less normalizing the economic effects of decades of deficit spending. As we were saying during the Recovery Summer following the Great Financial Crisis:
"Deficits are stimulus whether you call them stimulus or Sweet, Sweet Biden Love."
(Joe was running the program for President Obama and I was apparently channeling Chef from South Park)
Now for some conspiracy theory, which as we have discovered over the last six years is just another name for conspiracy fact. Just delayed.
From Advisor Perspectives:
Are We Being Hustled? A Mental “What If”
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Our economic experience could be driven by a con game – a hustle. The TV series “Hustle” follows a template that explains the ridiculous amount of money the U.S. is printing. The mark is the U.S., the grifter is China, and the shills are Russia and U.S. citizens.
“Hustle” portrays a likeable team of con artists who trick their “marks” into parting with money or valuables. Each episode shows a different, clever con that tricks an unlikeable person many times without being recognized as the thief. The $13 trillion in recent U.S. money printing is executed by China that is caught in a Thucydides trap. In other words, the U.S. has been conned into financial ruin that will make China the number one superpower in the world. Here’s the idea.
Mechanics of a hustle
Although every episode of Hustle shows a different con, there is an established pattern or template:
- They always play what’s called a “long con,” which means it takes a long time to come together, like months, but they frequently finance the venture with some “short cons” that raise a little money quickly.
- There are always three main characters: (1) a “mark” (the target) who is usually not a nice person; (2) the “grifters” (the likeable team of con artists); and (3) “shills” (accomplices who help along the way, sometimes unwittingly).
- The stages of the con progress as follows:
1. Foundation: Research the mark to identify interests and vulnerabilities.
2. Approach: Set the objective and pick the con. In the TV series they usually identify the con by name, suggesting that there’s some sort of con manual. The mark is approached or contacted.
3. Build-up: The victim is given an opportunity to profit from participating in a scheme. The victim's greed is encouraged, such that their rational judgment of the situation is impaired.
4. Pay-off or convincer: The victim receives a small payout as a demonstration of the scheme's purported effectiveness.
5. The "hurrah": A sudden manufactured crisis or change of events forces the victim to act or decide immediately. This is the point at which the con succeeds or fails.
6. The in-and-in: The grifter puts an amount of money into the same scheme as the victim, to add an appearance of legitimacy, and the mark buys in. The con is completed.Have we been hustled?
Our recent economic history fits this template in the following ways:
- Our economic journey began in 2008 with the financial crisis, so this long con has lasted 13 years so far, and it will likely take another four or five years to complete. The “long” in this long con is about 18 years.
- The “mark” in this con is the United States, specifically members of Congress. The “grifter” is China that is caught in the Thucydides’ trap, and seeks to be number one. And the “shills” are Russia and unwitting U.S citizens.
- The stages of the con progress as follows:
1. Foundation: Congressional members are greedy and mostly focused on getting re-elected. Voters want free stuff like healthcare and education
2. Approach: Create a “theory” that liberates spending from a budget. Money printing is justified by modern monetary theory” (MMT) – print all you need. When was our last “balanced budget”?
3. Build-up: Following Japan’s lead, the U.S. launches quantitative easing (QE) in 2008 to head off a recession, printing about $4.5 trillion.4. Pay-off or convincer: QE works! The recession ends quickly, the stock market enjoys its longest recovery and inflation is subdued.
5. The "hurrah": A sudden manufactured crisis or change of events forces the victim to act or decide immediately. The COVID pandemic breaks out, originating in China.
6. The in-and-in: China and Russia are “in” the fight against COVID. Congress approves another $5.5 trillion in COVID relief plus President Biden plans to spend at least another $3 trillion on infrastructure and other projects. So, $13 trillion in new money (counting QE), which should be enough to bring hyperinflation. $13 trillion is more expensive than our 10 most expensive wars combined....
....MUCH MORE
I should wrap something around Stephanie Kelton's thoughts on taxes but I am running long, and running late.
More to come.
