By 1997, I had graduated from a steady, iconic and expensive list of higher educational institutions which emphasized critical thinking, objective data, historical context and basic math.
But had I told a single professor back then that one day we’d see the simultaneous occurrence of
- treasury Yields at 1.35%
- an “official” YoY CPI (inflation) growth rate of 5.4%
- an S&P reaching all-time highs above 4000, and
- negative annual GDP rates and consumer sentiment tanking,
it’s likely they’d ask me to return my diplomas.
Why? Because everything I (and all the rest of us) had been taught long ago was that rising risk assets reflect healthy economic growth, vigorous natural demand and a robust confidence in continued productivity and hence free-market price discovery. …
Too bad they didn’t teach you monetary theory, and the power of those who control the price and quantity of money. But since banks and governments effectively control economic curricula everywhere, this was quietly dropped decades ago.
What did I learn after watching the NASDAQ rise to the moon in 2000 before puking by greater than 80% in 2003, and a sub-prime bubble that had investors giddy in 2006 yet on their knees by the autumn of 2008, or far more recently, a decade+ bull market hitting needle-peak highs on the backs $28T in national debt and a Fed balance sheet that had bloated from $800 billion in 2000 to over $7 trillion by 2020?
The answer is simple: Nothing I learned in school was “real” and nothing about our current moment in time has even the slightest resemblance to anything remotely characterized as natural, free-market or fair-price-driven.
Nothing. Not even close.
Now he learns the ugly truth:
Instead, we live in a dystopian world of engineered markets, centralized economies and dis-information in which extreme money creation by five central banks have increased their balance sheets [that is, printed up new high powered “base” money] by 12X like this
…leading to un-natural (i.e., “accommodated”) credit markets in which sovereign bonds offer negative (and technically defaulting) yields like this
…which makes the cost of debt free for a select minority, allowing corporations and their grossly advantaged and over-paid executives to live (and bloat) off their own stock buy-backs at levels this
…which directly results in central-bank-created risk asset bubbles like this [i.e. stock markets moved in almost perfect correlation with central bank money printing since 2009]
…in which greater than 86% of that market wealth is enjoyed by just the top 10% of the population, leading to wealth disparity at record levels like this
…while the self-serving central bankers like this
…who directly caused this historical distortion of capitalism, congratulate themselves on hubris-saturated book tours like this
… or subsequently become the directors of Treasury Departments like this.
Meanwhile, a feckless media owned by just a handful of corporate boards with direct ties to governments, tech billionaires, bad Davos skiers and Wall Street,… [aren’t interested in informing you of what has been going on].
So the central banks manufacture new base money in the national currency, leading to a cascade of new money created by lending by private banks, nearly all of which lands up in the hands of the wealthy asset shufflers.
It’s almost a perfect heist. Money is created by wealthy financial bureaucrats and transferred by a series of indirect maneuvers to wealthy shufflers of financial assets. This trick relies on confidence in the national currencies, which is underpinned by the powers of taxation — you played your part after all.
This looting of the national treasuries cannot go on forever, and will end in a great inflation. Almost there.