President Trump: The NEW one and only politics thread

I have spent at least the last 12 years giving it. Stop giving such immense power to an unaccounatble, appointed price fixer that most people don't understand, which makes the cost of money artificially cheap to enable everyone to act reckless, running up trillions upon trillions of dollars of private and sovereign debt that allows politicians to spend like mad to buy votes with handouts (and leave a mounting sovereign debt problem), crappy companies to exist on borrowed money and no earnings, and most other companies to borrow for free and financially engineer higher and higher stock prices by returning that borrowed money to shareholders, while everyone pretends that those inefficiencies on the back of that debt binge were a healthy economy.

My solution was. ... STOP creating a massive credit crisis that is going to bury us. As we are finding out now, it happens at the least opportune time, because when it seems like an emergency borrowing situation, you already passed your borrowing limit and there is no ability to monetize debt anymore to try to inflate away your problems on the clueless masses.

My solution now, given that it's too late? Stop deluding yourself with the $1200 checks and bailing everyone out with trillions dollars more of borrowed money that you think can be monetized the same way. It ain't happening and it is going to make the terrible times we are facing even worse.

Oh, and if you were one of the "Hey, look at my 401(K)!" types? The good news is that your stock holdings (if you aren't liquidating to meet margin calls. ... or future expenses) may very well start levitating again. Of course, that is only because with that much expansion of credit and how they have gone berzerk, it is going to take way more dollars to equal what one dollar equaled before they fucked us all. So stock prices may go up in dollars, even though the value of those stocks plummets in real terms. Of course, the vast majorty of Americans aren't going to be looking to use those dollars to buy stocks. ... they are going to be buying milk that may be going up in price too.

 

The correct analogy would be. ... if sometime during WWII, we decided we needed to run up a huge multiple of the debt we had already taken on fighting the war, and then that leading to a very serious credit crisis (2008), so then deciding to run up exponentially more debt to avoid delveraging (the right thing) in the wake of that crisis, and when that led to a much bigger debt crisis (now) due to the much bigger amount of debt, thinking that you can do more of the same to keep living the same fantasy.

During WWII, the dollar was actually backed by something limiting the ability to run up debt (why that debt in real terms was much less than our debt today, which is masked by artificially suppressed interest rates -- you can only do this by stealing from savers to keep all of the debt being serviced), this MUCH BIGGER problem has been on the back of a fiat currency. Which is the problem. Their answer to each debt crisis has been to destroy the dollar even more, putting the cost on all of us, or at least anyone who has decided not to be a debtor and instead save.

It's not possible this time. You are watching the end of the dollar as you know it right now.

 

With all respect. ... I have been watching the funding markets for weeks. It's a debt crisis.

They didn't get the Senate to rush and give them authority to buy short-term munis (announced earlier today), and they aren't desperately trying to enforce an overnight borrowing rate that they have NEVER had any trouble imposing on markets like a dictator, and they aren't going to be buying hundreds of billions of dollars more of government debt (as fast as Congress can come up with ways to spend it right now), because there ISN'T a debt crisis.

The US treasury market is the most liquid in the world. Most bonds don't trade every day, but there has never been a time in which spreads weren't reasonably narrow. Spreads earlier this week were wide enough to drive a Mack truck through. Why do you think they stepped in to inject an insane amount of liquidity to narrow those spreads, if they aren't dealing with a credit crisis?

This is up and down all the markets for credit instruments. And what is feeding it is that trillions of dollars of corporate debt -- leveraged loans, covenant light, garden-variety junk -- was very risky debt masquerading as investment-grade, and paying ridiculously low interest because the Fed manipulated us into prosperity. The defaults over the next year or two are going to be epic. no matter how they try to respond. They can't monetize all of that debt, and if they try, we won't have a toilet paper problem anymore, because people can just wipe their asses with dollars.

The mess they created is way bigger than you (and a lot of people) realize at this point. They are doing $1 trillion daily repo operations along with a lot of other drastic interventions because they are shitting pickles right now.