The Economy

Hot CPI number just now. https://www.cnbc.com/2024/02/13/cpi...-the-annual-rate-moved-to-3point1percent.html

Not that the number itself is very meaningful. They have expanded the money supply beyond anything the world has ever seen. That is inflation. And the effect on consumer prices themselves (as opposed to the other things it makes more expensive) is never going to be measured accurately by them. It's like asking Donald Trump to count the votes.

But the Kabuki dance is going on this morning. The Fed has been propping up banks, which has entailed expanding credit (even while they have raised the overnight rate, which is schizophrenic), which got the stock market bubble blowing again. It's a leverage game. But even the bullshit numbers aren't cooperating with their prayer strategy.

Markets know that the Fed is going to be back and they need to put their thumb back way more firmly on the scales of finance, because the economy we have because of the last two decades means that anything close to a positive real interest rate, with them not pushing credit into the economy in other ways (which is what is really creating the distortions) puts an end to the farce. We will get defaults and a financial crisis when they lose control, and they will never let that happen willingly -- they will just kill people by putting an anchor on the economy and letting prices go higher and higher. Which is why people started buying stocks again the minute our monetary mandarins signalled they are looking to reverse and start juicing things again (let's party like it's 2011!). ... But then a number like this comes out, and the BS rhetoric from all of the Fedhead speakers is to pretend like they are committed to fighting the "inflation" they have no control over. ... so you get a dump of stocks on a day like this.

It's just absurd volatility. ... all of these schizophrenic moves based on people reading tea leaves. ... related to an absurd fiction. Valuations are absurd, but all of the price signals are distorted beyond belief, so markets can't really work. You might as well have a czar telling people what prices have to be. Today, you also have the whipsawing caused by the corner they backed themselves into -- they need to pretend like they are going to suck credit out of the economy, while everyone knows they can't and they need to exponentially keep it growing. It would be so much easier if the BLS did a better job of creating fictional numbers than they did with this one.

 

The real minimum wage ends up being 0 because of this stupidity.

 

Just using a CPI that underreports reality. ... the prices hitting people are up 20 + percent over the last 4 years, and are still rising at a painful rate and will never go back to where they were. Real earnings are down close to 3 percent over the last 4 years. Credit card debt is up 40 percent, at record highs, as higher rates are hitting people with interest payments they are struggling to afford now. Defaults are slowly ticking up. We get fed GDP numbers in which government spending -- on the back of unsustainable runaway deficits -- is by far the largest component, as the real economy remains lethargic. We get jobs numbers that are a complete fiction, while buried under the headline number they slip in that millions of people are working multiple jobs because they can't find one full-time job that pays them anywhere near what they would like. The number of part-time workers and people who have just given up on looking for jobs (and collecting government benefits) is at levels that would have been unthinkable 50 years ago. We get layoff news (higher interest rates are filtering through the economy producing exactly what anyone with a brain would expect) every day.

Perhaps, just perhaps, that the problem is that you are never going to "convince" Americans that their reality isn't reality. ... not on their economic well being, which is what they are most focused on in life.

These conversations have turned into a Kafka novel, and it just astounds me. But it's pretty much America across the board in 2024.