by Chris Black
We have been in a depression since the dotcom crash.
Some of the greatest stock market rallies of all time, prior to the last decade of idiocy, were during the Great Depression.
In my line of work, the average salary was $85k in 1997.
Today it is $62k.
25 years have come to pass, and wages are lower, never mind inflation.
The house I recently bought sold for $87k in 1992. I bought it under the current “value” because of good contact with the seller, $242k.
It was valued at $275k.
Did that wage go up 4x to match the homes’ prices?
Nope.
After the depression people made more money, the same after the 1970s.
Not anymore.
Today the FED rate-hiked to 75 BPS after on May 4th Powell literally said 75 BPS hikes are off the table.
We know the whispers of 1% were just so that a .75% hike would look like a cut to the algos controlling the markets.
This rate hike is the biggest in 28 years by the way.
And after this stunning hike, because, you know, the FED is now committed to fight the inflation they themselves caused via QE and helicopter money, the markets “rallied”.
Well, sort of.
How and why is this good for the stock market?
It’s not. Classic dead cat bounce.
Stocks, Bonds, & Bullion Rally After Powell's Perjury-Prone Presser t.co/9CWdeuAunY
— zerohedge (@zerohedge) June 15, 2022
The thing is, the FED has no ability to stop the kind of inflation that’s happening right now. They can throw us into a nasty recession (which they seem bound and determined to do) but that will only blunt it, not crush it.
This is not 1981 and there are different forces at play here.
Everything works like government cuts.
We decreased spending by only increasing spending by $300 billion instead of the $500 billion we said.
So we saved $200 billion.
Speaking of inflation, the bill is $15 (real inflation rate, not that CPI bullshit), but here’s $0.75, it should cover it.
Here are some facts:
Bond markets are cracking.
Consumer is at an all-time high on leverage.
Consumer is at an all-time high in personal debt.
Consumer is at an all-time high on total revolving credit.
Jobless claims are significantly higher than last month.
Retail collapsed.
Housing is collapsing, 22 year low on applications.
If you look at the data that the mainstream media like CNBC and Bloomberg hide, you will be in the know.
It’s VERY bad, far worse than they say.
Moreover, the 3rd rate hike in a year brings us up to a Feds Fund Rate of 1.5%.
40 years ago, in order to deal with the Misery Index of Carter, when inflation was around 15%. Volcker knew he had to raise Interest Rate 5% higher than inflation — which he did jacking it up to 21%.
These jokers think 1.5% interest rate is going to tamp down Inflation??
Using the same Ronald Reagan era formula / calculations we’re at 15-20% inflation now.
Inflation may be “transitory” until it turns into hyperinflation, then The Greatest Depression.
To reiterate the obvious: globally, EVERY entity — except maybe Russia– is hugely leveraged: individuals, corporations and governments.
Even a small move in interest rates will cause a leveraged IMPLOSION of financial markets.
It’s gonna’ be a bumpy ride.
The pain is going to come fast and hard from these rate increases, which are doing nothing to tame inflation, but everything to bring the house of cards down in flames.
If you ask me, the rate hikes have not much to do with inflation. 0.75 BPS is pissing in the wind.
The real aim is to stop the Japanese and Europeans dumping their bonds.
The asset inflation caused by free money to leverage ever more free money is at an end.
Powell is staring into the abyss and he knows it. Housing is absolutely done as of TODAY.
Also, everything is part of a grand scheme: print $4 trillion for Blackrock and big business, use the cheap money to buy real estate and price people out of homes and living expenses, and then make them all slaves once again.
Fuck Powell and fuck the FED.
Ron Paul was right.
With Recession Now Guaranteed, The "One-Term" White House Begins To Panic t.co/FRaKUiUX7f
— zerohedge (@zerohedge) June 15, 2022
"They're Pulling The Plug… It's Game Over" t.co/N4cq5Lqq7Z
— zerohedge (@zerohedge) June 15, 2022