Comments on: Domain Query: The crack-up boom

By: Jim S

Jim S — Fri, 06 May 2022 22:53:19 +0000

The central banks are all behind the curve in regards to inflation. Should’ve been raising rates and taking out the liquidity over a year ago. That BS MMT, is BS. But the CB’s are going to have to raise rates, regardless, because…hyperinflation in food prices will lead to out of control circumstances. Peasants revolt, middle class do revolutions. A recession is already happening with high inflation. Gee, seems like the good ol days of the 70’s, but only better with high sovereign debt levels. Plus the central banks balance sheets, yeah how are they looking? In the USSA, the 10 year treasury as of 6 May 2022 is clocking in at 3.12ish percent. Did you just hear the car crash of the mortgage market in the USSA? I did. To your hypothesis of not raising interest rates, you are correct in a way. The Fed can’t do what Volcker did in the late 1970’s-early 80’s, because too much debt in the USSA’s balance sheet. But, that is what is needed to be done. Oh, don’t forget about the stock market. If you can go to cash (not a great proposition, but…), do so, to preserve as much capital as one can.

By: Bardelys the Magnificent

Bardelys the Magnificent — Fri, 06 May 2022 16:26:42 +0000

Inflation is now beyond the bounds of the Fed to control. Whether this was done intentionally or not can be speculated, but mortgage people, who usually kiss the Fed chairman’s ass unashamedly, are being very critical of Powell. I was telling people in the winter of 2020 that the boom was going to lead to a bust, and we needed to have a plan for it. Nobody did, everyone got fat and lazy, and there’s an undercurrent of panic that nobody is talking about.

The party is over.

By: Robert W

Robert W — Fri, 06 May 2022 14:24:22 +0000

Great essay, captures a lot of complexities in a concise way.

“What central banker would be willing to go down in history as the instigator of the greatest financial collapse of all time?”

Its a fractal of all bureaucratic operations, the Agency Problem of the individual measured against the goals of the organization. It is inevitable and intrinsic to human nature to CYA above all else. So inflation into oblivion is the inevitable consequence of central banksters.

In regards to bimetalism: I don’t think the USA had a bimetal format where silver and gold were both backing the USD. It had a gold standard for sure. But recall this EPIC speech (https://www.youtube.com/watch?v=UV2wRCcWJa8 a re-recording 20 years later) by Williams Jennings Bryan in 1896, where he campaigns for a bi-metal standard to loosen up the currency for the benefit of Labor and Agriculture against the Capital interests in the urban control centers.
“Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests, and the toilers everywhere, we will answer their demand for a gold [only] standard by saying to them: “You shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold.”

The Gold Standard worked so long as the frontier still held gold to bring to the surface. The gold rush in San Francisco, the Dakotas, the Yukon, all infused liquidity into the markets with real genuine value. When those gold rushes ran dry the liquidity problems emerged and the non-capital types were desperate for solutions…silver may have been the best middle road between Biddle 2.0 and Gold only.

Long-term thinking: If we had stayed on Gold only, we would have needed new frontiers to mine gold from. Not frontier left on earth, but whatever was undeveloped and had gold would have quickly been developed.
Next step? Space. There’s gold in them-thar-asteroid-belts. The Gold Standard could have fueled a genuine space-faring economy. Who knows, maybe the solar energy innovations from that would have broken us out of this petro-arm-bar all economies are in.