Steve Bull's Blog, page 195
September 1, 2022
Fed Paper Admits the Central Bank Can’t Control Inflation; Finger-Points at Federal Government
It appears somebody at the Federal Reserve has figured out that the central bank can’t tame inflation, so it’s setting up a scapegoat – Uncle Sam.
A paper co-authored by Leonardo Melosi of the Federal Reserve Bank of Chicago and John Hopkins University economist Francesco Bianchi and published by the Kansas City Federal Reserve argues that central bank monetary policy alone can’t control inflation.
The paper’s abstract asserts, “This increase in inflation could not have been averted by simply tightening monetary policy.”
In a nutshell, Melosi and Bianchi argue that the Fed can’t control inflation alone. US government fiscal policy contributes to inflationary pressure and makes it impossible for the Fed to do its job.
Trend inflation is fully controlled by the monetary authority only when public debt can be successfully stabilized by credible future fiscal plans. When the fiscal authority is not perceived as fully responsible for covering the existing fiscal imbalances, the private sector expects that inflation will rise to ensure sustainability of national debt. As a result, a large fiscal imbalance combined with a weakening fiscal credibility may lead trend inflation to drift away from the long-run target chosen by the monetary authority.”
There are a couple of startling admissions in this single paragraph.
First, the authors acknowledge that the federal government uses inflation as a tool to handle its debt. In other words, it acknowledges that we’re all paying an inflation tax.
Peter Schiff talked about this inflation tax in an interview on Rob Schmitt Tonight.
Inflation is a tax. It’s the way government finances deficit spending. Government spends money. It doesn’t collect enough taxes, so it has to run deficits. The Federal Reserve monetizes those deficits – prints money. They call it quantitative easing, but that’s inflation…
…click on the above link to read the rest of the article…
Where We’ll End Up Living as the Planet Burns
While nations rally to reduce their carbon emissions, and try to adapt at-risk places to hotter conditions, there is an elephant in the room: for large portions of the world, local conditions are becoming too extreme and there is no way to adapt. People will have to move to survive.
Over the next fifty years, hotter temperatures combined with more intense humidity are set to make large swathes of the globe lethal to live in. Fleeing the tropics, the coasts, and formerly arable lands, huge populations will need to seek new homes; you will be among them, or you will be receiving them. This migration has already begun—we have all seen the streams of people fleeing drought-hit areas in Latin America, Africa, and Asia where farming and other rural livelihoods have become impossible.
The number of migrants has doubled globally over the past decade, and the issue of what to do about rapidly increasing populations of displaced people will only become greater and more urgent as the planet heats.
We can—and we must—prepare. Developing a radical plan for humanity to survive a far hotter world includes building vast new cities in the more tolerable far north while abandoning huge areas of the unendurable tropics. It involves adapting our food, energy, and infrastructure to a changed environment and demography as billions of people are displaced and seek new homes.
Our best hope lies in cooperating as never before: decoupling the political map from geography. However unrealistic it sounds, we need to look at the world afresh and develop new plans based on geology, geography, and ecology. In other words, identify where the freshwater resources are, where the safe temperatures are, where gets the most solar or wind energy, and then plan population, food and energy production around that…
…click on the above link to read the rest of the article…
Your Window Of Opportunity To Get Prepared Before The Catastrophic Events Of 2023 Is Rapidly Closing
I don’t know how I could say it any more clearly. At this moment, the vast majority of the population is completely and utterly unprepared for what is ahead of us. Every day, there are more signs in the news that global events are starting to spiral out of control, but instead of using this summer to get prepared much of the population is partying instead. This greatly frustrates me, because I have been working extremely hard to try to sound the alarm. People should be using the window of opportunity that we have this summer to take action, because the months ahead of us will be filled with famine, war, pestilence, natural disasters and severe economic troubles. Summer officially ends in late September, and I believe that global events will accelerate greatly throughout the remainder of 2022 and into the early stages of 2023.
Most people always think that they have more time to prepare.
But as the people of Mississippi’s largest city recently found out, the opportunity to get prepared can end very abruptly…
Mississippi’s largest city has run out of water indefinitely, leaving 180,000 locals unable to drink from their taps, flush toilets, or shower.
The ailing OB Curtis water plant in Jackson was taken offline after it was overwhelmed by recent flooding, which destroyed backup systems put in place to relieve the elderly plant’s main treatment machinery.
Now, the capital city that is home to 150,000 people and 30,000 surrounding communities are pressed to conserve their rations as officials begin to distribute cases of water bottles in a ‘massively complicated logistical task.’
We are being told that it could take up to four months to completely repair the water plant.
So what will all those people do as they wait?
…click on the above link to read the rest of the article…
Dead of Winter
“There cannot be a crisis next week. My schedule is already full.” – Henry Kissinger
In the United Kingdom, a grassroots protest movement has broken out in response to the ongoing energy crisis. With the bill from its failed national policies coming due, ordinary citizens are organizing campaigns to ensure they are not the ones left holding the bag. The mission of Don’t Pay UK is to gather at least one million commitments from Her Majesty’s loyal subjects to simply stop paying their energy bills as of October 1, 2022. At the time of this writing, Don’t Pay UK has passed 130,000 signatures. We expect that number to grow.
In reading a recent profile of the movement by Euronews Green, we were struck by the framing of the crisis by some of the movement’s organizers. This quote from the piece and the photo we have reproduced below caught our attention (emphasis added throughout):
“Lewis Ford, an organiser from Hull, agrees the movement is ‘a lot about solidarity’, especially for those forced to choose between heating their home and feeding their family.
‘We’re already talking about the idea of setting up warm banks, which is an absolutely preposterous idea,’ the 31-year-old IT consultant tells Euronews Green. ‘We’re one of the richest nations. So, it’s not like there’s no money, it’s the fact that the money is being kept in one space.’”
Unicorn hunter | Euronews GreenSadly for Mr. Ford and the well-intended but totally naïve young woman holding out hope that the unicorn concept of “cheaper cleaner greener” energy is actually a thing, they are both victims of insidious propaganda…
…click on the above link to read the rest of the article…
August 31, 2022
“Prepare For An Epic Finale” – Jeremy Grantham Warns Stock Market ‘Super Bubble’ Has Yet To Burst
Having infamously spotted and profited from bubbles in Japan in the late 1980s, tech stocks at the turn of the century and in US housing before the 2008 financial crisis, GMO’s co-founder Jeremy Grantham laid out in his latest note to investors why the “super bubble” that he previously warned about hasn’t popped yet (despite this year’s somewhat chaotic market behavior).
“You had a typical bear market rally the other day and people were saying, ‘Oh, it’s a new bull market,” Grantham said in an interview with Bloomberg.
“That is nonsense.”
Specifically, the 83-year-old investors says that the surge in US equities from mid-June to mid-August fits the pattern of bear market rallies common after an initial sharp decline — and before the economy truly begins to deteriorate; and sees more trouble ahead because of a “dangerous mix” of overvalued stocks, bonds and housing, combined with a commodity shock and hawkishness from the Fed.
“My bet is that we’re going to have a fairly tough time of it economically and financially before this is washed through the system,’’ Grantham said.
“What I don’t know is: Does that get out of hand like it did in the ‘30s, is it pretty well contained as it was in 2000 or is it somewhere in the middle?”
In his note today, Grantham warns that we are entering the superbubble’s final act…
Executive Summary
Only a few market events in an investor’s career really matter, and among the most important of all are superbubbles. These superbubbles are events unlike any others: while there are only a few in history for investors to study, they have clear features in common.
…click on the above link to read the rest of the article…
“How In The Name Of God”: Shocked Europeans Post Astronomical Energy Bills As ‘Terrifying Winter’ Approaches
Over the past week, shocked Europeans – mostly in the UK and Ireland – have been posting viral photos of shockingly high energy bills amid the ongoing (and worsening) energy crisis.
Several of the posts were from small business owners who getting absolutely crushed right now, and won’t be able to remain operational much longer.
One such owner is Geraldine Dolan, who owns the Poppyfields cafe in Athlone, Ireland – and was charged nearly €10,000 (US$10,021) for just over two months of energy usage.
Geraldine Dolan, of Poppy Fields Cafe, Athlone, with an electricity bill for just under ten thousand euro for two months. Photograph: Dara Mac Dónaill / The Irish Times Photograph: Dara Mac Donaill / The Irish TimesAs the Irish Times reports, “The cost of electricity to the Poppyfields cafe for 73 days from early June until the end of August came in at €9,024.70 an increase of 250 per cent in just 12 months. There doesn’t include the €812.22 in VAT, which brought her total bill to €9,836.92.”
“How in the name of God is this possible,” tweeted Dolan.
I got this electricity bill today, how in the name of God is this possible, we’re a small coffee shop in westmeath pic.twitter.com/uz5J8BePhB
— poppyfields cafe.
(@DolanGeraldine) August 29, 2022
UK pensioners are also facing a “terrifying” winter, as elderly Britons are about to get hit with an 80% rise in energy bills in October.
Elderly Britons are set to welcome a boost of around £1,000 to their state pension payments next year thanks to the return of the triple lock, however the cost of living crisis will still leave them significantly poorer.
However, the price cap for energy bills will rise by 80 per cent to £3,549 in October, and it is predicted to rise over £6,600 next year according to Cornwall Insight.
…click on the above link to read the rest of the article…
Greyerz – The US Economy Is Crashing But The Global Collapse Will Be Even More Terrifying
Today the man who has become legendary for his predictions on QE and historic moves in currencies and metals warned King World News that the US economy is crashing but the global collapse will be even more terrifying.
_____
“Everyone wants to live
at the expense of the
state. They forget
that the state wants
to live at the expense
of everyone.”
Frederic Bastiat
August 28 (King World News) – Egon von Greyerz, Founder of Matterhorn Asset Management (based in Switzerland): Contrary to what the wisest men and women in the land have told us, the world has been hit by the most vicious bout of inflation.
The “transitory” heads of the Fed and ECB clearly couldn’t recognise inflation until there was a scapegoat like Putin to blame it all on.
The fact that Powell, Lagarde and their predecessors had laid the perfect foundation not just for a small spell of price increases but for an unstoppable avalanche of global inflation, they were totally oblivious of.
NEITHER COVID NOR PUTIN IS THE CAUSE OF INFLATION
Let’s be very clear.
Covid didn’t create inflation.
Putin didn’t create inflation.
No, inflation is the result of governments’ and central banks’ irresponsible and totally irrational policy of believing that prosperity can be created out of thin air.
They don’t understand or at least choose not to understand that reckless creation of fake money that has zero value CREATES ZERO WEALTH.
Money in itself has ZERO value. Money is just a derivative that derives its value as a medium of exchange through the production of goods and services.
In simple terms, money that has derived value from anything but goods and services has ZERO value.
…click on the above link to read the rest of the article…
August 30, 2022
The Chris Hedges Report Podcast with Patrick Lawrence Examines How the Western Press Has Become a Propaganda Tool of the War Industry and Ukrainian Government
The war in Ukraine has exacerbated the loss of credibility within the western press, inflicting, journalist Patrick Lawrence argues, irreparable damage.
The Ukraine conflict has plunged the world into a geopolitical crisis. But this is not, as the writer Patrick Lawrence points out, the only crisis. The war in Ukraine has exacerbated the crisis within the western press, inflicting damage that he believes is ultimately irreparable. The press in the U.S. and most of Europe slavishly echoes the opinions of a ruling elite and oversees a public discourse that is often unhinged from the real world. It openly discredits or censors anything that counters the dominant narrative about Ukraine, however factual. For example, on August 4, Amnesty International published a report titled “Ukrainian fighting tactics endanger civilians.” The report charged Ukrainian forces with putting civilians at risk by establishing bases and operating weapons systems in populated residential areas, including in schools and hospitals, a violating the laws of war. To call out Ukrainian for war crimes, however well documented, saw the press and the ruling elites come down in fury on Amnesty International. The head of Amnesty International’s Kyiv office resigned, calling the report “a tool of Russian propaganda.” In one of the many broadsides the Royal United Services Institute in London wrote that “The amnesty report demonstrates a weak understanding of the laws of armed conflict, no understanding of military operations, and indulges in insinuations without supplying supporting evidence.” It is nearly impossible to question the virtues of Ukraine’s government and military. Those that do are attacked and banned from social media. How did this happen? Why is a position on the war in Ukraine the litmus test for who gets to have a voice and who does not? Why should a position on Ukraine justify censorship? Joining me to discuss these questions is Patrick Lawrence who a correspondent and columnist for nearly thirty years for the Far Eastern Economic Review was, the International Herald Tribune, and The New Yorker. He is the author of Somebody Else’s Century: East and West in a Post-Western World and Time No Longer: America After the American Century.
…click on the link above to listen to the podcast…
Heat Dome Bakes California As “A Lot Of Records Could Be Tied Or Broken”
A severe heatwave across California and the Pacific Northwest will test power grids this week and early next week.
Temperatures are forecasted to soar above 100 degrees Fahrenheit east of San Diego and Los Angeles, with areas near Palm Springs and Palm Desert exceeding 113 starting Tuesday, according to the National Weather Service (NWS). By Thursday, Sacramento could reach 105.
The heat dome will spread into Washington, Oregon, and even Montana, Brian Hurley, a senior branch forecaster at the US Weather prediction center, said, quoted by Bloomberg. He outlined:
“A lot of records are forecast to either be tied or broken,” Hurley said.
The blast of hot air will peak average California temperatures of around 85-90 degrees Fahrenheit on Sept. 5 and revert to a 30-year trend line of the low 70s by mid-month.
Average high temperatures in California could be near the triple-digit territory.
Californian residents will lower their thermostats to seek relief with air conditioners, boosting electricity demand.
Bloomberg noted demand on the state grid could reach 44.8 gigawatts on Sept. 4 and then stay elevated until the heat dissipates. Peak loads are expected early next week.
On a seasonal basis, California power prices are above a 10-year trend line due to the burst of hot weather.
California’s grid operator has postponed power-plant maintenance from Aug. 31 to Sept. 6 to ensure adequate power supplies.
“Don’t Be Fooled By Recent Strength… A Post-Dollar World Is Coming”
The currency may look strong but its weaknesses are mounting…
This month, as the dollar surged to levels last seen nearly 20 years ago, analysts invoked the old Tina (there is no alternative) argument to predict more gains ahead for the mighty greenback.
What happened two decades ago suggests the dollar is closer to peaking than rallying further. Even as US stocks fell in the dotcom bust, the dollar continued rising, before entering a decline that started in 2002 and lasted six years. A similar turning point may be near. And this time, the US currency’s decline could last even longer.
Adjusted for inflation or not, the value of the dollar against other major currencies is now 20 per cent above its long-term trend, and above the peak reached in 2001. Since the 1970s, the typical upswing in a dollar cycle has lasted about seven years; the current upswing is in its 11th year. Moreover, fundamental imbalances bode ill for the dollar.
When a current account deficit runs persistently above 5 per cent of gross domestic product, it is a reliable signal of financial trouble to come. That is most true in developed countries, where these episodes are rare, and concentrated in crisis-prone nations such as Spain, Portugal and Ireland. The US current account deficit is now close to that 5 per cent threshold, which it has broken only once since 1960. That was during the dollar’s downswing after 2001.
Nations see their currencies weaken when the rest of the world no longer trusts that they can pay their bills. The US currently owes the world a net $18tn, or 73 per cent of US GDP, far beyond the 50 per cent threshold that has often foretold past currency crises.
…click on the above link to read the rest of the article…
