How hilarious is the Federal Reserve's cattle drive of cash
money (i.e. "liquidity") into the stock markets? I'll tell you: if
that cash is outflow from bonds that pay ZIRP interest rates, then this
attempt to stampede investment into the stock market is only going to succeed
in ravaging the bond market and by extension the credibility of the dollar,
the US banking cartel, and then the world financial system as a whole.
If bond-dumpers rush into stocks, then who are the next bond
buyers at ZIRP? The USA can't keep going without continuous bond selling.
Somebody has to buy the darn things. The Federal Reserve is now buying around
70 percent of US issue -- a lot of it via secondary market pass-thru
shenanigans involving "Primary dealers" (a.k.a. Too Big To Fail
banks, who get to cream off a premium when they flip bonds to the Fed -- tidy
little racket). If the other 30 percent of issue can't find willing buyers at
ZIRP then interest rates will have to go up. If interest rates go up, then
interest paid out on bonds (that is "debt service") by the US
government will go up catastrophically, because the aggregate debt is so
colossal and most of the debt is short term, meaning that in a post-ZIRP
world the interest rate ratchets up automatically every 13 weeks as bonds
roll over. The US will then only be able to pretend that it can service the
debt at higher interest rates. Everybody in the world will recognize this --
surely only increasing the velocity of the stampede away from bonds. The
question is: how long can pretending to service debt go on before it is just
called by it's real name: default? Or, if countered with additional furious
computer "money" creation: hyperinflation? Either way, of course,
you end up broke.
This cattle drive into stocks is strictly a political gambit. The
cattle are being driven to the slaughterhouse. It's discretionary strategic
national financial suicide. They're driving up the stock markets for cosmetic
purposes, to make it appear that an economic recovery is going on, and with
the aim of setting in motion a self-reinforcing financial feeding frenzy in this
rush to "equities." By the way, in case my manner seems didactic
today I am attempting to define my terms as I go along because most other
financial bloggers seem to assume that ordinary people understand all their
jargon, which I am quite sure they do not.
Returning to my point... the Fed and
their auditors on Wall Street and in government, are jacking up the stock
markets in the hopes of stirring up "animal spirits," as the
financial psychologists say, to put over the story that it equals a vibrant
economy -- which is nonsense, of course, to anyone who shoots a casual glance
at the economic wreckage all around them. Anyway, since the stock market
action these days is dominated by high frequency trading robots running on
algorithms, where exactly would animal spirits even factor in? If
anything the absence of real animal spirits in this action also implies the
absence of its counterpart, animal survival instinct, of which human
intelligence is an order. What can come of stirring up animal spirits among
robots? A train wreck is exactly what.
Now, I ask you: at a moment in history
when vast interlinked global financial markets have never been so unstable,
so primed for unintended consequences courtesy of the diminishing returns of
technology, so ripe for a massive, cascading "accident," is it a
prudent thing to fuck around with such crude PsyOps?
One other factor outside pure
financials assures that US economic performance will remain impaired (that
is, the kind of economic activity we regard as "normal" (suburban
sprawl building, credit card "consumer" spending): the price of
oil, which is inching up to the $100-a-barrel hashmark. Apparently that shale
oil bonanza we hear so much about has not left the USA swimming in cheap oil.
As a general principle, it's probably safe to say that an oil price above $80
crushes the US economy. It drives up the cost structure of just about
everything we make, do, or sell here, but of course the primary things that
go up in price are food and motor fuel.
Hence, it's tragically ironic that --
getting back to official financial PsyOps -- that one of the primary motives
for the Fed keeping interest rates super-low in the first place (apart from
enabling wild fiscal irresponsibility in government) has been to promote the
housing sector -- because in the reality of our time "housing"
translates into building more suburban sprawl. How smart is it to promote
more suburban sprawl at a moment in history when there's no more cheap oil?
It is this kind of stupendous
foolishness that is putting the USA on the path of an epochal systemic
Did anyone notice how violent and psychotic the Superbowl
advertising was this year? An Oreo commercial that depicted a mob of nerds
destroying a library -- huh? The Doritos spot where "Daddy"
and his male buddies transform themselves into an insane clown posse of
cross-dressers. The Fast and Furious 6 trailer featuring the
destruction of every vehicle known to man and a few office buildings, too.
The third-quarter power failure was a neat harbinger of things-to-come in the
Most Exceptional United States of America. Party on, peeps!