Groundhog Day, But It’s The Economy

“You like Japanese sake, Mr. Bond, or would you prefer a vodka martini?” – You Only Live Twice

The economy also depresses me.  That’s why I drink a gallon of water before bed each night – so I have a reason to get up.

First, I want to pop a signal flare on behalf of Big Country Expat.  He was bananated off of blogspot®, and now has a new home here (LINK).  So, if you were looking for BCE, he’s surfaced.  Expect more of these flares in the future, because more folks will be kicked off of platforms as time goes on.

Okay, back to the blogging.

Back in 2018, 2019, there were few reasons to post contemporary economic posts.  I could do what I like to do best, sit back, research, think, and give a few strategic thoughts on what I thought the future would bring.  There weren’t a lot of stories of an immediate nature.  That had been true (more or less) going back to 2010.  The motions in the markets were longer, and we could take the time to post the waves, print bikini-girl graphs, and talk about the problems that were coming.

Why is our economy like a strapless bikini?  It looks like there’s nothing holding it up.

Now?

It’s that damn movie Groundhog Day.  I have folders of graphs on economic doom that, in a normal year, where each would be the biggest story in months.  In 2022, those stories are coming out every week.  Germany collapsing and all of their people are going to be cold in the 2022-2023 winter?  Check.  Britain collapsing and the latest prime minister wants to (spins wheel) import 50 million illiterate immigrants that marry their first cousins because that’s what will fix Britain’s problem?  People literally saying, “Global thermonuclear war?  Bah, that’s not as bad as COVID®.

I’m not even making the above three stories up or exaggerating it in any way.  The Babylon Bee in 2022 has become non-fiction.  I’m expecting Joe Biden to pull a rubbery mask off his face and reveal himself as the old man who ran the carnival.  He would have gotten away with it, if not for those pesky kids.

So, this week I’m just going to rant.  On (spins wheel) vodka.  “Vodka, it’s not just for breakfast anymore®.”

Our economic system before the Federal Reserve™ was a mess.  Why, people had to have actual gold to back money.  And if a bank got sideways?  It failed.  Talk about incentives.

Gold wasn’t the biggest of the pre-Fed© sins, though.  Regional banking centers outside of New York were taking a larger and larger percentage of the banking market. That, my friends was a sin.  If there’s money to be made off of charging people interest, and a New Yorker isn’t involved, that’s treason.

The Federal Reserve™ Act essentially stopped the growth of banking outside of New York like Kanye West would be stopped from attending a Soros-family bar mitzvah.  But that pesky gold remained.  So, FDR confiscated it.  All of it.

What did Obama use for birth control?  His personality.

Why?  So he could immediately make the dollar worth less.  It was a con.  But one he sold because (smoke and mirrors) I have no idea.  Seriously.  Maybe it was the equivalent of the COVID® panic back then.  If the American public had stormed the White House when FDR stole their money, lynched him, and then placed statues of Eleanor Roosevelt’s face on each coast to ward off evil spirits I think we’d be a better country.

But we didn’t.

I’ll skip ahead to 1971.  There are plenty of things I could complain about in the decades between the 1930s and 1971, but I don’t think there’s enough vodka in the house (only a few gallons) and my liver has indicated that it can only take these utter financial rants about once a year unless I switch to wine or beer.

But, I tell my liver, we already drank the wine and we’re saving the beer for . . . hmmm.  Why are we saving the beer?  Shut up, liver.

Regardless of my weak organs, in 1971 Nixon booted the dollar off of any convertibility to gold.  That was because the French had figured out the game:  they saw how many dollars that we were printing and wanted us to give them gold instead of dollars.  Nixon saw right through that (thank you, vodka!) and just said, “We’ll print all the damn money we want to, or I’ll send G. Gordon Liddy to eat France.”

If you ever feel useless, remember this:  France has an army.

Of course, inflation followed.  Jimmy Carter was an awful president, mainly because he wasn’t aware of what happened, why it was happening, what he could do about it, or  . . . wait, this is sounding like Biden, but Carter was actually smart and relatively virtuous.

Then we sailed.  Interest rates were raised, stopped inflation, and after two decades of high interest rates the currency stabilized to the point gold prices dropped and the biggest problems the country had were Hillary killing people and Bill Clinton having sex with anyone else besides Hillary.

Ahhh, brings back memories of a sillier time.

Pressure though, was there to inflate the currency.  That was built in.  Social Security and Medicare

Hang on.  Need more vodka for this.  Be right back.

Social Security and Medicare require a growing economy.  They require more people working than those that are receiving benefits.  But tax policy and birth control and Hillary Clinton’s Abortion Clinic® (Motto:  No human is too old to abort©!) made it important to import people to pay for this stuff, especially if they’d vote (D) in elections.

That made the economy less stable, rather than more.  But the Federal Reserve© retained two controls:  printing money, and interest rates.  Heck, the Fed© should call it, “This One Weird Trick Allows Us To Print Money Without Printing Money.”

That one weird trick is low interest rates.  When people borrow money, it actually is inflationary.  I could go into detail, but each $100 you have in a bank can be loaned out.  So, if you put $100 in a bank, you think it’s there.  In reality, it has been loaned out, so you think you have your $100 at the same time someone else is spending it.  There’s more to it than that, but I’m running low on vodka and, last time I checked, you have the whole Internet.  I mean, none of it is as funny as this place, but, you know, I have to leave room for other folks.

If you ever try to do yoga drunk, that can put you in an awkward position.

But that brings us to the Great Recession.  The Fed™ and Congress wanted everyone to own a home, so they created massive amounts of money through the magic of low interest rates.  Poof.  Then everyone wanted to buy six or a dozen houses because they never go down in value.

Then it collapsed.

The problem with a debt deflation as the loans collapse is that the cash supply collapses even faster than the Fed© can print it.  That’s the Great Recession.  So, the Fed™ tried to smooth things out by “dropping money from a helicopter” – which is a direct quote from the Fed© chairman.

It worked.  Sort of.  When you do things like that, it distorts the economy in a big way.  You bail out banks, but cause other people to fail.  But those people aren’t congressmen, so, who cares, right?

Again, it worked.  Sort of.  The problems with Social Security and Medicare remain, and are getting bigger.  We’re pretending that those things aren’t happening, just like I’m pretending that having Kamala within a heartbeat of the presidency is something that Jefferson, Adams, or Washington would be cool with.

Then, COVID.  Solution?  Print money.  Now, we’re back to inflation.  The solution is simple:  raise interest rates to the point where they’re larger than Barron Trump.  But we can’t!  Back in the 1970s when we played this game the first time, we had functional manufacturing and the undisputed strongest economy in the world.  It still almost wrecked the place.

At least Barron will never have microaggressions.

We’ve run out of places to hide.  Admittedly, this nonsense has gone on far longer than I expected it could already.  We are living in a time and place where we’ll see more changes in a year than we normally see in a decade.  Heck, we might see weeks in the near future where we see more economic changes in a week than in a decade.

I’ll admit, I do miss boring at this point.  But, I still have you, vodka.

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom - How to be happy and how to be healthy. Oh, and rich.

35 thoughts on “Groundhog Day, But It’s The Economy”

  1. 1- you put it all in a nutshell
    2- I keep trying to influence other bloggers to see how you communicate without inappropriate language

  2. And to add insult to injury we run a grift war in Ukraine to better shovel our taxes (but mostly MOAR Debt) into the mouths of our Congress weasels and their Military supply businesses.

    Sounds like there is some panic in Nancyville as cracks in the War Support are becoming more common. About 30 of the young democratic Turks wrote a letter against getting the USA nuked over Ukraine. A MASSIVE backlash occurred, and they withdrew it.

    So sadly, the chances of a false flag “Evil Russian” nuclear event is almost baked in the cake before election time.

    No doubt Aesop will be right here to “Correct the Narrative” in 3,2, 1…

    I wonder just how long Putin can keep HIS Hardliners under control and when America who hasn’t had war in our country since our Civil War ended in 1865.

    1. Posted too soon, sorry. America has not seen war in our country since 1865, I wonder how folks will deal with it not being Over Seas, on TV happening to little brown people (Or Russian Snow Niggers as some blogger would think).

      For now, American are enjoying their Ukranian Military Sports ball, cheering on their team.

      Pretty soon it will get much more realistic.

      Pray for wisdom, real trouble is nearby.

      1. For values of war. Argument can be made that our dear gov is at war with us. Antifa and BLM riots and stuff. Bless their little hearts.

      2. America has not seen war in our country since 1865.
        Columbus, NM left a message. Something about 1916.
        Honolulu would like to have a chat with you about late 1941.
        So would the people who collected dead sailors washed ashore after being sunk by U-boats off the US east coast in WWI and WWII.
        Then you can talk with your parents about that bomb shelter they were digging in the back yard in 1962.

        America hasn’t seen a Civil War since the Civil War. So what?
        The level of violence in any number of places time and time again is why it was embarrassingly but accurately reported that citizens in Chicongo in the 2000s were at greater risk of getting shot and killed than combat troops in Fallujah.
        People that “haven’t seen war in this country” haven’t been paying close enough attention.

        And as for “false flag” nuclear events, you might want to get up to speed on current events – from 1991.
        https://mcthag.blogspot.com/2022/10/i-wonder.html
        Your comments to that post two days after this one don’t negate the original problem, but rather underline the problem with the very idea.

        Nuclear war is always an annoying reality, but we lived with it up close and personal from the late 1940s to 1990, and it didn’t go away entirely then, it just ratchetted down a notch. Until Putin.

        If you’re just now noticing nuclear conflict is a problem, welcome to the party, pal.
        It’s been a problem since we lost the monopoly in 1949, and will be a worry in perpetuity.

        You’re worried about US aid to Ukraine? $17B or so?
        I can see your point. That’s almost as much as we spent on welfare in this country…in 3 days. And all we’ve gotten for it is the utter destruction of 10% of all Russian standing military forces, and their total humiliation and impotence displayed on the world stage.

        Whereas spending 100 times as much on welfare, every year in your entire lifetime, has gotten us…wait for it…59,000,000 people on the welfare dole – 19% of the country’s population – who all vote for a living instead of working for one. Such a deal!

        IOW, we could pay for all US aid to Ukraine by suspending only 2% of welfare payments next year, and the US budget would actually go down.

        How does it feel to be the guy looking at a 10-course Thanksgiving feast on a 20-foot long banquet table given away to the shiftless 24/7/365, and bitching not about the extravagance of the silverplate on the napkin rings, but over the US sending Ukraine a case of MREs??
        That’s the narrative you’re pitching.

        Anytime you want a serious chat about misplaced government spending priorities, give a holler.

        If Ukraine had kept half a dozen nuclear weapons in 1991, Russian troops would still be in Russia, Vlad would be pissing up a rope, and Eastern Europe would be at peace.

        Even lions don’t eat porcupines.

    2. Yeah, we’re walking right into this, when if we leave it to the Ukrainians and Russians this is (for them) a local matter.

  3. In Spring of 2021 chose not to do a 1031 on a commercial property sale, as wanted to buy a coastal SFR rental where I now live. Bid anywhere from $5-10K over listing, cash sale. Lost out 3 times, I gave up.

    Each was bought by a NYC based LLC at 10% above listing (+/- $25K). I’d be holding the bag if they didn’t overpay. Sometimes you get lucky.

  4. Actually, there is one place left to hide and keep the con going just a little longer. That place is overseas.

    When Nixon dropped the backing of the US dollar by gold, he also actually transferred the backing of the dollar to oil. The deal was made with the Saudis that the US would defend them from the boogieman Soviet Union as long as they agreed to price their oil only in dollars and reinvest their profits into US Treasury debt to keep funding the US Government. What a deal: the Saudis formed OPEC to maximize their profit on the con, vast cities of wealth got built in the most God-forsaken corner of the planet, the US taxpayers didn’t have to pay as much by letting the Saudis pick up the ongoing election promises bribe tab, the US government got its debts covered, and the guys that manufactured zeros for use in calculators made a killing as that debt spiraled up to $31 trillion today. Everybody was happy.

    Except for the people who were no American or Saudi.

    If you were foreign and had oil on you land and tried to beat this con by trying to sell your oil in a currency other than dollars, (euros, say, or grams of gold) America crushed you with either outright invasion (Iraq and Libya) or crippling sanctions (Iran, Venezuela and Russia). The American Government always a high sounding noble reason for these deadly shenanigans that the American People swallowed uncritically as long as that yummy oil – and associated petrodollar goodness – kept flowing into the land of the Free and the Brave.

    If you were foreign and DIDN’T have oil, poor you. Because the petrodollar made the US Dollar into the International Reserve Currency, you had to have a national savings account (for example, so called Sovereign Wealth Funds) holding dollars to transact international business. So some (a lot) of those dollars the Federal Reserve printed from thin air were sold to YOUR country in exchange for MORE US Treasury debt – squeezing still more goodness out of the petrodollar con, see above. Also, that “money from thin air” didn’t become AMERICAN inflation…it became YOUR inflation. Thus the meme that “America manufactures and exports inflation”.

    Only now, the jig is up. This whole global Ponzi scheme requires eternal, never-ending growth to keep its head above water. That growth has stalled. The Fed has printed SO MANY dollars from thin air that inflation is not only rampant overseas but (gasp!) also right here in the Land of the Free and the Brave. So the Fed is raising interest rates. This is bad for Americans…this is fatal for The Rest Of The World. They can’t get the now-more-expensive dollars they desperately need to keep their economies afloat. Germany, Britain, Japan, China – all are on the verge of literal national economic collapse. One upcoming cold winter should do the trick….

    And when they go down, who’s left to but US Treasuries to keep the party going that the US taxpayers don’t want to (er, can’t) fund?

    Nobody.

    So welcome to MMT – no, not Modern Monetary Theory. MMT really stands for Mad Max Thunderdome.

  5. John, regarding Medicare and Social Security, I wonder if one unanticipated impact of The Plague and the resulting “We Have To Destroy The Economy To Save The Economy” is that more people than anticipated looked around, looked at their age, decided ‘Why not now?”, and just retired, putting additional draw on the system. If I were 10 years older than I am now, that is exactly what I would have done.

    The other thing that has set our course is the fact that we are terribly dependent on people buying things to make our economy go. If people think it is awkward now, imagine when they suddenly find that in a recession, people do not buy much of anything besides the necessities at all.

    1. Unless I’m sorely mistaken, the economy consists entirely of:
      1) People making and selling things.
      2) Other people buying those things.

      Without one, you can’t have the other. Of course, the things could be made elsewhere and sold here, or made here and sold elsewhere…

      1. It’s actually just:
        1) People making things, and trading them with:
        1) People making other things.

        “Money” is just a convenience for defering half of the trade. Ultimately, you can’t buy things if you don’t make things.

    2. TB, I am one of those, back in March of 2021; preparing for retirement later that year. I was told I’d need the vaccine to continue, I declined to acquiesce and walked out, approximately 6 or 7 months ahead of my plan. My advice to anyone else considering retirement – retire. Not kidding, don’t figure or do math or whatever; you are NOT guaranteed tomorrow; retire now. There are so many work from home options, but if you have to consider your budget – start with what it costs you to continue working. Fuel, car maintenance, etc, let alone what it takes out of you physically, mentally, and spiritually. Retire now, thank me later.
      Original Grandpa

    1. Popov, the vodka of Cleveland, $16 per 1.75 liter (a little under a half gallon) bottle.
      It was $4 per gallon when I was in college.

  7. I’m on vacation next week, and with the impending diesel shortage, I’m tempted to buy a few of those plastic gasoline containers and fill them up just in case. I hate having to worry about this shit.

  8. “Heck, we might see weeks in the near future where we see more economic changes in a week than in a decade.” I just love it when you’re optimistic. And then there was the China market dump on Monday. Heh. Reminds me of a recent meme. New word, Apocoloptimist: when you know things are going to SHTF but still think they’ll turn out ok.

  9. Just a friendly reminder: Your bank doesn’t merely lend out your $100. For every dollar you have stashed away, your bank lends out $100. That’s $10,000 lent per $100 deposited.

  10. Life is certainly getting exciting. I have heard no further updates about the damage to the Nordstream gas pipelines. Looks like that has gone into the memory hole. I suppose there are people who do not consider it important, but where I sit it makes a difference.

    By the way, “I have folders of graphs on economic doom that, in a normal year, where each would be the biggest story in months.” Looks like you took a break in the middle of this sentence.

    1. Huh. You may be right about the memory hole. I had to go to Bing to find this link to an interesting Medium.com article I had previously read, after Google wouldn’t show it to me after searches on “medium.com nord stream SEAL shaped linear charge”. Anyway, here ya go:

      https://medium.com/@Ponderosa_Pine/nordstream-retired-navy-seal-says-it-was-not-a-pig-blast-was-external-221731f12f99

      Despite what the author of this article insinuates, I personally still think it was a US operation, probably by proxy. If true evidence had been found that it was indeed a Russian operation, I believe this fact would be on the news cycle 24/7. The fact that it’s not speaks volumes to me.

      The war drums keep sounding their beat. We’ve now got 4700 “Screaming Eagles” US soldiers from the 82nd Airborne stationed three miles from the Ukranian border, with Petraeus saying they should be utilized as a “non-NATO multinational peacekeeping force”. We are playing a very dangerous game here to get energy expert Hunter Biden back to some Burisema conference room in Ukraine.

      https://www.theamericanconservative.com/playing-at-war-in-ukraine/

  11. More changes in a year sounds like a quote by Vlad Lenin.
    The CPUSA (D) will exploit it all to consolidate power now that terminal Peak Stupidity is the default setting.
    The Brawndo haulin’ ass gettin’ paid I like money comony? Printing press go brrrr but at least we can pretend to tweet in first amendment peace now that the NATO/WEF historic kitchen sink czar is here with some technocratic snake oil.

  12. Groundhog Day© ?

    You’re soaking in it.

    The First ‘Universal Basic Income’, UBI.?
    https://www.history.com/news/first-social-security-check

    Been a decade+ since i ‘looked’, NOT even sure ya could ‘Find’ it now, not worth the effort.

    EVERY PENNY ‘contributed’, You/Employer? ‘Withdrawn’ 3 – 5 Yrs. Ida May Fuller made out OK, quick read. The Irony/Coincidence (life-long Struggle) of Her Initials?

    https://www.imf.org/en/home
    https://en.wikipedia.org/wiki/International_Monetary_Fund

    The Student loan Debacle? Its Genesis?
    https://www.archivesfoundation.org/documents/g-i-bill-rights/
    SAME ‘Group of People’. BOTH ‘Issues’.

    REALLY got the anti-moss movement headed downhill, like swine to the:

    Matthew 8:32 “And he said unto them, Go. And when they were come out, they went into the herd of swine: and, behold, the whole herd of swine ran violently down a steep place into the sea, and perished in the waters.”

    Luke 8:33 “Then went the devils out of the man, and entered into the swine: and the herd ran violently down a steep place into the lake, and were choked.”

    No Need ta mention the preponderance of the Incredibly Stupid blissfully ‘Unaware’ of HISTORY, (or anything else, INCLUDING their ‘Job Tittle’) that got °’s.

    Maybe? The New & Improved TRANShumans will have Gills as an intermediate step in Our ‘Evolution’ ?

    Spent MANY Yrs. of my ‘Adult’ life wondering/wandering WTF?, Once i could pull my nose slightly away from the GRINDStone™. Unable to make SENSE of the
    Who’s/Why’s/Wherefores/Therefore’s…Big Shout-Out to algore. The FRESHMAN senator who
    procured funding for ARPANET, DARPA,Whatever invented the Internet.

    Not quite 2 yrs. in.

    https://bible-studys.org/ Recommend ‘About Me’ for starters when available, but that’s just me. i don’t feel that there is any such thing as ‘Too Much Information’, and it will give one a ‘Feel’ for the Individual, IMHO.

    Strictly KJV. ‘Ye Olde Engrish’ getting easier. Fascinating site, ‘Explanation/Interpretation’, Verse-by-Verse, that certainly doesn’t hurt, plain English.

    1 ‘Book, 2 Verses’ in particular that STAND Out?

    Isaiah 55:8 “For my thoughts [are] not your thoughts, neither [are] your ways my ways, saith the LORD.”

    Isaiah 55:9 “For [as] the heavens are higher than the earth, so are my ways higher than your ways, and my thoughts than your thoughts.”

    i Refer to those 2 (and surrounding text) quite Often, @ mental impasse. Slow Learner.

    A YUUGE additional 2 items: (Daniel & Revelation. Cliffs Notes Equivalency)

    Revelation 2:9 “I know thy works, and tribulation, and poverty, (but thou art rich) and [I know] the blasphemy of them which say they are Jews, and are not, but [are] the synagogue of Satan.”

    Revelation 3:9 “Behold, I will make them of the synagogue of Satan, which say they are Jews, and are not, but do lie; behold, I will make them to come and worship before thy feet, and to know that I have loved thee.”

    Fairly confident that the readers here, @least occasionally, Check Out:

    https://www.winterwatch.net/

    https://www.unz.com/

    Among myriad others. Suggestions Welcomed/Solicited.

    “Cowboys & Indians”? seems like Round #2 is on the Event Horizon as well.

    Definitely a ‘Target Rich’ Environment, but NOT my place to Judge. Self Defense is COMPLETELY Different.

    The ‘Cowardly’ French?

    Various References to The 3% (most commonly cited, from memory) Who MADE ‘all the difference’ in THIS Country, ‘In The Beginning’.

    Their Cohorts in France? might have been smarter.

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