It’s All A Big Lie!
As a youngster, I’d go with my grandmother to the grocery store pulling my little red wagon. We’d load up the groceries and tow them home.
With each trip she became more furious about food prices; “Prices are outrageous! We used to have to haul $25 in groceries in the wagon; now you can carry them home!”
I chuckled when friend Chuck Butler wrote in the Daily Pfennig about the debt escalation farce:
“I’m not a fan of the Fed/Cabal/Cartel.… But more so recently, because of their lies and misdirection. Here’s the skinny folks – inflation is the only way we, as a country, will ever pay down some of our debt. The Fed Heads know this, but won’t admit it.
So, what they do, is pretend that they are out to fight inflation, and then they jury-rig the inflation reports that show that they are winning the battle with inflation….
|“There are three types of lies: lies, damn lies and statistics.”
— Benjamin Disraeli (1804-1881)
In reality inflation is winning, but for the general consensus of people, they believe the Fed Heads…and that all’s well….
It’s ALL A BIG LIE!
|So, you go to the grocery store and you find that $100 of groceries fit in one bag, and you think, “well, this is better than it was last year!” When in fact it’s not!|
.… That’s the game, so don’t believe what you hear on TV, read in the paper, about how the Fed Heads are defeating inflation….”
John Williams at ShadowStats agrees. The phony numbers began in 1980; real inflation is still well above double digits:
It’s time to check in with Chuck.
DENNIS: Chuck, thank you for your time in helping to educate our readers.
The debt escalator only goes one way – up. Wolf Street projects the government “Holy-Moly” debt/interest expense to skyrocket now that the phony ceiling has been lifted:
Since 2019 we’ve added 50% to the national debt.
Current interest rates will add billions in interest cost to the budget. You feel the only way the government can deal with the debt is continued inflation.
It looks to me like tough choices/consequences lie ahead.
Ray Dalio’s latest book, about The Changing World Order, goes through history, all the way back before Christ was born. He’s discovered similar patterns to every rise and fall of Empires….
Here’s one quip that hits home today:
“When debt assets and liabilities reach the point that the amount of debt sold is greater than the amount of debt that buyers want to buy, central banks are faced with a choice: they either have to let interest rates rise to balance the supply and demand, which is crushing to debtors and the economy, or they have to print money and buy the debt, which is inflationary and encourages holders of the debt to sell the debt, which makes this debt imbalance worse.”
Doesn’t this sound like what’s happening to our Empire? We’ve allowed deficit spending to reach unsustainable levels, and now we’re left with the costs associated with these debts.
Despite their rhetoric, they know inflation is the choice of the banks and politicians. I shake my head in disgust, at the way our so-called leaders, have ruined our country’s future…
DENNIS: There’s an unwritten rule that citizens will storm the palace once politicians try to reduce their “free stuff” handouts. France had riots when they tried to change the retirement age.
Might this also be true in business? The banks and big business have been getting trillions in interest-free money for over a decade. They are already screaming.
As Dalio mentioned, isn’t there still plenty of money for corporate America, it is just no longer free? Someone is going to have to be weaned off the free stuff….
Am I off base?
CHUCK: Not sure if you’re off base – but with Corporations it’s different; they are HUGE compared to mom and pops. The problems they face will be mitigated by their ability to announce bankruptcy, leaving stockholders and creditors holding the bag when they walk away from the mess.
Bankruptcies in the U.S. are piling up as I write. We recently saw an all-time record number of bankruptcies filed in one day! Ask yourself how did that happen? Well, sit back grasshopper, and listen…
These corporations had multiple years of free stuff; easy credit, no-cost loans, and plenty of cash…. And what did they do? Did they expand their businesses? Did they buy new machines, or assets to improve their business? No…. They got loans for zero cost, and they spent the money on stock buybacks and dividends.
Now the loans are coming due, and guess what? The loans aren’t zero credit (free) any longer…. The Corporations look at their balance sheet, and decide, it’s time to fold…. That’s it in a nutshell, folks.
Of course, they are going to be screaming, the government is taking their free money away. I’m not taking any bets on the Fed and politicians standing firm in the face of the corporate outrage.
DENNIS: Former Israeli Prime Minister Ehud Olmert said, “Leadership is tested not by one’s capacity to survive politically, but by the ability to make tough decisions in trying times.”
The “Debt out the Wazoo” chart, outlining continual raising the debt ceiling, is a result of the political class avoiding tough decisions.
Congresswoman Virginia Foxx said, “If we do not make tough decisions now, future Americans will have to make even tougher ones.”
These are trying times, calling for tough decisions. What must be done?
How do investors protect the value of their nest egg?
How do retirees pay their skyrocketing living costs?
Luckily there’s a proven way for you to stay ahead of inflation, just like 20,000+ investors are doing right now…
Here’s how you can be one of them. Click HERE for more information.
CHUCK: The rising interest expense is going to force the government into making some tough, politically difficult choices. Raising the debt ceiling is NOT a tough choice as explained in my 5/31 daily letter:
“For What It’s Worth…. This is an article that explains the debt escalator situation, and points out that the rating agency, Fitch, has already downgraded the U.S.’s outlook to negative.…
It became the first I’ve seen in mainstream media to admit that failure to raise the debt ceiling does not inevitably lead to a credit default, noting that a default would only happen if the US chose not to prioritize debt payments over other expenses. So, there it is. Someone has finally said it in the mainstream media….”
Politicians always try to push off tough choices to future generations. We are faced with tough decisions as a result of irresponsible politicians. Hopefully the days of free money are over. What seems like common sense to you and me, will not make sense to politicians and the mass media.
According to the Cato Institute, Federal spending increased 40% since 2019.
David Stockman ran the numbers:
“Every month the feds receive about $450 billion in tax receipts. The net interest payments on the debt are just over $60 billion per month. Social Security is $128 billion. That leaves $262 billion available for whatever foolish thing the feds want to spend it on. In fact, it leaves plenty to run the entire government in the style to which it became accustomed in 2019, which was no mean and lean year.”
If they just froze spending at 2019 levels, things would work out.
Nothing is simple when you have politicians unwilling to make tough decisions, and do what is right for the country. Everyone agrees, the cost of government should be cut…as long as it is not in their backyard. Establishing priorities will lead to many more lies and a political dogfight.
DENNIS: One final question. I’m concerned the Fed, yielding to pressure from their member banks, will not exhibit Volcker-like courage and see things through.
Do you see a rate pivot coming? If so, what would the result be?
CHUCK: Dennis, thanks again for the opportunity to address your readers.
Right after the recent Fed announcement, I wrote, The FOMC Changes Words From Pause To Skip…. It looks like more deception to me:
“I get it, why the Fed Heads might want to take a pause…to see how their previous 10 rate hikes are doing, get a month or two of fresh data, and then decide about whether to hike rates again or not.
…. Expecting to hike rates 50 Basis Points within this calendar year, I say…. Balderdash! By the time we get two months out, the stock market will be back to daily gains, and I doubt the Fed Heads will want to upset that applecart….”
As to your question, I don’t see the Fed/ Cabal/ Cartel pivoting in 2023… That is unless the economy goes to hell in a handbasket. I could be wrong.
But IF, the Fed Heads decide to pivot after all their work in getting to 5% to combat inflation, it would be like jumping in the shark tank…. I’d expect to see a return of much higher inflation….
Before the 2008 bailout, 5% rates worked fine and were considered normal. They could just “permanently skip” more increases.
For years I’ve said we are in a very bad situation. Our only choices at this point are to either inflate or die…. Think about that and it should move you to this question…. Got Gold?
Dennis here. As always, Chuck gets to the point.
Politicians are already feeling voter anger about inflation. As interest continues to eat a larger chunk of the federal budget, expect more lies and constant political melodrama. In the meantime, I’m with Chuck – Got Gold?
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On The Lighter Side
This has been a significant week for our family. Daughter Holly and her husband Casey took grandson Braidyn to Indiana State for his freshman orientation.
To paraphrase Neil Armstrong, “One small step for man, one giant step in a lifetime.”
It seems like yesterday I was carrying him around showing him cool Christmas lights. Now he is 18 and ready to go off on his own; a milestone for all. Where did the time go?
This week I’m flying back to Arizona with Jo and grandson Brock. I have trips to the cardiologist, urologist and oncologist scheduled in the next few days. Cancer was starting to “sparkle” last trip and we need to see what is going on. There is a good chance they will change the medication, more frequent trips to the cancer center, and see how the body reacts.
Friend Chuck Butler has been doing this for almost 15 years and is now on his 6th different type of treatment. Just keep on trucking.
In the meantime, there are plenty of cool things we can do with Brock; might even make it back to the Grand Canyon.
Kinda sorry to leave Indiana, much of Jo’s gardening handiwork is starting to show. In the next few weeks, I anticipate the yard will be in full color. Not sure when we will return, hoping to be back in time to enjoy all the beautiful flowers. We are keeping our fingers crossed.
Quote of the Week…
“Make every day count. Appreciate every moment and take from those moments everything that you possibly can, for you may never be able to experience them again.”
Friend Tom G. shares some more cute puns:
- A man’s home is his castle, in a manor of speaking.
- Practice safe eating – always use condiments.
- When two egotists meet, it’s an I for an I.
- Local Area Network in Australia – the LAN down under.
- Every calendar’s days are numbered.
- Once you’ve seen one shopping center, you’ve seen a mall.
- Bakers trade bread recipes on a knead-to-know basis.
- If you don’t pay your exorcist, you get repossessed
- Does the name Pavlov ring a bell?
And my favorite:
- A midget fortune-teller who escapes from prison is a small medium at large.
Until next time…
“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken
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