Cattle Drive
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 collapse.
Superbowl addendum:
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!
