Wednesday, May 12, 2021

The Fed Rules The World-And You Are Stuffed


"The next year or so will show if there is, or ever was, "the laws of economics" or if a new paradigm is in place and the textbooks have to be tossed aside.

We shall see how the laws of economics hold up against US$2trillion of Reserve Bank created money on top of the trillion already spent and the 2 trillion of infrastructure spending to come, all this at a time when the economy is recovering anyway as Covid winds down. 

We shall see, as orthodoxy advises, if the massive circulation of money equals inflation, whether there actually is a "low level of unemployment that will cause inflation" and if there actually is no level of deficit spending and money creation that will cause inflation anymore when the creator of money is also the world's reserve currency-so far inflation, at a level to cause economic disruption, is utterly dead."

I said that we shall find out if classic economics has been upended-the answer has come sooner than I expected. The massive Fed money printing has fed through into inflation. Corn, a basic staple, is up 50% and the crazy situation is a massive labor shortage causing supply chain bottlenecks (as people are, rightly, happy to earn more in handouts than they can get in low paying jobs) with a rise in the unemployment rate! 

When this feeds into mortgages the pain will be severe for those who have borrowed so heavily against the crazy rise in house prices. The Fed rules the world, when they get it wrong everyone suffers.

I can understand financial ignorance and financial greed but can't comprehend how, as attached, numerous professional financial advisors can, over and over, pursue "14% p.a. continuous returns year after year from "Master of the Universe" and take down "high net worth individuals who have blocked their names" as well as establishments all of whom should know better and have endless examples going back to Bernie Madoff.

Managed funds  and one's own home are, over time, the best- for those who can invest.

This latest and surely most comprehensive research might interest as it gives an apparent final figure on stock market returns.

"The stock market’s has produced an inflation-adjusted total return of 6.0% annualized since 1793, according to research conducted by Edward McQuarrie, a professor emeritus at the Leavey School of Business at Santa Clara University.

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