What Could Go Wrong?

The comments above & below is an edited and abridged synopsis of an article by James Howard Kunstler

Jerome Powell, the next Fed chairman, once said that the lack of inflation is ‘kind of a mystery.’ Perhaps, but the money pumped out of the Fed and other central banks flows to only two destinations: the bond and stock markets, where it inflates bubbles that have no relation to economies where people have to make and trade things.

What Could Go Wrong? | BMGPowell might have declared contemporary finance itself a mystery, because it has been engineered to generate revenue streams. The rich get richer on revenue streams of air, and there is a lot of distance between the air they’re suspended in and the ground below.

Powell noted that the economy is growing robustly and unemployment is low. Like his colleagues in the investment banking community, he’s making it all up. If you’re going to lie, make sure it’s a whopper.

The economy isn’t growing; it has died. Stocks go up because the low interest rates established by the Fed allow company CEOs to lever up issuing bonds (i.e. borrow money from investors) and then use the borrowed money to buy back their own stock to raise the share value, so they can justify their companies’ boards of directors jacking up their salaries and bonuses, based on the idea that higher stock prices represent the creation of more actual things of value.

The economy is contracting because we can’t afford the energy it takes to run the things we do; and unemployment is not historically low, it’s simply misrepresented by not including the tens of millions of people who have dropped out of the work force. Meanwhile, the news business looks the other way. If any reporters understand what is at work in the finance world, they’re afraid to say. The companies they work for are dying, like so many other enterprises in the non-financial realm of the used-to-be economy, and they don’t want to be out of paycheck until the lights go out.

The narrative is firmest before it its falseness is proved by the turn of events, and there are an awful lot of events out there: the debt ceiling; North Korea; Mueller; the state pension funds. What could go wrong?

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