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Thread: You cannot ignore economic reality.

  1. #631


    Quote Originally Posted by brutus2 View Post
    If you believe that the ' Holy Trinity' in the world of today's economy, works in cooperation with each other ( Treasury/Fed/2BTF banks) then then this hypothesis may have some merit for you.

    Hypothesis: They are all working in concert to keep the 'husk' in power, ( or one of equal compliancy ), while giving the impression they are conforming with their mandates, and assisting in maintaining and growing a reasonably prosperous economy for all.

    Lets look at each one and their leaders. The motive and the action.

    Fed. Continues to shrink its bloated balance sheet ( very, very slowly vs how rapidly it increased it), and has raised rates aggressively ( after keeping them way lower than it should have for many years) and is probably going to start cutting them sometime in the near future. Their leader = Jerome Powell's term is up in mid 2026 and it is doubtful he would be given a third term by DT.

    Synopsis - They are the vehicle the main stream press can point to and say, see we are being tight and are trying to reign in the excesses of 2000 to 2021. The Fed can freely take a tight stand knowing how much ammo they had stocked in the reverse repo ( originally trillions) and that the other 2 of the HT are acting together to more than offset this tightening. .
    Also, obviously JP would stand a better chance of a 3rd term under a democrat or someone other than DT, should he want to do so.

    Treasury: I have run the numbers since the end of fiscal year end 09/30/2023, and the debt spend continues to amaze me, as it has all calendar year. It is running at a 15% of GDP clip so far 47 days into the 91 day 1st quarter of the new fiscal year. That is just crazy as the Atlanta Fed is saying GDP will be 2% and lets say inflation (cooling somewhat) will be 3% by their measurement) so that is a nominal GDP increase annualized of 5%. It is supposed to be lower than 5% in good times or certainly no greater than the 5% to maintain debt/GDP ratio.
    That is 3X higher and hugely stimulative. It is hard to believe this pace can be maintained but even if halved it would be extremely high and make the economy ( temporarily) better looking than it really is ( actually dead man walking without this and the below) This also factors out any money borrowed that was not spent ( 42 billion)

    The 'husk' is the obvious beneficiary of this or his successor, - The Fed can look tough without damaging the economy too much and the 2BTF banks benefit from all the money floating around. Janet Yellin would obviously not be reappointed if DT won.

    2BTF banks - you continuously hear how tight credit is or how it is tightening yet I follow the industries own index and it is loosening and has been relatively loose for some time.


    Index Suggests Financial Conditions Loosened Again in Week Ending November 10

    Contributions to the NFCI and ANFCI
    The first two columns in the table below denote how many series of the 105 used to construct the NFCI and ANFCI indicated tighter-than-average or looser-than average conditions in the most recent week. The latter two columns indicate how many of the 105 indicators have tightened or loosened in the past week.

    11/10/2023 Tighter than average Looser than average Tightened Loosened
    NFCI 8 97 46 59
    ANFCI 8 97 46 59


    When you have lots of $ being pumped into the economy by Fiscal ( increasing deficit) and credit conditions relatively loose, it is going to be hard to have a recessionary economy at least in the short term. Problem with a junkie, they keep needing more and more for the same effect.

    Synopsis: The 2BTF banks love lots of $ and they love big government as they benefit the most from it ( Facism/corporatocracy) .
    So although both parties are complicit, most would agree that the 'husk' and or the democtats would be more conducive to this than DT.
    ( even if they would be equal in this, most would prefer what you know to what may be. )

    So what do you arrive at. Keep the economy reasonably healthy until November, 2024 while giving the appearance of forceful guidance by the Fed. ( independent from the others - fall off my chair laughing)

    Just a possibility to explain the strange going ons that are differing so much from what many very smart people have anticipated the past year or two.
    This hypothesis is mine only, as far as I know, so it does not come from a smart or in the know person, just a suspicious one.

    So it continues, but it is a race to the finish line that I think the establishment is not going to win, so they probably have a backup plan.

    TGA beginning of fiscal year 657 billion
    TGA end of November 759 billion ( TGA is the cking account of treasury and 2 months into fiscal year)

    Public debt start of fiscal year - 33,167 billion
    Public debt end November 33,879 billion

    So 712 billion borrowed of which 102 billion is unspent (+TGA) so net spent 610 billion

    GDP of US economy is at most 27,750 billion so 610/27,750 or 2.2% but have to multiply by 6 to annualize, as only 2 months. So 13.20% annualized

    So Atlanta Fed current GDP forecast is 1.2% annualized and dropping like a rock. CPI will be very low this quarter and I doubt will exceed 2% considering October was 0 (government numbers) So It is unlikely the nominal increase in GDP will exceed 3.2% for the 4th quarter. This is a very low number. ( It may be a lot lower)

    Traditionally you have debt to GDP growing at less than nominal GDP during good times, about the same in normal times and a lot higher in bad times. (2 instances)
    This just makes sense, assuming you are into big government, which i am not, but that is what we all have.
    In the 21st century ( the era of CB control) it has been tilted a little towards debt, but not all that much for most of the years. They just forgot to pay back the bad time deficits with what should have been the good time surpluses, and went bat s-it crazy in the 2 bad times.

    Now 13.20% debt/GDP vs a probable 3.2% nominal GDP growth is a crazy number. Even if this subsides to 9%, given more time, it is still crazy. It is even more crazy when you hear the government, and many mainstream pundits and shrills claim the economy is wonderful, or at least fine.

    UNLESS THE US ECONOMY IS IN A REALLY BAD PLACE and the government(along with the 'club') are doing all they can to mask it.

    Going to be a wild ride in 2024. In more ways than I am sure we can imagine.

  2. #632


    Thomas Jefferson is credited with writing, “When injustice becomes law, resistance becomes duty.” The seceding states in the Civil War period issued a similar declaration using the word “tyranny” as opposed to “injustice.”

  3. #633
    Join Date
    Jan 2010


    Quote Originally Posted by vertical1 View Post
    Sometimes I kinda "get it" and then it all slips away. I'll have to review this a hundred times, I think, before it (somewhat) sinks in.

    I wish he had a "course" he'd conduct with slow examples and clarifications for me to review.

    Perhaps, some of you smarter folks on this subject my offer a "tip" or two to help me along. I am genuinely interested in understanding "the casino" game he reports on. I get "some" of it. I need more.
    Who are the righteous? ....Markpti

    What value did Burisma think to gain by hiring Hunter Biden as a Board member vs ALL other choices?

    Those who cannot articulate the other argument do not fully understand their own argument.

    "Much can be done by wise legislation and by resolute enforcement of the law. But still much more must be done
    by steady training of the individual - in conscience and character...." .......T. Roosevelt

  4. #634


    Quote Originally Posted by Markpti View Post
    Sometimes I kinda "get it" and then it all slips away. I'll have to review this a hundred times, I think, before it (somewhat) sinks in.

    I wish he had a "course" he'd conduct with slow examples and clarifications for me to review.

    Perhaps, some of you smarter folks on this subject my offer a "tip" or two to help me along. I am genuinely interested in understanding "the casino" game he reports on. I get "some" of it. I need more.
    YES agree Markpti....terms and speed of delivery leave me staggering...perhaps someone with a firm grasp on our forum could give us a laypersons outline in plain english...

    This a few days later with a little different delivery may help?
    Last edited by vertical1; 12-03-2023 at 10:51 AM.
    Thomas Jefferson is credited with writing, “When injustice becomes law, resistance becomes duty.” The seceding states in the Civil War period issued a similar declaration using the word “tyranny” as opposed to “injustice.”

  5. #635


    Quote Originally Posted by vertical1 View Post
    Interesting video that would require far more time to delve into then I have.

    The price manipulation of gold through "paper gold" is real and has been documented and litigated and is a pretty age old contention, in my view.
    There have been countless assertions that this practice is going to explode the next day, or month, or year. Perhaps it will in 2024.
    I may have got this assertion wrong or only partially right, as I got pretty sleepy on this part, and I know little about it.

    The more accounting part, The gold reserves, or should I say certificates, held by the Fed, and the actual custody of the gold, held by the Treasury, I am a little more familiar with.

    The Fed accounts for the gold on its balance sheet as an asset worth 11 billion $ even though it`s market value is about 49 times that. ( so should be in excess of half a trillion)

    It has a very peculiar way of accounting for its gold, via the Treasury giving the Fed old certificates valuing the gold at $42.22, and then the Treasury storing them ( supposedly)
    Supposedly, this amount has not changed since the early 70`s, but who would know, as no audit has been done, or permitted, and no one is answering any questions.

    The video discusses the queer German experience of taking 7 years to get back, I believe just 300 tons of its gold, and in some cases, not its gold, but an inferior kind ( think I got that right)
    Very peculiar for a country to take so long, when it has a huge amount of gold, to give back the property of a friendly country that requests it asap.

    Now , as far as I know, all other countries value their gold at market value. I do believe the Fed has a footnote as to the approximate value of the market value of gold it holds.

    I am sure the main stream conviction is all the gold is in good order and not encumbered in any way, but as usual, the government/Fed acts so suspiciously that many have come to the conclusion it is not. Obviously, if it is not as described, then it would have extremely negative implications. Trust is at the cornerstone of fiat currencies, along with its partner coercion.

    Just a tiny bit of observation and opinion on a very interesting and complex topic and assertion. Could be way off.

  6. #636


    I know that by the end of that second video, I actually considered looking into a monster box. Then woke up from my dream state.
    Thomas Jefferson is credited with writing, “When injustice becomes law, resistance becomes duty.” The seceding states in the Civil War period issued a similar declaration using the word “tyranny” as opposed to “injustice.”

  7. #637


    Wow, what a great video. Michael Pento sounds like a carbon copy of my philosophy, my market signals and my forecast, except obviously far more sophisticated.

    I will not get into 5% of all the info he packs into this video, just a couple points and where he sees markets in 2024 and what to do.

    1) Like myself he believed that a serious recession was coming in early 2023. Like myself he has not suffered from that incorrect timing as nothing really happened to any great extent in
    2023 and you partaked in much of the upside even if you were in cash/MM and dividend stocks and gold etc.

    2) He believes that the severe recession has been delayed due to significant fiscal stimulus and the increase in term for debt by the corporate and private sector ( the latter escaped me)
    This means that before rates increased US corporates and commercial real estate and private citizens on mortgages etc, just went out and borrowed long at very low rates for as long as a duration as they could. (logical). Hence this delayed or muted the effects of higher rates for longer than usual. (coming to end for many 2024/25

    3) He believes severe recession coming late first quarter, early 2nd quarter of 2024 for a lot of reasons, see video.

    4) He watches, like I do, aggregate employment hours worked which has dropped YTD. Financial Conditions, which miraculously are still lose as is the junk bond spread. He looks at the inverted yield curve and the fact that the household survey showed a loss of 350,000 jobs last report and states that it usually leads the Establishment Survey, He looks at the fact that layoffs are running double then last year and that the leading economic indicators just continue to be abysmal. He also monitors the reverse repo dwindling, which he also believes to be a big problem after March 2024. An endless amount of more negative things he mentions.

    5) He is mostly short term bonds now (MM) as well as some physical gold and and a small amount of more eccentric investments. He believes as soon as everyone realizes the recession is here there will be a short time opportunity to make some good money with longer duration bonds and shorts, specifically shorting higher volatility stocks. He recommends keeping the gold position constant throughout. He then believes that the Fed will pour in money, as things become serious, and stagflation will go on for years. He recommends before most people realize this to get long commodities of all types as they will do well in this environment.

    Bottom line, he believes only way you will be making money in this market for next 10 years is by being in the right assets at the right time. You must be a tactical asset allocator.
    (switching between the many types of assets at the right time for the right circumstances.) Like many, he believes stocks are due for a reckoning. He believes a 4% decline for 12 years (each year) due to research (not his) based on historical, as they are grossly overvalued (in aggregate) due to their hype and great historical high return. ( obviously he does not believe that of the commodity stocks although he says buy them just after the collapse of stocks in the recession.)

    In any case well worth viewing if you have an hour or so. Like the passion and straight talk and of course his experience.

  8. #638


    Should be a very interesting first half of 2024.

    If you believe, like I do, that the government/Fed/2B2F banks are joined at the hips
    The Fed increased its balance sheet by an extra 2.5 trillion or so after June 2000 when it did not have to.
    It then enticed that extra 2.5 trillion or so back by giving it a higher risk free, perfectly liquid rate, higher than it could obtain elsewhere ( reverse repo facility)
    - a facility that has hardly ever been used before, and certainly nowhere near to this extent)
    It could then say it was engaged in QT when in fact it just adjusted its RRF rate so that the money found it more advantageous to fund the federal deficit
    ( out of RR into ST treasury bonds).

    Beautiful - so when the world could not fund them (treasury) as had their own problems, and Social Security was actually having to sell Tbonds, and the Treasury was selling like crazy(deficit) to keep the illusion of a growing economy going, presto, the funds had already been popped into existence years ago. ( stored in RR facility).

    They are certainly masters at their craft. Just let everyone else think they are incompetent

    Only problem is the reverse repo $ are burning through at an extreme rate which will only last until the ides of March at this rate. Even if it slows some, which it might, it will only be a few extra months.

    Then, when the sh-t hits the fan, we will see where things stand.

  9. #639


    Wow, another 70 billion in 1 week leaving the reverse repo facility. At this rate QT will only have muscle and bone left to deplete, after a quarter more.

    The Fed will have to stop QT, when it has said, it really wants to shrink the balance sheet, or there is going to be some real hurting in asset prices in 2024.

    " At times of shock, converting illiquid assets to cash to build flexibility is very expensive. Finding an umbrella in a rain storm might be impossible or very costly."
    quote Myron Scholes.

  10. #640


    Sounds like a Heads up to me Brutus2.Thank you for keeping tabs on that quagmire...googled illiquid assets, they are not
    many at my house will stay my house long as I dont get taxed out....
    PM's are not listed as illiquid assets neither were my other arenas.
    Thomas Jefferson is credited with writing, “When injustice becomes law, resistance becomes duty.” The seceding states in the Civil War period issued a similar declaration using the word “tyranny” as opposed to “injustice.”

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