We wrote about the Democratic National Convention on Monday. Silence…
Yesterday, we wrote about the Republican confab…and sent it off at precisely 30 minutes past midday, Eastern Time.
Shortly thereafter, the artillery opened up…with dear readers blasting us for criticising Mr Trump and his party. We’ve been taking ‘incoming’ ever since.
But today, we continue connecting the dots.
We’ve seen that neither the Democrats nor the Republicans have any idea of the developing catastrophe…nor any plans to avert it. Here’s the latest from King Canute, as reported in USA Today:
‘Relying on a public health law intended to prevent the spread of an illness, the Trump administration said Tuesday it is implementing a national four-month moratorium on residential evictions.
‘The moratorium, announced by the Centers for Disease Control and Prevention, was the latest measure by the administration to get a handle on the economic fallout from the coronavirus pandemic absent an agreement with Congress on a more far reaching package that would have the force of law.’
And what about the landlords? Will there be a moratorium on mortgage defaults? And what about the banks that hold the mortgages? Will there be a moratorium on bank failures?
And what about real estate prices? If landlords can’t collect rents…and can’t pay their mortgages…won’t real estate prices fall? Should there be a moratorium to stop them?
Maybe Mr Trump should declare a moratorium on all bankruptcies, defaults, sales shortfalls, profit slumps, crashes, and repossessions…and knuckle-breaking loan shark collections.
And why not put a moratorium on weight gain and COVID deaths, too?
Web of deceit
The whole faked-up web of deceit and delusion is becoming more tangled up every day. People were paid more not to work than they earned in their jobs…but they didn’t have to pay their rent.
Businesses were given billions of dollars to pay employees on the payroll…but they didn’t have to produce anything.
Wall Street got an extra $3 trillion…pushing stock prices to record highs…while a recession actually reduced sales and profits.
But this is no reason to feel downcast or need medication. In private, we can still lead jolly, prosperous lives.
But we need to be careful. Because our public life is headed down fast…
Our economy, our political system, and the harmony of our social lives are all in danger. The system is corrupt and unstable. Our leaders are ignorant and foolish.
And it looks to us that we have just entered a darker phase, as we explain below.
‘The dollar dropped to a two-year low, while U.S. futures climbed after Chinese manufacturing data indicated that exports are underpinning a recovery…’
If you will recall from previous Diaries…the dollar is the weak link in the whole chain of fantasy.
From the fake money…to the fake interest rates…to the fake stock market…to the fake ‘greatest economy ever’…to the fake federal budget…even to the fake ‘Republicans’ and counterfeit ‘conservatives’.
And now, it leads us to…a fake recovery.
We introduced a provocative idea last week…so discreetly, even we almost missed it…that the recovery may not be V-shaped…or even U-shaped…
It might turn out to be more like an L…that is, there may be no real recovery at all.
How is that possible? Isn’t there always a ‘recovery’ after a correction? Doesn’t the stock market always bounce back? And the economy, too?
The answer is, ‘no’.
As for the stock market, the Japanese stock market peaked in 1989. It is now more than 30 years later. It has never recovered.
Here in Argentina, the economy has been in a downward trend (compared to the rest of the developed world) for 70 years.
The Roman Empire went into decline about 190 AD. Almost 2,000 years later, it still hasn’t recovered. And how many dead men come back?
And look at the US itself. Real wages for American white men of working age have been going down for 45 years.
GDP growth rates have been in decline, too, for about the same time. Averaged over Trump’s three and a half years in office, they hit a post-Second World War-low of less than 2% per year…
…and are currently running negative for 2020.
Total debt, meanwhile, is edging up towards $80 trillion.
We know this contrasts sharply with the narrative of the Trump campaign and the Republican National Convention…and that of many of our dear readers. They believe Mr Trump created the best economy ever…and that ‘he’ll do it again’, if he is given the opportunity.
This is very unlikely.
First, because he didn’t create anything. The economy of 2017–2020 merely continued on the same course that had been set in the Obama years. It was an expansion — aided, abetted, and amplified by the Federal Reserve’s money printing.
Second, we’re coming to the part of the catastrophe cycle where more dollars does more harm than good.
Left to work itself out, the current recession would be deep and long-lasting…simply because there is so much unpayable debt (secured with over-priced assets)…and so many insolvent debtors…in the system. At ‘normal’ interest rates — they would all go broke…
And so would the federal government. It owes $27 trillion…more than $8 trillion of which it has to refinance in the next 18 months.
Without money-printing, that funding would have to come from private sector savers. And it would force interest rates up — fast — and bring the whole shebang tumbling down.
No quick fix
Both Democrats and Republicans are determined to avoid that ‘day of reckoning’ by showering voters with a torrent of money.
But while money can drive up prices — on Wall Street as well as Main Street — it can’t create real jobs, real wages, or real wealth.
The extra dollars distort and disrupt…
Like moratoria on evictions, they don’t fix anything.
More to come…
For The Rum Rebellion