Monday, May 17, 2021

You Don’t Have To Be An Economist.. Or A Cockroach

 The battle between the Fed/Treasury and monetary sanity is red hot.  We “sane” people were recently called “monetary cockroaches” by Nobel laureate Paul Krugman, because we believe inflation is about to run much higher than expected due to the gusher of new dollars created by the Fed/Treasury.

But, you know what? You don’t need a Nobel Prize in Economics, not even a PhD, to see things as they are: as Warren Buffett said a couple of weeks ago, the US economy is “red hot”. And you certainly aren’t a money roach when you look at retail sales reaching all time highs at breakneck speed, precisely because of the new money being thrown hither and yonder.

.Look At Them Retail Sales... Bang, Zoom, To The Moon, Alice!!

Still, if I have to choose between HeliMoney4Ever and roachdom.. well, bring out the Roach Motel ‘cause I’m checking in 😜😜

... and just for perspective, here are some price increases in the last 12 months (futures prices).  They are merely indicative, just about every product you can think of shows similar price gains. I have chosen the ones that are most important in the global economy.

Gasoline +115%

Iron ore +75%

Copper +95%

Aluminum +65%

Lumber +340% (no, it’s not a typo)

Soybeans 95%

Corn +110%

Lean Hogs +81%

Sea Transport, Dry Cargo +580% (also not a typo)

Finally, EU CO2 emission permits (carbon rights) +100%  

— this last one is very interesting, look at the chart below.  In a year when EU CO2 emissions fell by a record 13.3%, and economic activity is still below 2019 highs, why have permit prices doubled to all time highs?? There is certainly less demand from industry (they don’t need them), so the only explanation is.. speculative trades driven by torrents of new cash from the ECB and Fed.

But... what do I know, right? I’m just a monetary cockroach...


  1. i am not saying he is right or wrong.... but want to talk about that chart that krugman keeps using, second chart from the top, percentage change of personal consumption vs M2

    this does not make his point... because he shows it in terms of percentage changes, let us assume that increase in m2 causes inflation but with some variable time lag between cause and effect; on his chart, it will appear as though m2 and inflation are not correlated... but that does not mean we should keep printing....

    on another note... prediction wise, i think krugman will be right if the fed stopped printing right now... but i don't think they are going to stop....

    on a more personal note... Hell, you are supposed to be all for crypto as well. =)

    1. Yup, that’s the “cockroach” article... yes, I’m well aware of the inflation argument that crypto fans are using. It’s fallacious... cryptos are 99% unregulated trading sardines - at least at this point. As such, they are merely yet another sign of the current mania, along with loonie NFTs. I mean... Musk, for heavens sake!!

      Manias/panics begin to end when the most outrageously overextended, most loony speculative instruments, start to fall. I’m looking very closely at cryptos for exactly this reason right now. BTW, no matter where I go, no matter who is there young and old, professionals and very much not, EVERYONE is talkin crypto. Who’s left to buy???

    2. laugh... they have been "investing" in stupid art for damn near 30 years now... if a bunch of squares can sell for millions, what is so wrong about bit-coins...

      in a world run by americans, Hollywood is a career path to the presidency, pieces of paper are valued over life, dogs eat better than people...

      in a world run by americans, man goes to the moon, talk to each other from across the earth, eat all the fish in the sea...

      i feel that in such a world, crypto goes down just fine with the morning coffee...

      more seriously, i would say there is 99% chance you are right; but there is still that 1%, weirder things have happened; especially if you deal with the americans.

      btw, dun be so harsh on Musk, i suspect that to the rest of the world, all americans seem like Musk... i doubt they can tell the difference between your insane guys and your more insane guys... =)

    3. If there ever were two glaring, flashing neon signs of the End Of An Era (of progressive America) it is these:
      MUSK - TRUMP flash MUSK-TRUMP flash...
      No wonder they love each other. They have turned American industry and American politics into jokes, literally.

    4. The US missed out badly on Bernie Sanders. But the establishment on both sides of the aisle couldn't allow corporate power and influence to diminish. The people lost badly.

    5. *the people lost out badly.

    6. amen brother... i would have taken Bernie over Trump, Trump over anyone but Bernie...

      Trump was actually one of your better presidents... he blew the lid off china, forced them to show their hand...

      To put it in Hell's terms. The U.S. was already a joke (sorry, no disrespect). Trump just discarded the pretense and made the joke clear... in my books, that is a good thing.

    7. and in that, I see hope... if the Americans can tell the truth to themselves... the country will begin to heal... god willing... god willing ...

  2. ok, I guess the burden is on the person that makes a "wild claim" to substantiate it...

    How many Americans can justify their wealth based on the good that they bring to the world...

    Did Warren Buffet bring billions of goodness to the world and he is one of the better billionaires. He brought some good, sure, but that much good?

    Does a google engineer bring half a million of goodness to the world. They do some good work, but that fantastic? ... I would give their actual worth at around 100,000.

    Does an ordinary professor bring 200,000 dollars of goodness to the world? (i would put that one at negative)

    Does a factory worker bring 70,000 dollars of goodness to the world? (i would say most could be replaced at 24,000).

    No one wants to give the americans money for anything that they produce, which is why they have to print it or steal it through monopolies... can skip all the fancy economic arguments here...

    The sad thing is that there are Americans who are very, good... superb even... it is just that the society ignores them and chooses to celebrate rubbish...

    think about what the real artist must feel when they see the nonsense paintings selling for millions.

    think about how the real teachers feel about the teachers union

    It is not Trump that is mad, the whole society is mad... fundamentally, you need to reward those that are trying to help you and kill the takers. it is that simple...

    sorry about it... best of luck guys...

    1. America is still at the forefront of tech of all kinds. Would you rather study at MIT/Caltech or Guangzhou Tech?
      Plus lots more, but China is closing the gap FAST.

    2. 24,000? Lol, why not 2,400? Or, better yet, free! Lol. Bernie Sanders Would Not be proud of you akoc. And yes, Trump is also insane Lol.

  3. to be fair... i feel the chinese are going mad too... i won't talk about it.. but it worries me... U.S. can recover from it... the chinese?....

    1. It is really quite simple: China wants to rule the world, to once again be the most powerful empire on Earth. Everything else is just process. I admire, wistfully of course, the methodical and patient way in which they are going about it. One of these days, and it’s not too far in the future, they will simply pull the rug from under the US.

      Most think that this can’t happen because of America’s military might. But, it’s a useless tool against another superpower, only good for chasing tin pot dictators and terrorists. In a MAD world more nukes mean nothing, they have no practical bargaining value.

  4. So, they were desperate for more stimulus; and now that they have it, they're worried about inflation and the value of the dollar Lol!