The Sordid (Pictorial) Story of the “Richest Country in the World”

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Steve Saville’s excellent post The monetary inflation moonshot (including the graph directly below) prompted me to go to the St. Louis Fed website and check out some COVID-era data graphs.

true money suppy

So in addition to Steve’s calculation of the moonshot in new (funny) munny, which if we’re being honest is the only trick in the Fed’s bag, here are some other pictures from the financial and economic system of what we are told is the “richest country in the world” (if you don’t count debt and the leveraging thereof).

As I often belabor, the Continuum (10yr Treasury yield shown here as opposed to the usual 30yr) has been a deflationary backbone against which the Federal Reserve has inflated and reflated the system in a, well, systematic way.

The downward pressure in yields – from whatever force has kept it in line – has been a license to print (you could say steal insofar as inflation robs the everyman of his buying power over time) over all these decades. The exceptions being those times when the long-term downtrend in yields bumps up against the upper bound. Next time people are bitching about a hawkish Fed while equities are dropping you will know that at times like that the Fed will choose ‘system on’ rather than ‘system fail’ over saving equity markets. Q4 2018 was a fine example as I made a big deal about at the time in real time..

10 year treasury yield

Here are some of the levers the Fed is using in conjunction with the tame 10yr yield above. Unemployment, Industrial Production, GDP itself… all bad and getting worse.

unemployment
industrial production
gdp

And here is the parlor trick that the Fed is using. It’s one trick, pumping the munny supply in the name of humanity and for the greater good.

money supply

You see, there is a little down tick in consumer prices as a result of the global shut down disaster. But fear not, the Fed stands ready to drive prices up much higher if history holds true to the future.

cpi

And so once again the masses now huddling in their homes (albeit soon to be set free, leaving aside all that tracing of movement to come) will be rescued by the Federal Reserve Bank as you and I invest and/or trade as necessary to take advantage of the situation.

In that aspect, we are an early and small microcosm of the bigger play, which will once again enrich asset owners while inflating away the everyman’s ability to keep up. He’ll then become ever more dependent upon government’s generosity and well folks, the richest country in the world will continue to slide along the Continuum and fly right up its own debt laden tail pipe as the compounding of the debt meets the effects of ever more intense inflationary policy.

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