What a glorious global economic gala! Apparently, contracting world GDP growth, monumental sovereign debt loads, ballooning central bank balance sheets, crashing commodity prices, competitive currency devaluations and synthetically suppressed interest rates as far as the eye can see are all great tidings to be joyously celebrated throughout this holiday season. Well, at least as far as the whooping wonderful world of capital markets is concerned. Have no fear, all is perfectly in order. Jamie Dimon, Jim Cramer and Larry Fink all have our back. The rest of us mere mortals are simply supposed to stand aside and take their professional word for it, silently sipping the financial establishment’s spiked eggnog until we attain a sheepish state of stupid stupor. After all, the money experts at the Fed are on the case, what could possibly go wrong?
Joy to the world! Yes, it’s true, your Nation too can enjoy the very same blissful state of economic euphoria, all you need is the will to turn your monetary policy completely on its head, a la festive freeloading Fed. No need to maintain the integrity of your means of exchange, that’s so old school. That’s right, you too are absolutely invited to enter the ZIRP zero bound party zone, just buy out all your own newly issued treasury obligations and be sure to lap up any illiquid debt that may be languishing. Set it and forget it, that’s it, nothing to it. In the end, it will all take care of itself according to the fabulous Fed fat heads and the crazed Keynesian collegiate kooks that orchestrated and obliged this opulent banker blowout. No worries, Father Allen, Brother Ben and Sister Janet figured out how to turn the universe’s economic waters into wine.
Oh, there is one important caveat which needs to be pointed out, along with the monetary ecstasy ease regime, your Nation is also required to unequivocally serve the United States’ geopolitical ambitions and global economic interests, otherwise, no monetary marmalade for you! Just ask Vlad on that score. His toast is badly burnt, his olive oil spread is spoiled, and his Ruble is now rubble, no money honey for comrade Putin until he bows down to the high and mighty masters of the badass bully banking USD monetary system hegemony.
Make no mistake, the same goes for his bummed broken BRIC buddies too. No IMF SDR soup for you! Might be time for the Putinator and his pissed off pals to invite Goldfinger to the festive grand global gala, and have him pour some leveling liquid gold libation into the overflowing currency punchbowl, but I digress, that’s for another sordid Santa story. As an aside, should you want to specifically understand Putin’s general take on things these days, you may want to review his Presidential address to the Russian Federal Assembly which was delivered over the weekend. I’ll simply post it here, seeing as CNN would rather cover Al Sharpton’s latest bowel movements 24/7.
Enough with that sobering slavic seriousness, back to the global gala, let’s get the party started. The all pro U.S. Central Bank was certainly instrumental in choreographing the QE easy street superbowl shuffle, and its really catching on now. Just like the Macarena did a few years back, the mo mad money endzone jig has gone viral. The BOJ is doing it, the BOC is doing it, the ECB is doing it, the BOE is doing it, the SNB is doing it, and of course the FED’s Hail Mary QE pass jump started it all. It’s simply fantastic, a fantasy football free for all moneyball abbondanza for the Fed frenzied financial fanatics!
Who needs genuine productivity in an underlying economy to generate the necessary excess savings essential to legitimate capital formation, when all you need do is turn the vast volume valve on the Fed’s free funding fire hose to the maximum flow rate position. I guess you can print your way to prosperity after all. Well, everyone seems to think so these days, anyways. Take a quick look at the global equity indices, they’re going great googly gangbusters, the crazed Christmas carnival party has clearly already started, let’s dance!
I do have one question for you eternal equity enthusiasts types though. Why are the kids of today not dancing along side with you all? Doesn’t youth typically hit the dance floor first to flaunt their funky new flashdance moves? It seems the bald brooding bouncer at your posh money club only invites the more mature loaded fat cats past the velvet ropes these days, outside the fabulous frolicing fast money hotspot. Unless, of course, you should happen to be a young gun hailing from Wall Street, sporting the obligatory Hugo Boss pinstripe suit and tasseled Alden loafers, then, you go straight to the head of the line at Studio QE54, no questions asked. It’s all good, you get a great table at the groovy gratuitous greenback grill, where the money fabulously flows through endless magnums of bubbling big bottled Champagne.
Wait a minute! Did someone just mention bubbles? Pop, pop, pop! Was that simply a few more careening champagne corks exuberantly launched across the smoke filled room of the Moar Money Lounge? Or, rather, was it a disenfranchised group of angry young men stealthily lobbing multiple molten molotov cocktails from the lofted balcony above the open bar?
By the way, incase you weren’t aware, just a heads up. Along with the resentful, uninvited, unemployed and utterly disillusioned average American youth that’s been locked out of the Moar Money Club, I hear the Italian, Spanish, French, Greek, Portuguese, Brazilian, Russian and Arab kids actually want to torch the place. What’s up with that? Any ideas?
I guess unabashedly abusing the world reserve currency to your ignoble advantage for years on end does eventually have its blowback comeuppance consequences to deal with. The Fed prints and parties, while the rest of us work and weep. Not a good look. You didn’t really expect the largest transfer of wealth known to man, picking the average citizen’s pocket and placing their hard earned cash directly into the billfolds of your most well to do citizens, would go smoothly and without a hitch, did you? Always thought the idea of America was to enlarge the middle class, not eviscerate it? And besides, how are you going to expand the tax base if you extinguish it? Don’t we have some monumentally fat federal fiscal bills coming due? Are you simply gonna pay those off with more funny money as well? Is that the pitiful pathetic political plan?
Speaking of unpaid bills, who’s paying for the EU’s Champagne tab? Boom! Pop goes Brussels! Bring on Le Pen, Farage, Tsipras and Grillo, all hell’s about to break loose in the soon to be bubbling over erupting European Union. Andalusia! Catalonia!
Finally, for the record, what many of you consider to be endless equity elation, some of us consider to be insidious Stealthflation. What? You’re not familiar with the term? Here, let me spoil the party for you:
STEALTHFLATION: An intractable economic condition that inevitably arises as excessively issued fiat currency compulsively pursues non-productive wealth assets in a grossly overleveraged economy, which has been artificially reflated by monetary authorities in a misguided attempt to synthetically engineer growth via extreme monetization. (Money Printing & Interest Rate Suppression)
This effectively prevents the real economy on the ground from realizing the healthy normalization of free market forces necessary to genuine bottom up capital formation, which is essential for generating legitimate and sustainable economic growth.
Under the imposition of StealthFlation, asset prices are inordinately inflated while the generative velocity of money is eviscerated. Worse still, the seeds of hyperinflation are sown, as the overtly financialized economy becomes increasingly dependent upon the interminable monetization.
Put away your party caps and stems my festive friends. It’s not about today’s high flying Stock Market, nor the Dollar and U.S. Treasury safe haven bid, it’s about tomorrow’s confidence in our monetary system. Are you confident in the malignant malfunctioning monetization mayhem?
Enjoy your pandering pilfering partying while it lasts, as a nasty notorious New Year looms large. The great off tempo American band, The Talking Heads, said it best:
“This ain’t no disco, this ain’t no fooling around” & “Hold tight wait till the party’s over. Hold tight we’re in for nasty weather. There has got to be a way. Burning down the house”
Happy Holidays from The StealthFlation Blog!