Tag: Coronavirus

Ep. 383 – From Millions to Trillions!
The Kapital News
The Kapital News
Ep. 383 - From Millions to Trillions!
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What a difference 100 years makes as we near the centennial anniversary of the Great Depression. As we continue our discussion from yesterday’s podcast, ” A Tale of Two Depressions,” we were highlighting the similarities between the economic and political climate of the 1920s and 1930s to today. The only major difference between then and now, are the numbers! If it was millions then, it’s billions now, and if it was billions then, it’s likely trillions now! This is true whether we’re referring to the policies of the Federal Reserve or the Congress in conjunction with the White House. It’s a one-two punch of monetary and fiscal “stimulus” today, just like back then. Unfortunately, it was these very policies that turned a would be severe recession into the Great Depression – and it appears we’re heading down the same path.

As we make our way through these trying times, when we observe the economic data, we’re witnessing numbers that we have not seen since the Great Depression, and some numbers are even worse. And despite the optimistic notes from some in DC, of how the economy is going to come roaring back to life, then one must ponder why Congress and the White House are once again contemplating another major spending package. If everything is going to be better than before, then why another massive bill? Of course this would be spending even more money that we do not have! Right now, we’re borrowing about 50 cents for every dollar that we spend. The more we do, the worse this ratio will become and we’ll have very little to show for it on the other side, except for a ballooning national debt and deficit – that will saddle future generations with the tab. The further along in time we go, the more it appears that we’re standing still – yet the fashion, music, faces, and names change. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Depression #Bailouts #USA #Debt #Recession #Gold #Congress #Jobs

Ep. 382 – A Tale of Two Depressions
The Kapital News
The Kapital News
Ep. 382 - A Tale of Two Depressions
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While the historians and economists have written plenty about The Great Depression of the 1930s, the pages mainly remain blank as to how this depression will unfold. However, if history is any guide, and it’s usually one of the best, then it may be prudent to study the 1920s-1930s in greater detail.

When reading Murray Rothbard’s, “A History of Money and Banking in the United States,” Rothbard paints a vivid picture of the players, the policies, and the outcomes that existed during this historic time. What is quite an eerie feeling as one reads his pages when covering The Great Depression, is how similar the policies of the late 1920s-1930s coincide with today’s policies from both the government and the Federal Reserve. Whether it’s central bankers standing at the ready to do whatever it takes and willing to expand the money supply, to Congress and The White House, strongly supporting public programs – the only thing(s) that change are the names and the size of the facilities – and sometimes even the names do not change.

A simple exercise can be conducted where one would simply exchange millions for billions and billions for trillions to see how similar The Great Depression is to the here and now. What may be even more disconcerting is that these very policies were the cause of The Great Depression. Had the “authorities” allowed the market to self-correct then what would have been experienced was a recession, perhaps a severe one, but no depression. And this is not simply an intellectual thought experiment. Rather, look at the recession of 1920-1921 and the policies undertaken by the government and the Federal Reserve. More correctly, it would note the lack of policies and intervention. This is because only a decade earlier, the American people, as well as their elected officials, understood the prudent tenants of free-market capitalism and simply allowed for the markets to self-correct. What occurred was a recession and not a depression. But a lot changed in ten short years and books are written not of the 1920-1921 recession, but they surely are for The Great Depression. Want to understand the present and future, then know the past. We discuss this during today’s podcast.

On the economic front, the Fed’s balance sheet now stands slightly above $7 trillion – representing a week-over-week increase of some $103 billion. With respect to initial jobless claims, an additional 2.4 million Americans filed for unemployment insurance during the prior week – taking the nine-week total to around 38.5 million Americans. With a workforce population of 206 million, this would represent about 18% of the workforce. These are staggering numbers that are consistent with April’s jobs report, and also consistent with an economic depression – and more is likely to follow. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Depression #Bailouts #Debt #USA #Recession #EndTheFed #Jobs #Gold

Ep. 381 – The DC Power Play
The Kapital News
The Kapital News
Ep. 381 - The DC Power Play
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A power play in DC appears to be taking shape regarding the economic response from the Fed and the government in relation to COVID-19. Over the last couple of weeks, the argument between a liquidity crisis and a solvency crisis has been and continues to be discussed. This is likely to be at the crux of this particular DC power play. Because after all, no politician or policymaker wants to be the one holding the bag when all of this comes crumbling down – so, they’re setting the stage for the blame game.

On the one hand, we have the Federal Reserve, where Jay Powell accurately notes that there is a difference between a liquidity and solvency crisis. It is on the liquidity side of the ledger where the Fed can be most “effective.” They can print money and expand the money supply at-will. They can flood the financial system by utilizing a number of lending facilities – and they have. However, this does not solve the solvency crisis that surely awaits us. Here, the Fed Chairman has been stating that he believes Congress and the Administration should take a bigger role through fiscal measures as opposed to relying solely on monetary ones. Here is where the power play or blame game starts to form. The Fed can show via various statistics, such as their balance, that they have thrown trillions of dollars into the system to keep the financial plumbing moving along – in conjunction with other measures. Now, while they claim they still have ammunition, it would be prudent for the government to step in even further, is their argument – the Fed is passing the baton of responsibility. “Hey, we here at the Fed have done our part, look at exhibit, A, B, C, etc… now it’s your turn Uncle Sam.” So now the ball is in the hands of Congress and the Administration – a huge and slow moving political machine – what could possibly go wrong? So, if the solvency crisis does unfold, meaning a considerable amount of businesses, (of all sizes), file bankruptcy and/or liquidate, then a lot of this blame will fall squarely on the shoulders of the government – at least this is what the Fed is trying to position for. Will the Congress and/or Administration allow this to happen?

No one wants to step up and be the leader. No one wants to step up and admit to our many faults as a country, as a society, as individuals. No one wants to speak the harsh truths of the matter with respect to so many subjects. No, no. But what we can do without hesitation, is burden future generations who have nothing to do with this, and have them pay for it with lower living standards, higher costs, and lack of opportunities. All for the purpose of returning things back to “normal.” Normal by the way is insanity personified, and completely unsustainable, but as our podcast highlighted yesterday, Nobody CARES. It will thus be interesting to see how the government handles the solvency crisis and who they seek to blame. It’s a power struggle, it’s a money struggle, it’s a reputation struggle, and it’s a legacy struggle. And on top of it all, it’s a Presidential election year. We told you 2020 was going to be interesting and it’s only May! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Debt #Bailouts #USA #EndTheFed #Congress #Liberty #Revolution #Gold #Depression

Ep. 380 – The Nobody CARES Act
The Kapital News
The Kapital News
Ep. 380 - The Nobody CARES Act
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This is of course a direct criticism of the multi-trillion dollar monstrosity known as the CARES Act. The bill that was passed by Congress with bipartisan and Presidential support in response to COVID-19. Well, just like any title of a bill – it’s usually the exact opposite that transpires – so in this case, it’s the Nobody CARES Act.

Today via a virtual Senate hearing, Treasury Secretary Mnuchin, and Fed Chairman, Jay Powell, gave their testimony as to the progress of the CARES Act. During today’s podcast, we highlight a few of the key points. These pertain to: not all of the money that has been appropriated has been spent, the Fed will utilize leverage if and when they put this money to use, the base case of the US Treasury is that on a net-net basis, there will be losses, questions asking if there will be conditions to receiving any funds, especially by large corporations, such as guaranteeing that employees are kept on payroll and/or brought back from being laid-off, the money supply, limitations to the Fed’s balance sheet, discussion of Treasury issuing 50 and/or 100 year bonds, and asking how the Fed’s purchases of junk bonds, is a help to the people…all this and more as we dissect this new banana republic. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Bailouts #Jobs #USA #Depression #Gold #Protests #EndTheFed

Ep. 379 – Fed Speak + Risks Ahead
The Kapital News
The Kapital News
Ep. 379 - Fed Speak + Risks Ahead
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Jay Powell, Chairman of the Federal Reserve, had another interview with 60 Minutes on CBS this weekend, and the conversation, unfortunately proved to be a waste of time. There were no difficult questions. It was basically a recap of the data that has been well published and discussed, combined with the Chairman’s rinse and repeat answers. We take the time during today’s podcast to discuss the interview and ask our own questions that we think should have been asked and answered. A sample of such questions pertains to which Americans are the Fed working for? Is there such a thing as a free lunch in the context of all this admitted money printing and fiscal spending? Are financial asset prices allowed to go down? This and many more provides some color for today’s discussion. Nonetheless, these are simple and basic questions to ask and 60 Minutes completely dropped the ball and did a major disservice for the American people.

Despite the Chairman mentioning data that is reminiscent of the Great Depression, he claims the US economy can bounce back by the end of the year. He also noted how he would like to see Congress “do more.” Whatever this means we are not entirely certain because the Federal government is broke. Powell continues with his claim that the Fed has much more ammunition and is ready to use it. And again there was no push back from 60 Minutes on highlighting any limitations to these policies. One key point that Powell mentioned was regarding the development of a vaccine as being one of the only solutions to solve this entire crisis. Well wouldn’t you know it, the very next day (today, Monday), there was a news headline that came out prior to market open in the US, from Moderna, a biotech company, announcing positive results with their vaccine. It was only a handful of people, but the markets do not care about the news – they just want the headlines. This is eerily similar to the Gilead Sciences headlines from only a couple of weeks ago where we witnessed comparable massive rallies on Wall Street – only later to reverse course. So there we have it, softball interviews and timely headlines to move markets higher – just another day in this financial world of Oz. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Bailouts #EndTheFed #Gold #Silver #USA #Congress #Recession #Depression #Debt #Protests

Ep. 378 – No Consumer, No Sale
The Kapital News
The Kapital News
Ep. 378 - No Consumer, No Sale
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The economic hits just keep on coming with two dismal reports being released. The first was retail sales – plunging 16.4% for the month of April. This is the worst reading ever and was well below market expectations of a decline of 12%. All categories were harshly hit, primarily driven by the lock-downs due to COVID-19. Some of the worst hit, and no surprise, were clothing and accessories, electronics, appliances, and furniture, and restaurants and food service. On the back of this data, we also have JC Penney filing for bankruptcy this evening. This is another blow to the retail sector, as well as commercial real estate, and adds to a list of other big name retailers filing for the protection. Another notable report pertains to industrial production, which collapsed by 11.2% for the month of April – also the largest monthly decline since records have been kept. On a year-over-year basis, the decline is over 15% – this kind of decline has not been seen since the GFC, the end of WWII, and the Great Depression. Nonetheless, the DOW, the NASDAQ, and S+P 500 all closed the day in the green. However, what also had a very strong performance was that of gold and silver. Are the precious metals starting to sniff out the effects of money printing, deficit spending, geopolitical uncertainties, and the realization of the true economic and financial damage that likely lies ahead? Time will tell, but it is most definitely worth the time to pay some attention to the precious metals.

This evening in the House, Nancy Pelosi’s, “HEROES Act,” was passed along party lines and will now head to the Senate where it is all but certain to be voted down. However, it is also likely that there will be another round of spending – the question will be, when, and how much does it cost? Also in Washington, this afternoon, the President announced that the US will have a vaccine ready for use by the end of this year. This blows past all previous comments that the earliest possible would be 12-18 months, which would have taken us into 2021. Nevertheless, “Operation Warp Speed,” as it is to be known, is underway to develop a vaccine in record time and the President has also made comments that the military is to administer the vaccine. We don’t like the sound of that and this is well deserving of further explanation. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Bailouts #EndTheFed #Debt #Gold #Recession #Depression #USA #COVID19

Ep. 376 – Negative Rates Are Coming!
The Kapital News
The Kapital News
Ep. 376 - Negative Rates Are Coming!
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It is all but certain that negative rates will be here in the United States in short order (within a year). Despite the many voices of protest from several members of the Federal Reserve regarding the adoption of negative rates – it’s sad to say, but we don’t trust them as far as we can throw them. This is the same group that claimed only 1 1/2 years ago that the Fed’s balance sheet was on autopilot with respect to shrinking their balance sheet. Well fast forward to today and we have had several interest rate cuts, two of which transpired during emergency meetings that have taken us back to the zero bound. And what of the balance sheet? Oh yes, over the last two months the Fed has added over $2T in assets to its books. So excuse us if we do not believe the rhetoric from the Fed. After all, it’s no big secret that the Fed follows the market, especially during these types of events. Now of course, the Fed also tries to lead the markets with their rhetoric, which they claim is an effective tool in the kit – but the question remains, how effective and for how long? If the markets are always expecting the Fed to do more and the Fed can’t live up to the hype and the promises, then how will markets behave? Are we setting ourselves up for one of the biggest “buy the rumor and sell the fact” events?

The reason for today’s topic is because Jay Powell, Chairman of the Federal Reserve gave an interview this morning and so we thought it prudent to cover his remarks in greater detail. Some of the key takeaways were the following remarks from the Chairman: there is no bubble to pop, the usual suspects are not to blame, it is all the fault of COVID19, above and beyond what the Fed can do by law as outlined in their charter, will only take place with the direct approval of the Treasury Secretary (thus potentially shifting the blame to the government and not the Fed), once the crisis is over all of their tools will be put away, highlighted the important difference between a liquidity crisis and a solvency crisis, and how the Fed can only do so much and mainly on the liquidity side of that ledger, and lastly, how the fiscal side of the equation will likely have to carry more weight – thus calling out Congress to do more, but stopping short of giving them any recommendations. So there you have it – delusional comments about no bubbles and no issues prior to COVID19 – an unlimited amount of money to be printed, and seemingly an unlimited amount of federal spending is likely required and is perfectly fine with those soaring deficits and debts. We did tell you this is now a banana republic – enjoy the rum! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #EndTheFed #Bailouts #Debt #USA #Recession #Depression #Jobs #Gold

Ep. 375 – What’s Another $3 Trillion?!
The Kapital News
The Kapital News
Ep. 375 - What's Another $3 Trillion?!
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We knew it was coming and have been discussing this for weeks now – more, more, more! The Speaker of the House, Nancy Pelosi, and her fellow Democrats are putting forward another spending bill with a price tag of some $3 trillion. This is not the total of all spending since the onset of COVID19, this is simply another bill unto itself. About 1/3 of the bill will be to assist State’s governments because many of them are broke as well. So follow the logic – broke states asking a broke federal government for assistance – got it. In addition to this, the federal government announced a record monthly budget deficit for the month of April amounting to around -$740 billion. Recall, that the US Treasury announced last week that net issuance of Treasuries would amount to around $3T just for Q2 of 2020. Well it now appears that if this new bill should pass that they’re going to have to issue another $3T. Of course at this time it is only the Democratic party’s version. However, given comments by the President, his economic advisors, the Treasury Secretary, and members of the Federal Reserve, they’re all at the ready to spend/print/lend “whatever it takes.” Therefore, it can be reasonably assumed that another spending bill will be passed sooner rather than later. Also remember, that the national debt is over $25T and the deficit is projected to hit $4T. However, if more spending is approved then both of these numbers will be much higher by end FY2020.

Additionally, we discuss negative interests rates as the markets are pricing them in for early next year. The Federal Reserve has begun purchasing corporate debt and yet the markets sold off today – buy the rumor, sell the fact? And lastly, we read excerpts of an article highlighting some of the stresses in the residential rental market and how this environment will be seriously affecting both landlord and tenant for some time to come. This is only just beginning. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Bailouts #Recession #Debt #Depression #USA #EndTheFed #Gold #Deficit #Protests

Ep. 374 – American Dream or Ponzi Scheme?
The Kapital News
The Kapital News
Ep. 374 - American Dream or Ponzi Scheme?
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A very fitting title for today’s podcast as we digest further the national debt, national deficit, State and local debt, and household debt. With over $25T and growing, will this national debt ever be paid back and if so, how? Will it take the form of inflation, stagflation, hyperinflation, default, and/or some combination thereof? These are serious questions that have serious consequences. The American people need to wake up to the fact that the US economy is a Ponzi scheme – especially at the government level. Broken promises, whether that being Social Security, government and/or corporate pensions, Medicare, etc… These are huge price tags and it places an ever-increasing burden on younger and future generations and taxpayers – making this by default a Ponzi scheme. Why? Because the scheme relies upon new entrants/taxpayers/investors to come into the system to support earlier contributors. The Kapital News is of the mindset that the government in conjunction with the Federal Reserve are well aware of this and thus explains their insane response to printing and spending. These institutions know the fragility of the system. They know it is a Ponzi scheme and thus they are implementing such policies to the tune of several trillion dollars because they have to keep this fraudulent system alive. Otherwise the masses will awaken to such fraud and demand real change. So that old American dream of getting an education, a solid job with a pension and/or retirement plan, buying a house, starting a family, and hoping your kids have it better than you did – well, that dream is getting awfully expensive and is looking more and more like a nightmare. And the price tag just keeps going up!

The global protests that we witnessed well before COVID19, are starting back up and we imagine they’ll be even more intense. Be on the lookout for civil war(s), government overthrows, and war(s) amongst nations. We stated for months that these protests were not transitory, but rather history in the making. And we ain’t seen nothing yet! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Debt #Bailouts #Recession #USA #Depression #Protests #Oil #Gold

Ep. 372 – Depression Level Unemployment
The Kapital News
The Kapital News
Ep. 372 - Depression Level Unemployment
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Another week and another dreadful initial claims number. For the week ending 2 May 2020, another 3.169 million Americans have filed for unemployment insurance. This takes the previous seven weeks to a total of 33.5 million Americans. Furthermore, it must be understood that given some of the “stimulus” programs implemented by the government, that many American remain on payroll, while some of these very businesses may be shut down or limited in their capacity. So the numbers are somewhat skewed for this reason – meaning there are actually even more Americans not currently working. We must also take into consideration those who were unemployed prior to COVID19 and these health and economic restrictions. And then lastly, there are also those who are designated as “discouraged workers” who have given up looking for work altogether and if they have been discouraged for over one year, then the government does not even include them in the official unemployment statistics. So, for all intents and purposes as the jobs report comes out tomorrow, the headline, U-3, unemployment rate could well be near 20% +/- a couple points. This would take us well into depression level numbers, which have not been seen since the 1930’s when unemployment peaked around 24.9%. And despite these numbers, the stock market continues its rally. Do we even have a market? Or is this all now just a perpetual money-making machine? Remember, banana republics love the printing press.

On another historic note, the US national debt has eclipsed $25T and has a current national deficit of around $2.6T. Per various estimates, for the FY2020, the deficit is set to hit $4T, thus implying that the national debt will be around $27T by the end of September of 2020. And this number could also be well eclipsed if Washington, DC continues with further bailouts and “stimulus” packages. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Depression #Inflation #Deflation #Recession #USA #Gold