Tag: Deflation

Ep. 597 – Policymakers Getting Nervous?

The Kapital News

Ep. 597 - Policymakers Getting Nervous?

00:00 / 00:34:09

Politicians and central bankers the world over have been boxed-in for some time. The road to responsibility, accountability, and leadership is not one they want to take. Therefore, they continue to implement the same asinine policies that led us to this point. And despite all of these artificial attempts to prop up the system and despite how powerful these institutions may be separately or combined, they are not larger than or more powerful than the markets. This means the day of reckoning awaits us. The question is when does this happen? Policymakers know this, but will never admit to it. However, by reading between the lines and listening carefully to their remarks, it is quite clear that they are getting nervous. They know the global economy is extremely fragile right now, as are whole countries from a political and societal perspective. They know this will not end well and they know they will be the ones who will be blamed.

Initial jobless claims for the week ending 15 May came in at 444,000. The lowest reading since the pandemic. The prior week was revised higher by 5,000 to now stand at 478,000. In aggregate, there remains nearly 16 million Americans that continue to claim some form of unemployment insurance. This gives us a de facto unemployment rate of 11.5 percent. The official rate is 6.1 percent.

The Federal Reserve’s balance sheet has hit a new all-time high at $7.922 trillion! This is a week-over-week increase of $90 billion. This is a sign that the Fed is worried about the recent price action in the equity markets that has been trending lower, and this is a clear attempt at cushioning the blow in the least and sparking a rally at best. The Fed remains committed to their QE program of purchasing at least $120 billion per month in US Treasuries and mortgage-backed securities. The Fed is also starting to admit that they are paying closer attention to crypto and digital currencies, and announced that they will be publishing a report on this matter in the summer months.

In other news, the 11 day conflict between the Israelis and Palestinians has come to halt, at least for now as both sides have agreed to a cease-fire that went into effect early Friday morning. The deal was brokered by Egypt. At least 232 Palestinians, including 65 children have been killed. On the Israeli side, twelve people were killed, including two children. Let us pray that the ceasefire holds and turns into a more peaceful situation between the two sides. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Jobs #Gold #Silver #FoodPrices #Protests #USA #Israel #Palestine #Commodities #Riots #Peace #Liberty #EndTheFed #bananarepublic #FireCongress #Leadership #Debt #Revolution

Ep. 591 – The Ever-Changing Narrative

The Kapital News

Ep. 591 - The Ever-Changing Narrative

00:00 / 00:38:25

In the 24/7 news cycle, there is always a moving target. So it is not uncommon for there to be a new narrative from week to week or even day to day to hold the attention of their viewers. The Kapital News does not play this game and has called out most, if not all of these narratives as of late for being what they are – phony. The main narrative to focus on with respect to markets is the liquidity injections by central banks into the system. It is the funny money that is conjured up out of thin air that continues to prop up these markets. Simply ask yourself where would bond prices, bond yields, interest rates, and equity prices be if it were not for these actions undertaken by central banks? The answer is quite simple, yields and interest rates would be higher, and bond and equity prices lower. This is a house of mirrors and one which is built upon a foundation of sand. Nonetheless, the markets continue to buy into this narrative and policy and so they march onward and upward to new highs. Yes, there have been some minor pullbacks here and there, but they then go on to make new highs. As long as this is the case, then markets move higher. But once this relationship breaks down, and The Kapital News believes that it is only a matter of time, then these liquidity injections will no longer matter and will be impotent in propping up the markets. This will likely result in a great unraveling, whose force cannot be stopped by any kind of monetary or fiscal intervention. At this juncture, market forces are in complete control and they will rid the system of malinvestments and fraudulent businesses. Look out below.

Other news discussed pertained to updates on the Colonial pipeline situation, the Israeli and Palestinian conflict that has been intensifying, and an update on the tensions between Russia and Ukraine. Much of these geopolitical events are not receiving the news coverage they deserve and furthermore, the equity markets do not seem to be pricing in the types of risks that can rapidly develop if any of these global issues escalate more seriously than where they currently stand. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Fraud #FoodPrices #Debt #Spending #EndTheFed #bananarepublic #FireCongress #USA #Israel #Palestine #Russia #Ukraine #Protests #Riots #Peace #War #Gold #Silver #Commodities #Liberty #Leadership

Ep. 590 – Nation Against Nation

The Kapital News

Ep. 590 - Nation Against Nation

00:00 / 00:34:06

The Kapital News has been talking at length since 2019 about the protests that were taking place globally. While there is always something that triggers such movements, it is rarely ever just that one issue making the headlines. Typically, it is a series of structural flaws and failures that have been tolerated for far too long, and now the people are making a stand. Due to the pandemic and the subsequent lockdowns, many of these protests and movements were paused. Now, with vaccines being rolled out and people anxious to get back to their lives, these protests are once again taking place and gaining international momentum. Furthermore, much of the problems from 2019 and prior were not contended with in 2020, and in fact, many of these issues were made worse. And due to the pandemic and all of the fallout, many new issues now exist.

Revolutions are fought on empty stomachs and The Kapital News is projecting a structural, long-lasting inflation. Of course inflation means an increase in the money supply, which has and is occurring in spades, but the effects of inflation, higher prices, will be here to stay for some time. The focus on the price increases are on items that people need to live and survive, such as food, energy, medical products/services, shelter, and other commodities. We are not so concerned with items that people do not need to live. It is actually quite simple to see – are all of these people protesting and rioting because the cost of living is so affordable, or otherwise? And yet this is only the beginning of these price increases. We saw what happened in the Middle East only a decade ago with the Arab Spring. Much of this was caused by inflation and high food prices. This happened only a couple years after major central banks began their monetary experiment of QE following the GFC. An inflationary policy that had ripple effects around the world and later contributed to such a movement. The actions undertaken by central banks and governments around the world today dwarf the efforts during and shortly following the GFC – so what can one reasonably conclude? That the fallout from these policies will be even worse and far more reaching. Throw in wealth inequality, tax increases, and political corruption with these higher prices and you have one dangerous and volatile cocktail.

News stories discussed today pertain to the escalation between Israel and Gaza. Actions between these two have not been this bad since 2014. This comes on the heels of rising tensions between Israel and Syria, where Syria is playing middleman for Iran. Another common story now seems to be run-ins at sea between Iranian naval forces and US naval forces. Just last month, US forces fired warning shots at Iranian speedboats for conducting dangerous maneuvers and getting too close to US vessels. Well the same thing just occurred whereby US forces fired 30 warning shots at Iranian speedboats. The frequency of such actions is setting itself up for something to go wrong – let us pray that it does not. In the US, the Colonial pipeline was hacked over the weekend. According to the FBI, it was at the hands of a Russian hacker group. The pipeline is one of the most crucial in the states, especially for the east coast as it supplies a major portion of gasoline. Gas prices were already anticipated to be higher in the spring and summer months, and this setback only adds to those price pressures. Restoration of the pipeline has yet to be fully restored at this time. The longer it takes, the worse the outcome. Other items mentioned, were the tensions between Russia and Ukraine, Australia and China, China, Taiwan, and the Philippines, Scotland and the UK, and civil war mentions in France, amongst others. It is nation against nation. Pray for peace, yet be prepared for war. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Protests #FoodPrices #Commodities #Revolution #USA #Liberty #Leadership #War #Peace #FireCongress #EndTheFed #bananarepublic #Gold #Silver #Debt

Ep. 589 – April Fools Jobs Report

The Kapital News

Ep. 589 - April Fools Jobs Report

00:00 / 00:35:06

The market consensus was looking for a gain of one million jobs in the month of April. Instead, the figure came in at +266,000. This was quite the miss. However, it certainly gives at least another month of cover for fiscal and monetary authorities to continue with their narrative that more policy intervention is needed. From the White House, both the President and Treasury Secretary were stating how there is still a long road ahead. They also mentioned how the extension of unemployment benefits has no impact on this dismal jobs number. Instead, they cite the effects of the pandemic and the costs and lack of availability of child care. Interesting to note, however, is that members of the Federal Reserve did mention that the extension to unemployment benefits likely did impact the jobs number for April. As many people are getting paid just as much to stay home as compared to actually working. This belief by some Fed members was stated because, first of all, it is true, and then secondly, those extensions are a fiscal measure, not a monetary one. So the Fed is more than happy to throw a fiscal policy under the bus and shift the blame from themselves onto Congress and the White House, even though they are the ones financing such fiscal policy nonsense.

Clearly, both fiscal and monetary policy authorities want the “gravy-train” to continue as do the markets. And despite this dismal number, markets rallied and made new highs on the DJIA and the S&P500. This is a function of central bank liquidity, which continued to march higher this week and with it equity prices. This is the true narrative to monitor. If markets continue to buy into the rising liquidity injections, then they climb higher, if they cease to buy these actions, then it is game over, as this is the only thing that is propping these markets up. And it is not just the equity markets, but the bond market, and others as well.

The fiscal and monetary policies introduced last year and this year will continue to drag future economic growth downward, while also leading to increased costs across the board in commodities, and items needed to live. Housing and rents continue climbing higher, as do construction and building materials, as do commodities, from base metals, to agricultural products. These price increases will translate into great economic, political, and social strife in the coming months and years and this will be a global phenomena. Some of this fallout is already being witnessed in smaller countries, where they are near collapse or are already there. This trend will continue to make its way up the chain impacting larger economies and countries. This funny money coming from Uncle Sam is anything but a gift from the government, and it is anything but free. The costs of which will be some of the most expensive in human history in terms of price increases, social and political impact, lower living standards, and lost opportunities. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #USA #Liberty #Protests #FoodPrices #EndTheFed #bananarepublic #FireCongress #Bailouts #Debt #Spending #Revolution #Leadership

Ep. 588 – Jobless Claims Below GFC

The Kapital News

Ep. 588 - Jobless Claims Below GFC

00:00 / 00:28:16

It has been over a year, but finally the initial jobless claims figure is below that witnessed during the depths of the GFC. In aggregate, regular state unemployment and PUA claims came in at a combined 599,000 for the week ending 1 May. The peak during the GFC was around 660,000. The prior combined figures for around an entire year stood north of 900,000 on a weekly basis! Regular state claims came in at 498,000 and the prior week was revised upward by 37,000 to stand at 590,000. The Pandemic Unemployment Assistance claims came in at 101,000. In aggregate, amongst all forms of unemployment insurance, some 16.2 million Americans continued to file claims. This gives a de facto unemployment rate of 11.6 percent. The official unemployment rate is currently at 6 percent. The jobs report for the month of April will be released tomorrow by the BLS.

The Federal Reserve’s balance sheet stands at $7.81 trillion, which is a week-over-week increase of $30 billion, and is just shy of a new-all time high. The Fed remains committed to purchasing at least $120 billion of US Treasuries and mortgage-backed securities per month. This will take the balance sheet to around $8.5 trillion by the end of the year, and The Kapital News expects that number to be closer to $10 trillion. This policy of QE continues onward despite record high equity prices, record high housing prices, sky-rocketing commodity prices, rising food prices, et cetera. If the jobs report provides a strong number, then the Fed is going to find themselves to be trapped even more than what they currently are. How can they continue to justify their policies and interventions if everything is looking healthy? Of course things are not healthy. It is a smoke and mirror show provided to us via trillions in fiscal and monetary policies. But the Fed will never admit to this, so they will continue with some made up narrative to justify their reckless actions. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #Protests #FoodPrices #EndTheFed #bananarepublic #FireCongress #Liberty #USA #Leadership #Gold #Silver #Commodities #Debt

Ep. 587 – Is Social Unrest Contagious?

The Kapital News

Ep. 587 - Is Social Unrest Contagious?

00:00 / 00:36:21

More than several countries around the globe were protesting throughout 2019. In comes the pandemic and the subsequent lockdowns and the protests are tampered down. However, the reasons for the protests were never truly dealt with and due to the negative fallout from the pandemic, many of these issues have actually gotten worse. So here we are in 2021, and many of these protests are once again taking shape.

Whether it is income inequality, tax hikes or the mention of tax increases, a raise in bus or metro fares, a decrease in governmental benefits, or political abuses of power, one thing is certain, people around the world are sick and tired of being sick and tired. The cost of living is increasing by the day and more and more people are spending larger portions of their incomes on the basic necessities to live. This is why it becomes laughable if not disrespectful for those who argue about a deflationary environment. People around the world are not protesting and rioting because the cost of living is so affordable – they are protesting because they cannot afford to live!

Furthermore, these types of protests and movements can prove contagious as they may inspire other people around the world to take to the streets in their respective countries. Cost of living increases, tax hikes, and political corruption are not unique to only a few countries, but rather most, if not all of them. Depending on the outcomes, some may be resolved peacefully, while others may turn violent. In the latter scenario, the global economy should be watchful of further supply-chain disruptions. A country at war with itself will produce fewer items and thus less to be offered on the global stage. The global economy is continuing to contend with supply-chain issues, and social strife will only add to these pressures and bottlenecks, which ironically will only serve to further increase prices. There is no easy way out of this mess, but it is encouraging to see people stand up for themselves, their families, and their countries. Major changes are needed, and let us pray that they take the form of liberty and free-market capitalism. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Protests #FoodPrices #Inflation #USA #Colombia #Peace #Gold #Silver #Commodities #Jobs #Housing #Fraud #Bubbles #Zombies #EndTheFed #bananarepublic #FireCongress #Liberty #Leadership

Ep. 585 – Priced Out of Housing

The Kapital News

Ep. 585 - Priced Out of Housing

00:00 / 00:34:01

Only a few months ago the average new home build cost an extra $24,000 due to the price increase of lumber alone. Fast-forward to today and now that increase is $36,000! That is an increase of 50 percent in only a few short months. And of course we are told constantly by our policymakers that there is no inflation. Do not believe your lying eyes is supposedly their message. Further, this is placing upward pressure on rents as well, and according to the National Association of Home Builders (NAHB), monthly rent payments are likely to increase by $120 per month. So understand that Uncle Sam and company have been sending out stimulus checks over the last year. If your rent should increase by $120 per month, then that check simply went to covering this rent increase. However, it will not be able to cover all of the other price hikes that exist from A-Z.

As we continue to see upward pressure on prices, many major corporations have been issuing press releases to their customers indicating that they will be increasing their prices, if they have not done so already. It would also be prudent to not only pay attention to the price hikes, but also the volume of product. Is it the same weight or lesser? Is it the same count or fewer? With these prices increasing there are only a few things that can happen. For example, corporations can assume the price hikes, thus squeezing their margins; they can pass along the entire cost to their customers, thus increasing consumer prices yet also risk losing market share; or a combination of the two. However, whichever option is chosen by what company, one thing is certain and that is margins and savings will be squeezed. The markets are priced to perfection, as the saying goes and thus anything that strays from this narrative can have some serious negative consequences.

Some such negativity right now with the current state of housing is the likelihood of pricing out a generation of homebuyers. The demographic most negatively impacted right now is the Millennial generation. This cohort has to contend with purchasing record-high housing prices, equity prices, car prices, rents, student debt payments, and the lack of current and future opportunities. All while likely to be left with the responsibility of cleaning up this mess from a budgetary and governmental standpoint. This is the intersection of economics, politics, and social issues. The dam is about to burst globally because of these issues, and when it does, it will be epic! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Housing #Lumber #Jobs #EndTheFed #bananarepublic #FireCongress #Liberty #USA #Leadership #Inflation #Gold #Silver #Commodities

Ep. 584 – Job Or Just A Paycheck?

The Kapital News

Ep. 584 - Job Or Just A Paycheck?

00:00 / 00:33:34

Evidently one does not need a job in order to receive a paycheck in the new America. As stated by President Biden yesterday evening, Americans should not have to choose between a job or a paycheck. So presumably, one can go to work and earn a paycheck, or one can simply decide that they would prefer to just receive a paycheck by doing nothing. It would have to be assumed that the government will be sending out the checks. This is beyond ridiculous, but this is what was said. As The Kapital News has been stating for the last couple of years and especially last year, with all of the stimulus checks that were sent out, was how the American people were being conditioned to accept money from the government. This is a trial run at universal basic income or UBI, which is part of modern monetary theory, or MMT. The overall belief is that money grows on trees, deficits and debts do not matter, and if inflation should ever be of concern, just raise taxes. A terribly flawed idea and it should not even be considered an idea – that is how bad it is. Nonetheless, many Americans have grown accustomed to and fond of these checks from the government, not realizing the true cost that awaits them on the other side. This will take the form of much higher prices, higher taxes, lower living standards, and the loss of opportunities.

Initial jobless claims came in at 553,000 for the week ending 24 April. The prior week was revised upward by 19,000 to now stand at 566,000. While the regular state unemployment number is now below the figures we saw during the depths of the GFC, when taken together with the federal program of Pandemic Unemployment Assistance, or PUA, which came in at 122k, in aggregate still keeps us above those GFC figures for over a year. While trending lower, there is still along way to go as prior to the pandemic and subsequent lockdowns, claims were between 200-300k. In aggregate, some 16.6 million Americans continue to claim some form of unemployment insurance. This gives us a de facto unemployment rate of 11.9 percent, which is still about 2x as high as the official rate at 6.0 percent. Next Friday will be the release of the official jobs report for the month of April.

The Federal Reserve’s balance sheet retreated by $40 billion from last week’s all-time high and now stands at $7.78 trillion. The Fed remains committed to their QE policy of purchasing at least $120 billion per month of US Treasuries and mortgaged-backed securities. This will take their balance sheet to around $8.5 trillion by the end of the year and The Kapital News is projecting it may be closer to $10 trillion. For perspective, the balance sheet was just shy of $900 billion prior to the GFC. Monetary measures of M1 and M2 were also released. These figures used to be updated weekly, but are now refreshed on a monthly basis. M1 and M2 both hit new all-time highs, at $18.68 trillion and $19.89 trillion, respectively. These were month-over-month increases of $280 billion and $250 billion, respectively. The ultimate narrative that matters is this one that pertains to central bank actions and the injections of liquidity into the system. Should markets continue to buy into it, then markets likely continue grinding higher. But should they cease to buy into it, or the system hits exhaustion, or an endogenous or exogenous event occurs, they it is likely game, set, and match for this decade plus long bull market.

Lastly, several active military officials in France are warning of a civil war breaking out in the country. The rush of immigrants into the country over recent years is one such reason cited by the officials, along with other government policies that they believe are leading to the downfall of the country. The French government will be dealing with these individuals via military council, but their message has already been heard. With all of the actions and policies that have been implemented by governments and central banks around the world, the global system has been materially weakened. This type of rhetoric, along with the global protests, riots, revolutions, civil wars, conflicts, and coups will only pick up steam from here. The true costs of all of these policies have yet to be fully felt and once they are, global flare ups will be the norm in countries large and small, weak and powerful. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #FoodPrices #Debt #Spending #bananarepublic #EndTheFed #FireCongress #Liberty #USA #Leadership #Bailouts #Protests

Ep. 583 – Powell + Biden Speak, Trillion Dollar Giveaways

The Kapital News

Ep. 583 - Powell + Biden Speak, Trillion Dollar Giveaways

00:00 / 00:34:16

Just when you thought multi-trillion dollar deficits for the past couple of years was bad enough, wait…there is more! The one-two punch from monetary and fiscal authorities keeps coming with no end in sight. The government, especially the Democrat party wants to continue with the massive spending spree and the Federal Reserve is more than happy to continue to finance such profligacy. Of course nothing is free and the results will be higher direct taxes at every level, federal, state, and local, higher inflation, lower living standards, and fewer opportunities. One cannot fix a global debt crisis with even more debt. Yet no policy maker regardless of political party or monetary institution wants to take responsibility or accountability for their years of reckless and criminal behavior. We do not have the right to steal from future generations, yet that is exactly what it means when we run these types of annual deficits and accumulate a national debt of over $28 trillion and growing!

Today was the conclusion of the FOMC meeting and as expected the Fed left the Federal Funds Rate unchanged at 0.00-0.25 percent. They also maintained their stance with respect to their QE program whereby they will continue to purchase at least $120 billion per month of US Treasuries and mortgage-backed securities. Last week their balance sheet hit a record high of over $7.8 trillion. Fed Chair, Jay Powell, continues to reiterate that inflation expectations will be transitory and will be a result of base effects, due to the low levels seen last year due to the lockdowns. In effect, he is stating that the Fed is just going to wait and see what happens next year, because the base effects will be in play through the remainder of this year. So a large print on inflation may very well occur and the Fed will just presumably shrug it off and say it is only due to base effects. We wonder if the people who have to pay higher prices will be so nonchalant about their currency being devalued?

Finally some tougher questions were asked of Jay Powell, but most likely simply due to the obvious absurdity of their policies and rhetoric. For instance, questions were asked with respect to the real estate market, which is currently hitting all-time highs with prices and other metrics. It was then asked with this as a backdrop, why then does the Fed continue to purchase $40 billion per month of MBS? It may be understood and even accepted that during the GFC, housing prices were collapsing and MBS were toxic assets and the Fed was attempting to inject liquidity into the system via these purchases. That was then and this is now. The GFC was an emergency and thus they justified their actions because of the falling house prices. Now, we have prices at all-time highs and the Fed also states that the economy is recovering – so where is the emergency to justify these purchases? A fair and basic question that received a terrible answer or better yet a non-answer, but at least the question was asked. On the other side, however, giving credit where credit is due, Jay Powell did admit that rising housing prices are pricing people out of the market, especially younger people, and that this is problematic. This is true. Yet does he not understand that much of this is a direct result of monetary policies that he is responsible for and fiscal policies of which his institution finances? This summarizes who and what we are dealing with.

This evening President Joe Biden gave an address to a joint-session of Congress. In his hour long speech he promised trillions of dollars in new spending on top of the trillions of dollars already passed to be spent during his short-time in office. There is completely no understanding of basic mathematics that exists within Congress, especially within the Democrat party. For instance, the Biden administration wants to increase taxes on the wealthiest of individuals and corporations. And presumably, with this extra tax revenue all of these new and old programs will be funded. Well not so fast. We are on track to spend nearly $8 trillion this year alone! This will give us an annual budget deficit of over $4 trillion. Our deficit will be larger than the entire amount of tax revenue that is brought in, which is around $3.5 trillion. Further, if you take $8 trillion and divide by 52 weeks in the year, you get around $154 billion of spending per week! And this is just the federal government. So, you can confiscate 100 percent of Jeff Bezos’ net worth, not just income, but everything the man owns, and it will only finance the US federal government for one full week! Yeah it does not add up and look who is in control of the education system – yep the government. These programs are outrageous, un-American, and unconstitutional. Yet none of that is going to stop them from trying to pass more legislation and spend trillions of dollars that we do not have – thus stealing it from future generations and robbing them of their prosperity and opportunities. This is all only going to get worse. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Fraud #Inflation #Spending #Debt #Gold #Silver #EndTheFed #bananarepublic #FireCongress #Liberty #USA #Leadership #Revolution #Protests #Peace

Ep. 582 – Low Rates Fuel Housing, Zombies, + Chaos

The Kapital News

Ep. 582 - Low Rates Fuel Housing, Zombies, + Chaos

00:00 / 00:33:45

Low interest rates are fueling much more than just housing and zombie corporations, but earlier today housing data came across the wires. The Case-Shiller 20-city composite home price index saw an 11.9 percent year-over-year increase in the month of February. This reading is the highest since 2014. With respect to the national home price index, the year-over-year increase was also at 12 percent. This is the highest reading since 2006. It is interesting to note that the time period of reference is just prior to the GFC when the housing market peaked.

The Kapital News has been mentioning how the current environment is likely going to have to contend with a triple whammy or trifecta of serious economic and financial issues. For one, the trade wars, supply disruptions, and fiscal policy measures are highly reminiscent of the causes of the Great Depression of the 1930s. Secondly, there is a fascination and outright obsession with big tech names, SPACS, and cryptocurrencies, where the crowd claims that these assets can only experience price appreciation. Thus mirroring the Dot-com era. And lastly, with residential real estate prices moving as they have been over the prior year and likely to continue in this manner for at least the remainder of this year, will generate data points not seen since the peak of the housing bubble in 2006, which led to the GFC. So, it should be highly evident that risks abound and that such price appreciation across the spectrum of asset classes is due in large part because of low interest rates, fiscal policies, and monetary policies. All of which cannot last forever, so it begs the question, when will it let up, and when it does, what will the fallout look like?

Not only are low interest rates fueling asset prices higher, they are also creating new zombie corporations, as well as continuing to prop up existing zombies. If market forces were allowed to prevail, as opposed to distortionary interventions via the government and central bank, then these firms would have gone out of business and/or restructured. This would have been a net-positive for the long-term health of the economy. Yet due to such monetary and fiscal policies, these poorly managed companies were given a life-line, and it came in the form of easy money and cheap credit via low interest rates. The existence of these firms will stunt future growth and prosperity because these firms will have to allocate a disproportionate amount of their cash flows to servicing debt as opposed to capital expenditures, investments, and hiring. This is at complete odds with one of the dual mandates of the Federal Reserve and that is achieving full employment. Well how can full employment be achieved if a significant portion of US firms are classified as zombies? This figure is now nearing 25 percent! This is a question that needs to be asked and answered.

Lastly, because the worlds of economics, politics, and social issues are always intertwined, there exists risks and opportunities within any environment. However, given the current climate, it is reasonable to assume, and recent geopolitical events would indicate that there are more risks than there are opportunities. It is simply not logical to believe that a global debt crisis can be managed or solved by increasing the amount of debt into the system. This faulty logic along with the subsequent policies that are implemented, give rise to a lot of social movements, and increase the likelihood of global conflict. This conflict can be internal to countries or it can be between and amongst nations that can turn into war. Revolutions are fought on empty stomachs. And when one accounts for increasing food prices, commodities, and security threats, coupled with pandemic lockdowns, lack of future opportunities, and many people being priced out of various markets, then it is rather easy to connect the dots. The global system is extremely fragile right now on many fronts, and thus it will only take the slightest of internal or external shock(s) to bring it all down. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #FoodPrices #Protests #Revolution #USA #Liberty #EndTheFed #Leadership #bananarepublic #FireCongress #Gold #Silver #Commodities #Peace

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