Tag: normal

Normal Is Not Forever

Guest Post by The Zman

If you watch a movie from the 1970’s or maybe look at old family photos from the period, you’ll notice that people dressed funny. The men wore tacky looking polyester suits in odd colors, like lime green and powder blue. Women were also in polyester. They liked high-waisted pants with a bell-like shape to the trouser leg. Both men and women would wear denim or suede jackets on purpose. From the perspective of our age, the fashion of the 1970’s is quite hideous, but the people in that age thought they looked great.

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Totalitarians of the World, Unite!

Hat tip Raven

Guest Post by Anthony Esolan

scholastic-books

Whenever I’m in a diner or a family restaurant, I look around for the most cheerful thing in any day’s experience, and that’s a young husband and wife and their children. Today the two children sitting with their parents at the table next to us were a baby boy and his four-year-old brother. The four year old had glossy blond hair, tousled over his forehead, and was all skinny arms and legs, elbows and knees. Foolishness regarding the supposed sameness of men and women cannot stand up against a moment or two of looking at how they are shaped, and that is true even of little boys and girls. In the boy we can see the man-shape in miniature: the straight-angled legs, the shoulders made for throwing, the jaw line, the snowshoe feet. I imagine that it delights the heart of any ordinary mother and father.

Ordinary—but these are not ordinary times. They are dis-ordinary. Try to pretend that they are ordinary: that the most important things in life strike everyone as a matter of course. So the parents of the little boy look at their son, and imagine what he will be like when he grows to manhood. They imagine him as marrying a woman and begetting a family of his own. That is a matter of course. It is what all parents have always done, on the banks of the Hwang Ho or the Father of Waters, on the treeless expanses of Alaska or in the rain forests of Borneo, in the Roman forum or on a village green in New England. It is normal, not in a mere statistical sense, but in the sense of the Latin noun norma: a carpenter’s square. It is what ought to be, when you raise your son in a healthy way. To do anything other would be like building a house with crooked walls. Why would you do that? The thing will buckle.

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THE NEW NORMAL?

Our government and financial “leaders” tell us that things are back to normal and we are well on our way to economic recovery. They report rising GDP, declining unemployment, and record corporate profits. The legacy media propaganda machines, controlled by corporations dependent upon the government and Wall Street to funnel them advertising dollars in return for reporting falsehoods and mistruths, have been informing the masses that all is well. Just go back to staring at your iGadgets and tweeting your every thought to your followers, because the best and brightest in D.C. and Wall Street have it all figured out. The new normal is here to stay.

I guess my interpretation of normal deviates slightly from our glorious leaders’ definition. During the long-term bond bull market, from 1982 until 2007 the 10 Year Treasury steadily declined from 16% to 5%. This was normal because inflation declined at the same rate. Inflation declined from 13% to 3% over this same time frame according to the BLS. In reality, measuring inflation as it was measured in the 80’s and early 90’s would have yielded an inflation rate closer to 6% in 2007. During the decade prior to 2007, which consisted of supposedly strong economic growth, the 10 Year Treasury ranged between 4% and 7%. Even during the 2001 recession, it never dropped below 3.5%.

In a normal world an investor in a 10 Year Treasury bond would require a yield 2% to 3% above the rate of inflation. If the yield was below the rate of inflation they would be guaranteed to lose money. Only a fool, Federal Reserve chairman, or a CNBC bubble headed bimbo would buy a bond yielding less than the inflation rate. The BLS reported inflation rate has been between 2.1% and 3.2% over the last two years. Over this time frame, the 10 Year Treasury  yielded 2% or below until the threat of tapering reared its ugly head this past summer. Would this happen in a normal free market? If things are back to normal, why aren’t supposedly free markets acting normal? The Chinese and Japanese reacted normally. They stopped buying Treasuries with a real negative yield.

The only fool willing to buy negative yielding Treasuries is none other than Ben Bernanke. He thinks they are the investment of a lifetime. He is so sure they are a can’t miss investment, he buys $2.5 billion of them per day, which just so happens to be the government deficit per day. Ben now has $3.8 trillion of bonds on his books, versus $900 billion in 2008. His balance sheet is leveraged 60 to 1, versus the 30 to 1 of Lehman and Bear Stearns prior to their implosions. When even the hint of reducing bond purchases from $85 billion per month to $75 billion per month caused 10 Year rates to jump from 1.5% to 3% in a matter of weeks, you realize how “normal” our economy and financial system is functioning.

If our financial system was functioning normally and free market capitalism was allowed to operate according to true supply and demand, the 10 Year Treasury would be yielding 4% to 5% and 30 year mortgage rates would be 6% to 7%. Think about that for a minute. This scenario was normal from 2002 through 2007. That is what normal looks like. Now open your eyes and observe what your owners are telling you is normal. The slight increase in mortgage rates from 3.5% to 4.5% has brought the Wall Street buy and rent housing recovery scheme to it knees. Imagine if mortgage rates were allowed to rise to their true market rate. Housing would collapse in a heap.

Allowing Treasury rates to adjust to a true market rate, based on true inflation, would double or triple the annual interest expense on the $17 trillion national debt and blow a gigantic hole in Obama’s already disastrous $1 trillion annual deficits. Does this sound like “normal” to a rational thinking human being with the ability to understand simple math? Luckily, there are very few rational thinking Americans left and even fewer with the ability to understand simple math. We have been programmed to believe rather than think. As long as the stock market continue to rise, then everything is normal.

Do you think Ben Bernanke and his cohorts at the Federal Reserve worry about the average person who doesn’t own stocks, has to fill up their gas tank, feed their kids, make the mortgage, auto, and credit card payments, and figure out Obamacare, while working two part time jobs? Quantitative Easing (MONEY PRINTING) has one purpose and one purpose only – to further enrich the owners of the Federal Reserve – Wall Street banks. The .1% own most of the stocks in this country and their greed and avarice can never be satisfied.

This artificial prosperity plan for Wall Street has the added benefit of allowing the captured politicians in Washington D.C. to continue their $1 trillion per year deficit spending with no consequences for their squandering of future generations’ wealth. Bernanke and Yellen will never taper, because they can’t. The Fed balance sheet will continue to grow by at least $1 trillion per year until they crash the financial system again. Except this time, there will be no money printing solution. We are all trapped like rats in this monetary experiment being conducted by evil mad scientists. No one will get out alive. Welcome to the new normal. Now eat your cheese.