Guest Post by Jim Kunstler
Halloween’s coming super-early this year and it will be a shocking surprise to those currently busy looking for Russians behind every potted plant in Washington DC. First, accept the premise that your country has lost its mind.
This is what happens when societies (and individuals) can’t face the true quandaries of a particular moment in their history. All of their attention gets channeled into fantasy: spooks, sexual freakery, conspiracies, persecution narratives, savior fairy tales. It’s been quite a cavalcade of unreality for the past six months, with great entertainment value for connoisseurs of the bizarre — until you’re reminded that the fate of the nation is at stake.
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The questions Americans might more profitably ask ourselves: can we continue living the way we do? And by what means? These matters of home economics have been sequestered in some forgotten storage unit of the collective mind for at least a year while a clock ticks in the time-bomb that sits on the national welcome mat. That bomb is made of financial plutonium and it’s getting ready to blow. When it does, all the distracting spookery and freakery will vaporize and the shell-shocked citizens will have a clear view of the bleak, toxic, devastated landscape they actually inhabit.
March 15 is when the temporary suspension of the national debt ceiling — engineered in a 2015 deal between Barack Obama and then House Speaker John Boehner — finally expires, meaning the government loses its authority to continue borrowing money. The chance that congress can pass a bill raising the debt ceiling to enable further borrowing is about the same as the chance that Xi Jinping will send every American household a dim sum breakfast next Sunday morning by FedEx. The US treasury will then be left with around $200 billion in walking-around money, at a burn rate of about $90 billion a month — meaning that that around June sometime the country won’t be able to pay invoices, issue salaries, send out entitlement checks, or do anything, really. It means pure government paralysis. It means no infrastructure spending jamboree, no “great” wall, no military shopping spree, none of the Great Expectations sewn into the golden fleece of Trumptopia.
Meanwhile, over the next few weeks, Janet Yellen and her crew of economic astrologasters at the Federal Reserve will have to put up or shut up vis-à-vis raising the interest rate on the basic overnight lending rate. The Las Vegas odds of it being raised currently stand at around 95 percent. So, they will be running that play around the time that the debt ceiling issue materializes into a live-action event. Of course, the Fed could welsh on its carefully-scripted previous hints and utterances and do nothing. But that option would probably extinguish the last remaining shreds of the Fed’s credibility, since they’ve been jive-talking about raising rates since they began “tapering” the QE bond-buying spree in the spring of 2013, i.e., a long time ago. The Fed’s credibility is synonymous with the dollar’s credibility. Look out below.
If those 95 percent odds are correct, the end of all that lovely cheap money will be the death of the Trumphoria stock market zoom as all algo hell breaks loose in Wall Street’s server farms and the trend is no longer anyone’s friend. Enter, stage left, the unintended consequences and diminishing returns of computer technology ripping apart the financial expectations of every banking official from Shanghai to 20th Street and Constitution Avenue. The American public will be left out in the parking lot with its head spinning.
So, enjoy the last few weeks of artificial Russia hysteria and LBGTQ bathroom neurosis. You’ll have other things to think about as the daffodils come peeping through the garden loam — like what to use for money to buy stuff if, perchance, the ATM machines go to lockdown, and anyway, after three days of that there won’t even be anything to buy (or steal) at the local supermarket, given the fragility of our supply chains. I know this sounds a little extreme, like Zombie Apocalypse, but you won’t actually see any zombies around. They were just part of the perpetual freak show of the mind that is being shoved aside for the starker theatrics of reality.
They’ve voted to continue to raise the debt ceiling every time this comes up. What’s different?
But……….I was heading to south west Utah in April. The fed screws everything up………
https://youtu.be/YHe1XPTioIk
“The US treasury will then be left with around $200 billion in walking-around money, at a burn rate of about $90 billion a month — meaning that that around June sometime the country won’t be able to pay invoices, issue salaries, send out entitlement checks, or do anything, really. It means pure government paralysis. It means no infrastructure spending jamboree, no “great” wall, no military shopping spree, none of the Great Expectations sewn into the golden fleece of Trumptopia.”
Hogwash! It means that this country will have to do what it has not done in over a century – LIVE WITHIN ITS MEANS. On a purely mathematical basis, this country has enough to pay our CURRENT government debt obligations, and day to day operations via direct taxation. HOWEVER, we DO NOT have enough to continue these wars of folly, fund the futures of illegals, subsidizing ridiculous solar, wind, cars etc. that cannot produce for themselves, welfare recipients that get up at noon and drink 40’s with their friends and discuss the intricacies of their low-riders, fund college loans for “womens studies” and medical “care” that is a cash cow and generally being a overweight and bloated non productive society.
And what carnage do you suppose would happen if the IRS and EPA were shut down. Well, maybe we could KEEP our wealth, and GM, Chrysler and Ford could actually build cars that people wanted, and GASP make a profit. And what if the federal reserve was forced to stop printing money – gasp, our currency would actually APPRECIATE in value, and banks would actually have to make a business plan to do something productive. The horror!
Oh, and small business owners could compete again. Go ahead, shut the whole debt fueled nonsense down, and live within our means again. I would bet that this country a year from now would be FAR more prosperous than it has been in the last century. Capitalism would truly have a shot again. / rant over
Wow, what a picture. Sound great on paper. Hats off to you Anon.
Rather than dim sum, we can be issued magic wands.
I am nearly certain that the debt ceiling will be raised. Congress has to do it.
Period. JHK’s view/prediction will have cities imploding and give us an end
of civilization. At present, the dollar still influences the economies all over
the world. We can not wish for a world-wide Venezuela. Take heart people.
We can do this, one logical step at a time. First we go chapter ll.
Southwest Utah. Beautiful country though flat, surrounded by all sorts of volcanic rock. Spent some time at my buddy’s farm in Enterprise, Utah. Nice a place as any to spend the apocalypse
Meanwhile, over the next few weeks, Janet Yellen and her crew of economic astrologasters at the Federal Reserve will have to put up or shut up vis-à-vis raising the interest rate on the basic overnight lending rate.
“The Las Vegas odds of it being raised currently stand at around 95 percent.”
Is that legit? Or just hyperbole to make a point? Do the bookmakers really have odds on the Feds future behavior?
Yes – all the time.
http://www.breitbart.com/london/2017/03/06/immigration-minister-slammed-crucifix/?utm_source=facebook&utm_medium=social
Cuntsler’s having another fainting spell over there. He’ll be Ok this evening and will write about something else.
FWIW, the 3 Month T-bill yield is rising from about 0.5% to 0.7262% given the delayed quote for Big Charts:
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Bond&symb=3_month&x=39&y=9&time=10&startdate=1%2F4%2F1999&enddate=7%2F13%2F2011&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=3&maval=13&uf=0&lf=4&lf2=32&lf3=256&type=2&style=320&size=3&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
This, not Las Vegas odds makers, informs us that the Fed will in all likelihood raise its Fed Funds and Discount Rates to about 0.75%.
As I’ve stated for years now, when bond rates finally being their inevitable rise (AKA the end of the 35 year bond rally), eventually EVERTHING about the last 50 years will change.
It is NOT Janet Yellen and the monkeys at the FOMC who will change things. It is the market, which is a summation of individual people acting in a spontaneously organized fashion. The Fed didn’t make bond prices rise from 1981 to 2016 and they won’t make the fall for the next ten years (I just guessing at that last.)
The “rally” of 1784 to now is ending. It will be followed by a century of “bear market” in social mood. I don’t know about you, but for all its warts, I did enjoy the relative peace.
Change, VAST change, is coming.
This article is somewhere on the spectrum between drivel and horseshit.
Barnum, you have the right idea, but the wrong wave count — this is most likely the third of an extended fifth, which means it has decades to run…
So you’re positing Dow 100,000? Or more?
Perhaps. I no longer pound the table in certainty about forecasts. I do suggest, however, that under the Wave Principle the “internals” of third waves are the most consistent, and powerful.
I see no way to characterize a boom based on Fiat-money credit creation as powerful. It is the equivalent of funding a lavish lifestyle on credit cards, not entrepreneurial genius or even hard work.
So, no, I think you’re wrong. The entire last 35 years are a fifth wave. Contrast every measure of industrial vigor and social health between now and the 1950’s and still try to tell me we’re in a 3rd.
The leftist delusions (universalism, Blank Slate, Magic Dirt, SpEd “inclusion,” Affirmative Action, innate racism, trann-insanity, anal intercourse celebration) all result from the same manic optimism of this social mood mania demonstrated by the belief that when a dollar is borrowed, two dollars in wealth then exist.
I think the 5th wave of importance in nominal terms began in 2009, and this unprecedented romp higher amidst utterly SHITTY economics is a 5th for the ages. In inflation adjusted terms it gets muddy, because there is so much credit inflation that backing it out of the statistics is impossible. By that measure I think the entire last 17 years is part of a correction that has much, much, much more room to fall.
So share your wave count. When did this extending fifth begin?