Cradle-to-Grave Stimmy: How We Got Here

[PAF]

By David Stockman
May 3, 2021


You would think that knuckleheads like Senate GOP Leader Mitch McConnell would finally wake up. Last night the biggest spender since LBJ and FDR combined laid-out Part 3 of a $6 trillion in 100 days spending spree – which comes on top of the Donald’s $4 trillion fiscal bacchanalia last year. Yet the bond vigilantes barely wiggled their small toe.

Indeed, at 1.65%, the 10-year UST is still buried deep below the running inflation rate, which rate itself is on the verge of liftoff.

Still, today’s negative 50 basis point real yield on the benchmark UST is only the culmination of a 30-year campaign by the Greenspan Fed and his heirs and assigns to destroy honest price discovery in the bond pits on the misbegotten theory that cheap debt fosters growth, prosperity and wealth.

No, what it actually does, among countless other ills, is unshackle the politicians to bury future generations in unspeakable debts.

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33-Year Destruction of Honest Bond Prices by the Fed: 10-Year UST Yield Minus Inflation



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Of course, what remains of the Trumpified GOP actually believes that the real problem in America is that the Donald’s idiotic wall on the Mexican border remains unfinished and scheduled for effective demolition.

Soon they will find out, however, that it is not Hispanic immigrants looking for work in America that voted them out of office. It was the 12 unelected money-pumpers on the all-powerful FOMC – an American monetary politburo – that allowed their political enemies to finance social democracy by monetizing the mountains of debt that have been and will be issued to finance it.

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Continue to full article, links and graphs:

https://www.lewrockwell.com/2021/05/...w-we-got-here/

[Brian4Liberty]

Great article.

But interesting choice of quotes from that extremely long article. The intent seems to be to troll those concerned about massive, uncontrolled (and incentivized by government) immigration.

Also contained in the article:

Still, today’s negative 50 basis point real yield on the benchmark UST is only the culmination of a 30-year campaign by the Greenspan Fed and his heirs and assigns to destroy honest price discovery in the bond pits on the misbegotten theory that cheap debt fosters growth, prosperity and wealth.

No, what it actually does, among countless other ills, is unshackle the politicians to bury future generations in unspeakable debts.

Thus, if the real spread on the 10-year (purple area) was even +200 basis points, as it was at the turn of the century, the 10-year UST would now be yielding 4.25%. At that level, even Easy Janet (Yellen) would not have blessed Sleepy Joe’s $6 trillion spend-a-thon and centrists like Senator Manchin would have been a lot more than merely “uneasy” upon its presentation to the Congress.

Absolutely right. There is no price discovery and no functioning bond market anymore. It is completely manipulated and price fixed.

So we actually do understand what the Biden Administration is doing. With what amounts to free money on offer, the Progressive/Left has spotted a once in a lifetime opportunity to saddle the American public with the kind of Cradle-to-Grave Stimmy that they have always dreamed about.
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After all, how do you compete with free maternity leave, free child care, free preschool, free elementary and secondary education, free community college, nearly free university, virtually free ObamaCare, free elderly care and, to boot, after $3,600 per child tax credits, essentially no income taxes at all for upwards of 75% of adult Dem voters?

That is, the Dems are going with universal free stuff for all while the going is good. The rather despicable Svengali who ran the Obama White House and then ran Chicago into the ground from the mayor’s office, Rahm Emanuel, made that clear as a bell when he explained the Dems’ true political calculation this week to the Washington Post:

“Once everyone’s in, all the parents want in. Then it’s not a poor person’s program or a poverty program. It’s an education program. . . . That to me, that is essential. It changes the center of gravity once it’s for everybody.”

Spot on again. The UBI ideas are being back-doored into reality. And as Ron Paul recently said on the Liberty Report, what Pelosi is doing is akin to looting. They know it isn’t sustainable, but they have the opportunity to loot and they are taking everything they can get.

But we have a news flash: Financial socialism has been underway for several decades now because on Wall Street all the boys and girls get a trophy, while risk and loss have been essentially vaporized by the central bankers.

Yes, everything to benefit Wall St.

You can blame this pivotal inflection point on Baker because the Gipper was a sound money, gold standard man at heart. Reagan would have likely reappointed Volcker on his own motion, but his diary from March 16, 1987 makes clear why that didn’t happen:

Then Jim Baker – re the Aug. end of the term for Volcker as Chrmn. for the Fed. Reserve Board. We are going to see if Alan Greenspan will take the job if Paul will step down gracefully.

The fact is, Baker didn’t want rising rates and a crowding-out driven recession in front of the 1988 election because his Texas friend and mentor, George Bush the Elder, was next in line. So he had convinced Reagan that Volcker had to go and that Alan Greenspan was just as sound on money matters and a Republican to boot.
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As Greenspan took his bows 25 year later, however, the center of lobbying power had shifted to Wall Street and the financial industry, even as Greenspan’s decades of Keynesian central banking and easy money had sent the bond vigilantes into permanent hibernation.

Needless to say, the financial industry knows whereupon its bread is buttered, and has functioned as the Fed’s potent advocate and shield in the political wars of Washington.

At length, therefore, the GOP members of the House and Senate finance and banking committees were bought and paid for by the new financial industry lobbying power. Soon, nary an ill-word was spoken about the Fed from the Republican side of the aisle, even as it destroyed honest price discovery in the bond pits and gutted the bond vigilantes that had kept the old main street lobbies vigilant and the GOP wedded to its old time fiscal religion.

The Banking-WallSt-Government Complex. Speaking of looting, Pelosi wasn't the first person to come up with the idea.

Soon they will find out, however, that it is not Hispanic immigrants looking for work in America that voted them out of office. It was the 12 unelected money-pumpers on the all-powerful FOMC – an American monetary politburo – that allowed their political enemies to finance social democracy by monetizing the mountains of debt that have been and will be issued to finance it.

Since it was brought up as a slight dig by the author, it should be pointed out that it is very relevant to the topic at hand. It was a conscious and integral part of the Greenspan plan to export to cheaper labor nations, and to import cheaper labor to the US. One way to offset all of that monetary inflation is to reduce wages at the same time. As long as the monetary inflation (and the money) could be contained on Wall St, and prevented from reaching wages, it would disguise the monetary inflation.

There was a wall built built by Greenspan and friends. It was a wall to contain the monetary inflation on Wall Street. And now, as Stockman is getting to in the article, it has set the stage for Pelosi and friends to put as many holes in that wall as possible.

Yes, Greenspan and his replacements created crony central banking. And now Pelosi wants to expand the list of people getting a share of the spoils. But Pelosi’s list of cronies is far larger than just Wall Street. The dam has broken, and the inflation flood is coming.

[oyarde]

I seem to be weathering the storm OK , but it is only a matter of time before this really starts to show . It is though quite amazing how well it has been hidden in the past 13 years or so .

[CaptUSA]

I seem to be weathering the storm OK , but it is only a matter of time before this really starts to show . It is though quite amazing how well it has been hidden in the past 13 years or so .

It's coming unraveled, though. My wife is the type of person that is disinterested in any issues beyond her immediate circle. Politics, religion, international affairs, etc. are all things beyond her control so she invests little time in worrying about them. (Oh, how jealous I am!) But she does the grocery shopping and has been complaining for the past few visits that the prices of everything are going up. So when she starts to notice it, I know it's being felt by "regular" people.

[oyarde]

It's coming unraveled, though. My wife is the type of person that is disinterested in any issues beyond her immediate circle. Politics, religion, international affairs, etc. are all things beyond her control so she invests little time in worrying about them. (Oh, how jealous I am!) But she does the grocery shopping and has been complaining for the past few visits that the prices of everything are going up. So when she starts to notice it, I know it's being felt by "regular" people.

Yes I think that will continue to rise this summer because I also expect fuel to rise and one lesson from obama was once they go up they dont go down .

[CaptUSA]

Yes I think that will continue to rise this summer because I also expect fuel to rise and one lesson from obama was once they go up they dont go down .

Interesting thing about fuel - at least around more urban settings - is that there are still tons of people working from home. Which means that demand for gas is still way down. And yet the price is going up. But it may take going back to a normal commute for many of these people to "feel" it.