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Discussion in 'The Kruse Longevity Center' started by Jack Kruse, Mar 11, 2021.

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  1. Jack Kruse

    Jack Kruse Administrator

    Credit is the future tense of what money is today. Credit is how we borrow time from tomorrow today. When we borrow time it comes with a toll. That toll is leverage. We need to pay more in the future for the time we steal today from the future. Inflation is time theft. Credit to an excess always leads to inflation because of how credit links to time.
    If you think your future is going to be like your past you're doing life wrong and wasting your time.
    John Schumacher likes this.
  2. Jack Kruse

    Jack Kruse Administrator

    Two-thirds of the companies that went public in the U.S. this year are now trading below their IPO prices. More data that shows you the coming economic collapse is being hidden by the asset bubble growing in the top ten stock of the SPY = pure evidence of the Cantillion effect.
    John Schumacher and ND Hauf like this.
  3. Jack Kruse

    Jack Kruse Administrator

    One of the less appreciated stories of 2022 will be the continued declining mortgage originations. Organic (owner occupied) buyers
    collapsed from 81% in 2020 to 74% in 2021. The year-on-year GROWTH of investor residential real estate purchases is steepest on RECORD.

    Are you reading the smoke signals?
    John Schumacher and ND Hauf like this.
  4. Jack Kruse

    Jack Kruse Administrator

    We are being ruled by a den of criminals. You have a duty to remedy this in 2022. Healthcare is now a market that deals in human futures. Vaccines are now a future market in healthcare designed to remove people from their rights and their lives. https://twitter.com/briantopping66/status/1476579248055984137

    If the Fed was working for "We The People" The Fed must take fine scale control of modern Monetary aggregates, UST, and repo/rrp. Central clearing lets FICC police margin and fixes balance sheet shortfalls once and for all.

    What Is the Fixed Income Clearing Corporation (FICC)?

    The Fixed Income Clearing Corporation (FICC) is a regulatory agency that deals with the confirmation, settlement, and delivery of fixed-income assets in the U.S. The FICC ensures the systematic and efficient settlement and clearing of U.S. government securities and mortgage-backed security (MBS) transactions in the market.

    Inflation right now is confusing people because its cause is difficult because the traders see bad numbers. Inflation is in the headlines. The critical issue is whether it is going to be sustained. It is not a question of when a reversal will occur. This makes me chuckle.

    Jeff Snider speaks for many deflationists like Jeff Boothe and Joe Carlasare. In fact, both of them tell anyone who listens to Snider that Jeff made an excellent case that we don't even HAVE inflation. I chuckled at this ignorance. Snider believes, absent an expansion of the true global monetary USD-based aggregate (call it M5?) all you have is a shift inward in the supply curves driven by the COVID shock. No money growth=higher prices, but not inflation. That is their thesis.

    This is moral relativism for economics a course correction by deflationists who first said inflation would be short-lived and now argue it never existed it was just a syntax disagreement Inflation cant be money defined because good services are not fixed and the system Is open. Inflation will not be short-lived and I have made that case for 18 months.

    Some may call this a cheap shot but it is not. Some may say the jury is still out. LOL.
    There is no jury out - the flawed algorithm is the issue not its calculation at any given time. The behavior is quite apparent.

    According to Boothe, Joe, and Bitcoin TINA there was nothing to debate until 3 months ago. The 'deflationists' loved to tell their audiences in podcasts and in Clubhouse that their opinions had run the table for 2 decades in economics. Now we get a little zig in the zag--in inflation in 2021 for reasons that are hardly hard to see-- and Joe and TINA particularly have enjoyed their "I told you so's. A think they have been a little premature, IMO.

    Virtually every real-world factor that allowed the deflationists to run the table for 20 years has already done a 180-degree pivot in 2021 as this THREAD has documented in detail towards PERMANENT structural inflation, while the deflationists remain solely focused on the stock of global debt. IMO this is the essence of the debate. They still do not get it.

    On Clubhouse now some of the guys following their line of thinking I have tuned out. The church of satoshi is not 100% deflationary dogma that is wrong.

    The most relevant “inflation” stats for US middle-class are college tuition, housing, daycare, date night (movie and dinner), car, and vacation (1-2 trips per year)… these are all pushing 10%+ yoy… they’re falling behind and no “Eurodollar curve flattening” changes that…

    Snider the deflationary clubhouse crew in the Bitcoin rooms tells the ears who listen to them that none of these are inflation if the broad money stock isn't growing. And they believe it isn't just semantics, or a cheap back-pedal. It defines the Fed's ability to control and address it. If it isn't inflation, they cant tighten.

    This is where the “definition” of money (which has a moral dimension) intersects with “inflation”. If “Broad money stock” can be defined to include any repo-able collateral (e.g., AAPL bonds), then certain “money issuers” win at expense of “money earners”->fundamentally political.

    The best answer to the inflation problem now is to just eliminate the Primary Dealer altogether. Why should a handful of mega-firms have an oligopoly that is demonstrably counterproductive to "We The People"?

    Much of Basel was designed to manufacture demand for UST in the markets themselves, but they never considered the plumbing. COVID was a wake-up call. this is why I call it a compliance test for the coming economic reset.

    The Fed has to backstop markets. Basel is designed to tax the users of UST sourced leverage for the taxpayer insurance. Got to get the strike right, markets think it's last night's close. That comes from Primary Dealer's who took them hostage--because they COULD.

    The Fed must take fine-scale control of modern Monetary aggregates, which include UST now by formal definition (repo/rrp). Central clearing lets FICC police margin and fixes balance sheet shortfalls once and for all. Then the Fed can tighten Wall st not Main st and we'll see the market bubbles deflate.

    This is part of the reason why I just had to back away from Bitcoin rooms the last 6 weeks. When people do not get it, just let the world play the game out and see where the chips fall because the storm is firmly here.
    GavinH and caroline like this.
  5. Jack Kruse

    Jack Kruse Administrator

    1/31/22 Mark your calendars. This is the date December M4 growth released w/first glimpse into multiplier effect of taper.

    A friend introduced me to this resource when M4 growth still raging. Pre-taper it had fallen from 30.6% on 6/20 to 5.1% on 10/21.

    Deflationist believe balance sheet expansion does not impact inflation… not even M1, only monetary base. If private credit is not expanded there is no impact on inflation. It may have a psychological impact on asset prices nevertheless.

    My reality:
    Balance sheet expansion does cause inflation when the Fed is the single biggest marginal financier of the govt & the govt is the single biggest economic actor in the US economy, which it is at ~25% of GDP (& that does not include the state & local govt's, which also get Federal support & should therefore be added)
  6. Jack Kruse

    Jack Kruse Administrator


    Why are the deflationists wrong now: The Taylor rule predicts the Fed fund rate should be way higher and it is being suppressed as a form of YCC to keep the cost of government low while inflation burns your value.

    What Is the Taylor Rule?

    The Taylor rule (sometimes referred to as Taylor's rule or Taylor principle) is an econometric model that describes the relationship between Federal Reserve operating targets and the rates of inflation and gross domestic product growth. The Taylor rule has been interpreted both as a way to forecast Fed monetary policy and as a fixed rule policy to guide monetary policy in response to changes in economic conditions. The rule consists of a formula that relates the Fed's operating target for short-term interest rates to two factors: the deviation between actual and desired inflation rates and the deviation between real GDP growth and the desired GDP growth rates.
    GavinH and caroline like this.
  7. Jack Kruse

    Jack Kruse Administrator

    Where interest rates and debt levels are now it means we likely can never raise interest rates again. The economy was stuggling at a 2.25% Fed Funds rate and 3% 10-year yield in 2019. And that was with the national debt at $22 trillion. At $32 trillion debt by the end of 2022, what Fed Funds rate and 10-year yield is the collapse?

    Implications for the coming year?

    Each dollar of marginal debt taken on declines as subject to the Law of Diminishing Returns. That’s indeed where the US finds itself Sole saving “grace” is the dollar’s continued hegemony by virtue of being the best-looking horse in a glue factory
    John Schumacher, caroline and ND Hauf like this.
  8. Jack Kruse

    Jack Kruse Administrator

  9. Jack Kruse

    Jack Kruse Administrator

    The first trading day of the year is around the corner. That familiar smell of negative real rates eating your purchasing power, banks and funds swimming in excess liquidity yielding 0% at best, the “Bitcoin fixes this”, companies trading at 30x sales and China's real estate markets is blowing up. Gotta love markets.
    John Schumacher, caroline and ND Hauf like this.
  10. Jack Kruse

    Jack Kruse Administrator

    “Turkey CDS spread implies a 10% cumulative probability of default over the next 5 years assuming a 40% recovery rate” Please kindly refer to Mr.Erdogan on how the heck are you suppose to recover this 40% in the event of default
    caroline likes this.
  11. Jack Kruse

    Jack Kruse Administrator

    Using inflation adjusted returns, gold beat S&P 500 since 2000. 6.623% vs 3.125%( w dividends 5.127%). Bitcoin destroyed every asset for the last 13 years. I doubt S&P beats real assets like Bitcoin for the next few decades.
  12. Jack Kruse

    Jack Kruse Administrator

  13. Jack Kruse

    Jack Kruse Administrator

    Pending Home Sales Are Crashing. Who is laughing now?
  14. Jack Kruse

    Jack Kruse Administrator

    There is PRICE inflation as recorded by the CPI/PPI basket... And there is Fiat debasement, which leads to price inflation. Since Fiat debasement is 100% certain due to the debt spiral and fiat being the "error term"... Complete the causation equation... Don't overthink it. The answer is Bitcoin.
    John Schumacher likes this.
  15. Jack Kruse

    Jack Kruse Administrator

    Most people don't distinguish between monetary debasement and price increases. I think the word inflation may be used purposefully by financial propagandists to help confuse the matter.
    John Schumacher likes this.
  16. Jack Kruse

    Jack Kruse Administrator

    Inflation is already over 10% in the US. If Fed steps away from bond purchases, long bond yields will have to rise substantially… especially when investors realize that global supply-side inflation likely will be very sticky… but where is the break point?

    When the 10 yr yield hits 2.5 % the levee is gonna break
    John Schumacher likes this.
  17. Jack Kruse

    Jack Kruse Administrator

    Why people are piling into large risky variable mortgages to buy inflated homes: (Variable mortgage rate: 1.7%) - (Inflation: 4.7%) = -3%

    So the real, inflation-adjusted rate is NEGATIVE 3% if you stay in real estate = a negative yielding bond. You get paid to borrow big. So where's the $$ coming from?

    The Fed MBS.
    JanSz likes this.
  18. Jack Kruse

    Jack Kruse Administrator

    Inflation is so bad that California shoplifters are demanding a 10% hike in the $950 misdemeanor cap.
    DebraGM likes this.
  19. Jack Kruse

    Jack Kruse Administrator

    Empty shelves in markets
    Inflation rampant
    Official media props up govt leaders
    Rules change on weekly basis
    Fear propaganda spread daily
    Documents required for entry
    Questioning is not allowed

    caroline and ND Hauf like this.
  20. Jack Kruse

    Jack Kruse Administrator

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