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Via InternationalMan.com,

International Man: Recently, massive riots have broken out in many cities across the US.

Despite the unrest—and the economic damage from the shutdowns—the stock market continues to rally.

It seems that markets don’t reflect earnings, economic prosperity, or growth. What is going on here?

David Stockman: It’s quite simple. The Fed has unleashed the greatest torrent of liquidity ever, and it’s finding its way into a relentless, massive bid for risk assets.

Since the eve of the Lockdown Nation disaster on March 11, the Fed’s balance sheet has erupted from $4.3 trillion to nearly $7.2 trillion. That’s $32 billion per day—including weekends, Easter, and nationwide riot days.

Worse still, at their June meeting, the mad money printers domiciled in the Eccles Building promised to keep printing $120 billion per month to buy US Treasuries and other assets for an indefinite period. That should get us to a $10 trillion balance in less than two years’ time.

What this means, of course, is that honest price discovery in the canyons of Wall Street is deader than a doornail. We now have a putative capitalist economy in which the most important prices in all of capitalism—the prices of financial assets—are pegged, rigged, and manipulated by the central banking agents of the state.

The result, of course, is speculation and malinvestment on a biblical scale.

As to the former, we are now being treated to the preposterous spectacle of an IBO—or Initial Bankruptcy Offer—of the stock of bankrupt Hertz.

Hertz’s stock is worthless. It’s pinned under a pile of $20 billion of debt—senior debt securities, which are trading at 40 cents on the dollar—and a vastly overvalued fleet of vehicles.

All this is in a world in which airline and business travel has been crushed by more than 80% from trends and won’t be coming back any time soon—so long as Dr. Fauci and the Virus Patrol are stalking the land.

Yet the unhinged millennials—who idle their ample time and de minimis money on the Robinhood trading platform—have bid up Hertz’s post-chapter 11 stock price by more than 10X, thereby inducing a mainstream investment banking firm to propose underwriting a $1 billion stock offering in lieu of a debtor-in-possession (DIP) loan!

Never before has it been this crazy.

And, yet, the empty suit who sits in the top chair at the Fed keeps insisting this is all being done for Main Street and the workers, and as Powell said in his June presser, the Fed has no asset price target in mind at all; it just wants to keep financial markets functioning smoothly.

What hay wagon does this doofus think we fell off from?

Whether they intend it or not, their massive infusions of liquidity into the financial markets and relentless bid for financial assets funded with fiat credits has redounded to the top 1% and 10% who own 53% and 88% of equities, respectively, and it’s setting up the financial system for the third—and most spectacular—crash of this century, which, in turn, will wipe out what remains of middle-class wealth.

International Man: Over 40 million Americans are unemployed. Many small and medium-sized businesses will never reopen. Many must survive not only an extended lockdown but also the most severe riots in decades.

How are the riots and shutdown going to affect Main Street?

David Stockman: It’s a devastating combo and originates in the most senseless, destructive act of the state in modern times—if ever.

We are referring to the sweeping quarantine and lockdown orders that caused instant economic heart attacks in vast sectors of the US economy after mid-March.

There is no precedent in history for activity levels in huge industries like airline travel to plunge by more than 95% virtually overnight, or the restaurant sector, where Open Table reservations dropped by 80% versus prior year in a matter of days.

Not surprisingly, there have been nearly 50 million unemployment claims (counting the new federal benefit) in just 11 weeks—a figure which amounts to nearly 32% of the 158 million employed Americans as of February 2020.

Indeed, not even the bubble-blowing, crack-up boom antics of the Fed have ever created the kind of depressionary collapse now underway.

Yet its propagators—Dr. Fauci and the Virus Patrol at the CDC, NIAID, WHO, Big Pharma and the Bill Gates camarilla of foundations, think tanks, NGOs, and vaccine lobbies—have been peddling a Big Lie from day one.

Namely, that COVID-19 is the modern equivalent of the Black Plague and spreads its deathly pathogens on a random basis to all segments of the population—the young, the old, the healthy, the sick, and all variations in between—with equal alacrity.

That’s not even remotely true.

There are 104 million young people in the USA under 25 years of age, and as of the end of May, the mortality rate with COVID was, well, 0.12 per 100,000 population.

That is, all the schools, bars, gyms, restaurants, movie theaters where they congregate were shut down by orders of the governors and mayors, but it would take a million of these young people to generate just one death attributable to the COVID.

And we emphasize the with COVID part because the CDC changed its coding criteria at the beginning of the pandemic, and now they are coding as “COVID deaths” virtually everyone who dies in a hospital—even cases where someone arrives DOA at the emergency room after a traffic accident and tests positive for the coronavirus on a post-mortem basis.

By contrast, there are 6.5 million Americans with an age of 85 or over—representing 2% of the population—but they accounted for 33% of the CDC reported deaths of May 30, and that represented a mortality rate of 450 per 100,000.

So, the risk of death with COVID for what we call the Great Grandparents Nation is 3,750 times greater than for America’s School Age Nation.

Yet the mass quarantine orders amount to a one-size-fits-all attack on everyday economic and social life when the obvious thing to do was to keep the schools open and isolate, protect, support, and treat the grandparents and great grandparents.

In fact, if you take the entire population of 52 million persons 65 years and older, they account for fully 81% of all COVID deaths—with upwards of 50% of these fatalities attributable to residents of nursing homes and other long-term care facilities. As a matter of reality, residents of the latter do not frequent bars, gyms, movie theaters, offices, bus stations, and factories, essential, nonessential, and otherwise.

The general population never should have been quarantined.

Even among the core of what we call the Parents and Workers Nation, the 83 million people between 35 and 54 years of age, the with COVID mortality rate is just 7.0 per 100,000. That is, for this group, the risk of death from contracting the coronavirus is not much higher than what is incurred in commuting to work and back, day in and day out.

In short, the whole Lockdown Nation fiasco was a mutant exercise in social engineering that will leave Main Street battered and bruised for years to come—long after the coronavirus completes its infection cycle and succumbs to the summertime sun in most parts of the nation.

And that gets us to the George Floyd uprising, which was overwhelmingly comprised of under-35-somethings breaking out of house arrest and mad as hell about their now dramatically reduced prospects in life—which weren’t all that compelling in the first place.

Just consider that the overwhelming share of leisure and hospitality industry workers are in the under-35 age cohort. Yet the 17 million jobs reported by the BLS in this sector as of February had plunged to hardly 8 million by the end of April.

Even worse, average hours declined, too, so what we had at the end of April was an industry which had shrunk back to October 1979 levels in terms of labor hours actually deployed and paychecks issued.

So, the authorities sowed the wind and reaped the whirlwind, but on such a gigantic scale as to make the future fraught like never before.

There are 80 million persons aged 16–34 in the US, and during the long, hot summer ahead, an overwhelming share of them will be unemployed. It doesn’t take too much imagination to see that the current, so-called social justice uprising is just developing an explosive head of steam.

International Man: During the COVID lockdown, Trump and Democratic governors were at odds. We saw a similar dynamic occur with the recent riots.

How do you see this impacting the presidential election?

David Stockman: It will just exacerbate the red/blue divide like never before.

Trump will posture as the nation’s super sheriff and the Dems as the champions of a cavalcade of victims—some real, though mostly politically invented—who deserve help from the heavy hand of the state.

In other words, the upcoming campaign will be a contest between the Trumpian law-and-order form of big government and the liberal-progressive-socialist version of the leviathan state. And what’s going to get crushed by the clash is the Constitution, fiscal solvency, Federalism, free enterprise, and personal liberty.

The fact is, neither party’s agenda has any legitimate place in the halls of government. The identity politics and racialist agenda of the Dems is simply a brazen abuse of the democratic process for the purpose of winning and retaining the perks, pelfs, and powers of public office.

But the Donald’s law-and-order demagoguery is just as bad.

The solution to mismanaged riots in the blue state cities and juvenile stunts like the six-block Autonomous Zone in Seattle is Federalism. That is, law enforcement is a state and local function that should never have been elevated to the federal level in the first place.

We should get rid of the FBI, DEA, ATF, and the rest of the law enforcement alphabet of bureaucratic fiefdoms by repealing the War on Drugs and the rest of the nanny state statutes.

There is no reason whatsoever that legitimate law enforcement—protection of the lives and property of the citizenry—cannot be handled by the 17,000 law enforcement agencies operative at the state and local level.

And if they are not doing the job, well, that is the purpose of elections to remedy—not some Bully Boy tweeting from the Oval Office.

And if elections chronically fail in their purpose in certain deep Blue State jurisdictions, there is a solution to that, too, which does not require sending in the Feds from Washington. To wit, people and businesses will vote with their feet, and eventually, even the likes of Governor Cuomo and Bill De Blasio would get the message.

Rep. Alexandria Ocasio-Cortez took to Twitter Saturday night to gloat over the apparent low turnout at Trump’s much touted Tulsa campaign rally earlier in the day.

She boasted that teens across the nation and around the world had scammed the event by registering for spots, snagging up mass tickets online in order to prevent others from attending, leaving most of the arena barren and empty. 

According to a Forbes report on Sunday, while the BOK Center’s total capacity is near 20,000 – about 6,200 people showed up, bused on Tulsa Fire Department numbers.

The New York Times also reported on the organized attempt to scam the Trump campaign by ensuring a low turnout, saying “hundreds of teenage TikTok users and K-pop fans say they’re at least partially responsible.”

However, the media reports appear driven purely by anecdotal evidence like Twitter testimonials among teens and parents claiming success in the scheme.

For example, AOC’s “shout out to Zoomers” for what she called the “fake ticket reservations” appears based not on direct knowledge of it actually taking place, but merely on media reports. 

Actually you just got ROCKED by teens on TikTok who flooded the Trump campaign w/ fake ticket reservations & tricked you into believing a million people wanted your white supremacist open mic enough to pack an arena during COVID

Shout out to Zoomers. Y’all make me so proud. ☺️ https://t.co/jGrp5bSZ9T

— Alexandria Ocasio-Cortez (@AOC) June 21, 2020

The New York Times reports Sunday:

TikTok users and fans of Korean pop music groups claimed to have registered potentially hundreds of thousands of tickets for Mr. Trump’s campaign rally as a prank. After the Trump campaign’s official account @TeamTrump posted a tweet asking supporters to register for free tickets using their phones on June 11, K-pop fan accounts began sharing the information with followers, encouraging them to register for the rally — and then not show.

One Trump 2020 Campaign spokesman, Tim Murtaugh, did acknowledge some degree of protester interference. 

His criticism appeared aimed at protesters at the event who “blocked access to the metal detectors, preventing people from entering.”

i have three teenagers. two of them have a pair of tix each to @realDonaldTrump’s rally in tulsa; they registered to spoof POTUS & his campaign. one of them is sitting at dinner now, laughing and saying teens around the united states fooled the man. https://t.co/akLU9o8u3f

— C.J. Chivers (@cjchivers) June 21, 2020

The “buying up tickets” scheme has been widely reported, but still remains largely unverified outside of things like TikTok videos instructing people to participate in the “trick”.

Meanwhile, a Trump campaign spokesperson was on the defensive on the Sunday morning shows, ultimately blaming tensions surrounding anti-Trump protesters at the event blocking entry, while also saying the televised and digital media reach was at over five million viewers.

“You guys were so far off that you had planned an outdoor rally, and there wasn’t an overflow crowd … the fact is, people didn’t show up” — Chris Wallace grills Trump campaign spokesperson Mercedes Schlapp on Trump’s underwhelming Tulsa crowd pic.twitter.com/1wdWK7Cpta

— Aaron Rupar (@atrupar) June 21, 2020

But then the low turnout could could also be explained by the resurgence of growing COVID-19 case numbers in Oklahoma and other states ahead of the Trump campaign’s first major indoor event.

Just hours before the Tulsa rally, six staffers working on the rally tested positive for the coronavirus. No doubt this likely gave many ticket-holders last minute second thoughts.

Authored by Bruce Wilds via Advancing Time blog,

The images of protest and violence that fill viewing screens across the globe underline the fact we are not on the way to nirvana, a state of idyllic peace and happiness. In my younger days, I was a full-blown idealist full of optimistic thoughts of how if we all worked together we could create a wonderful world. It soon became apparent that many people were not interested in work or doing, “their fair share” just for the sake of adding to the overall health and well-being of the community. This is the fatal flaw in the socialist theory. Adding to the problem is the human-animal by nature, while considered a social creature, seems unable to agree on much of anything. This of course extends to how we live, goals, and even the kind of lifestyle we wish to live.

Vincent is a song by Don McLean written as a tribute to Vincent van Gogh. It is also known by its opening line, “Starry Starry Night”, a reference to Van Gogh’s 1889 painting  The song, by Don McLean, in some ways, is an ode to idealists everywhere. The lyrics are a comparison to Van Gogh’s actual life.

They take us on a musical journey from Van Gogh’s vantage point looking out from the asylum at Saint-Remy. History shows Van Gogh to have been a troubled soul that lived in torment and spending time in the mental asylum where he painted mainly from his room or the courtyard garden. Later he went further afield to paint. Van Gogh attempted suicide by shooting himself in the chest, which ultimately led to his death two days later.

Vincent Van Gogh  is among the most famous and influential figures in the history of Western art. In just over a decade, the Dutch post-impressionist painter created about 2,100 pieces of artwork. This includes around 860 oil paintings, many of these were done during the last two years of his life. They include landscapes, still lifes, portraits, and self-portraits, Starry Starry Night is the most famous. Most people are unaware of the fact that Van Gogh was never famous as a painter during his lifetime and constantly struggled with poverty. He sold only one painting while he was alive.

Click to see more images of Van Gogh in Arles

Years ago I had the good  fortune to be able to visit the beautiful city of Arles, France where Van Gogh lived for more than a year, he experienced great productivity there before suffering from a mental breakdown. Van Gogh was a prolific correspondent and wrote nearly as many letters as he created paintings. In one of the last letters, some four days before his death, he wrote, ‘I try to do as well as certain painters whom I have greatly loved and admired.’

The most telling part of the lyrics is the line, “But I could have told you, Vincent, This world was never meant for one As beautiful as you.” This can be interpreted to mean that idealists or those who see the world through rose-colored glasses are doomed to a life of disappointment and pain. This extends into most areas of life, that is why luck is such a treasured commodity. This line in the song should also be considered a warning to idealists that over time they will suffer a thousand cuts.

It would be unfair to those of you that have read to this point not to make an effort to return to the inspiration that caused me to write this article. Sadly, the cynics reading this will tell you the only thing you can count on is that those in charge will never fail to fail us. Being thrown under the bus is more common than we want to talk about. Many idealist are simply naive, this translates into their lack of experience, wisdom, or judgment as setting them up for a life of great disappointments. While it has been said, pioneers take all the arrows, it could also be said that idealists leave themselves open to a life of heartbreak.

Life is full of lessons and many of them are learned from the harsh reality that slaps us in the face each day, one of these is that a vocal minority can create chaos. Another is that those with an agenda will often gain power by devoting a great deal of their energy to this goal. After gaining power these people justify the actions they take by saying they serve “the greater good.” For the many of us that have seen too much, it has gotten to the point where we should think about lowering our expectations the world will suddenly get better.

Two weeks ago, just as the retail daytrading euphoria peaked manifesting itself in both a record surge in small trader call buying…

… and the stock of bankrupt Hertz soaring so much it prompted the company to try to and issue as much as $1 billion of worthless stock to Robinhood investors and a since-scuttled plan, we pointed out that it wasn’t just retail investors flooding the market, and according to Goldman desk, after holding out for months hedge funds finally capitulated and are were also flooding into stocks.

Fast forward to today when in its latest weekly exposure report, Goldman’s prime desk notes that this panicked buying across hedge funds has continued and gross leverage of the overall book rose another +4.4% to 246.6% (93rd percentile one-year) while Net leverage rose further +1.6 pts to 75.1%, putting it in the 99th percentile, effectively the highest ever.

And another striking fact: according to Goldman Prime, the dollar amount of gross risk deployed during the past week is the largest over any 5-day period since mid-March, with net buying seen on Fri/Mon/Tues followed by net selling on Wed/Thurs.

Digging into the flow data reveals that North America, Asia, and EM Asia were net bought. Europe was the only net sold region.

• North America’s net buying was driven by long buying slightly outweighing short selling.
• Europe was net sold for the second consecutive week led by short selling outweighing long buying in a 3:1 ratio. The region’s weight vs. the MXWD Index fell -0.2 pts to -4.7% U/W vs. the MSCI World – the lowest level of the year.

Perhaps not too surprising, the continued selling in Europe comes just as Goldman’s own research team turned from Neutral to Overweight on Europe Stoxx 600, just as the continent experienced one of its biggest ever 3% month gains, likely capping gains for the foreseeable future.

Also not surprising is that the Info Tech sector was the most net bought sector driven by “risk on” flows of long buying outweighing short selling in a 1:8:1 ratio.  Within the sector, industry flows were split – Software and Semi & Semi Equip saw net buying, while IT Svcs and Communications Equip saw net selling.  The sector’s weight vs. the S&P 500 rose 0.2 pts to +1.5% O/W (64th percentile one-year).

So what about the bears? Here, despite the overall continue surge in bullish sentiment, global single stock shorts increased +2.5%, with short inflows led by Europe, Americas and AEJ. Japan saw little to no net activity.

At the same time, single stock shorts in the US increased +2.7%.

Nine out of eleven sectors were shorted led by Real Estate and Industrials. Energy and Health Care were the only covered sectors.

US ETF shorts increased +0.4% and currently make up 16.1% of the US Short Book (vs. 16.6% last week). ETF short outflows were driven by US Listed International ETFs.

Finally, at the single stock level, Goldman pointed out the following highlights:

• CarMax Inc (KMX) shorts decreased -12% as shares rose 12% ahead of Q1 earnings announced June 19, 2020
• United Rentals (URI) shorts increased +63% as shares rose 8% amid an analyst upgrade.
• US Steel Corp (X) shorts increased +40% as shares fell 2% amid the pricing of a stock issuance.
   

Authored by Daniel Payne via JustTheNews.com,

The country has refused to allow inspectors to access disputed sites…

Iran may be engaging in “undeclared nuclear material and activities,” a nuclear watchdog agency revealed this week, raising concerns that the Islamic theocracy might be developing weapons outside of international oversight. 

The International Atomic Energy Agency said in a declassified letter released on Friday that earlier in the year it had “identified a number of questions related to possible undeclared nuclear material and nuclear-related activities at three locations in Iran that had not been declared by Iran.”

The agency multiple times requested “clarifications” regarding Iran’s nuclear activities, including its use of uranium and whether it had engaged in research and development of nuclear processes.

Yet Iran refused to allow inspectors access to sites where possible nuclear projects were ongoing. The country said it would “not recognize any allegation on past activities and does not consider itself obliged to respond to such allegations.”

The agency “continued to request clarifications and access,” though by early March Iran still had not allowed access to the sites in question. 

The country’s refusal was “adversely affecting the Agency’s ability to clarify and resolve the questions and thereby to provide credible assurance of the absence of undeclared nuclear material and activities in Iran,” the agency said in its letter. 

In a resolution adopted on Friday, the IAEA called on Iran to “fully cooperate with the Agency and satisfy the Agency’s requests without any further delay, including by providing prompt access to the locations specified by the Agency.”

Following the judge’s comments yesterday, he was unlikely to see much profit from the book, but now that the PDF of John Bolton’s controversial tell-all book “The Room Where It Happened” has been leaked online, the neocon-warhawk may not see a penny..

Oh no!! The pdf of Bolton’s book got leaked and people can download it and read it on the phones or iPads! That would mean he doesn’t get a royalty!! Oh no! The Room Where It Happened – John Bolton.pdf – Google Drive https://t.co/K7XgcQ63qT

— Ayelet Waldman (@ayeletw) June 21, 2020

Interestingly, in his tweet yesterday, President Trump mentioned the “leak”:

“BIG COURT WIN against Bolton. Obviously, with the book already given out and leaked to many people and the media, nothing the highly respected Judge could have done about stopping it…”

Enjoy.

As Ben Garrison recent noted, in an interview Bolton stated that it was OK for the government agencies to lie to the American people if national security is at stake. And it always seems to be at stake for dominant men who want secrecy and power. Bolton is a dangerous liar and his anti-Trump screed cannot be trusted.

It’s time to slam the book shut on Bolton.

With only a few more hours to go until US equity futures open on Sunday night, it appears the dire situation across the American south and West has gone from bad to worse. According to a Washington Post tally of coronavirus data released by each state on Saturday, 8 states on Saturday reported their highest single-day case counts since the pandemic began, and the pan-US tally of new infections surpassed 30,000 for the second straight day (both Friday and Saturday). The US hasn’t regularly reported 30k COVID-19 cases a day in seven weeks. And while New York and the surrounding states that caught the brunt of the outbreak – or the first wave, at least – haven’t seen the feared upsurge in new cases.

States across the South and West, including Florida, Texas, Georgia, South Carolina, Utah, Washington, Nevada and Missouri, set records for single-day confirmed cases, and 13 states set new highs for their 7-day averages.

On Sunday, Florida reported another 3,494 new cases, bringing the statewide total to 97,291. Though Sunday’s number broke a streak of daily records, it is still well above the 7-day average seen in recent weeks, leaving the state on track to pass the 100k case mark tomorrow.

Florida would become the 7th state to pass 100k behind New York, California, New Jersey, Illinois, Texas, Massachusetts.

Source: NYT

According to the NYT, 22 states were listed under the “increasing” tab of its coronavirus tracker.

Furthermore, while the Washington Post reported that the first iterations of the COVID-19 tests distributed nationwide in March and April by the CDC were so inaccurate as to be practically useless, a chorus of Democratic critics led by Joe Biden has spoken out against President Trump over a remark he made during last night’s rally in Tulsa, when he suggested that he pressed the CDC to hold back on the testing during the early days of the outbreak.

Even if Trump was telling the truth (the president, of course, has a widely acknowledged tendency to exaggerate when speaking extemporaneously at these rallies), a surge in testing during the early days of the outbreak may have only created more confusion. But many of the president’s Democratic critics claimed Trump’s remarks further cemented the notion that he put the economy before safeguarding the lives of the most vulnerable Americans.

“The President said tonight that he slowed down testing so the public death toll wouldn’t be worse,” Elizabeth Warren tweeted. “We still don’t have a national testing strategy & Trump’s plan is to bury his head. This is a deadly failure.”

Outside of the US, Spain officially entered the next phase of its reopening plan on Sunday, which included allowing tourists from most of Europe, but warning that social distancing  measures must be followed to avoid a second wave. Speaking just before the three-month-old measures expired at midnight Saturday, Spanish PM Pedro Sánchez asked the country to keep its guard up.

“We will leave behind the state of alarm and we will enter the new normality…our economy is starting to beat. We are in a situation where we can move forward. We can’t drop our guard,” he reportedly said.

After finally wrestling a surprisingly virulent outbreak under control, Saudi Arabia on Sunday removed curfews and other restrictions imposed to fight its spread after 73 days of w relatively restrictive lockdown that also kept millions of Muslim pilgrims out of the Holy Cities as pilgrimmages were put on hold.

Over in East Asia, South Korea reported 48 new cases of the virus, 8 of which were imported, half from Bangladesh and half from Pakistan. In response, South Korea announced Saturday that it would restrict travel from both countries.

Authored by Charles Hugh Smith via OfTwoMinds blog,

You thought that monkey on your back was light as a feather, but now it transmogrified overnight into a crushing gorilla.

Dear junkies addicted to the Federal Reserve’s free-money smack: like all addicts, you firmly believe you’re not addicted. Never mind those tracks, you can stop any time. Yeah, sure, but we all know you’re going to buy the dip and max out your margin account because the craving cannot be denied.

Speaking of denial: you don’t realize you’re the dealers’ chumps, the bagholders who bought at the top who the dealers are counting on to cling on to the bitter end because those Fed speedballs have inspired a euphoric faith in your god-like trading powers.

Here’s how it ends, figuratively speaking: you’ll wake up inside your Mercedes in a god-forsaken patch of urban wreckage, all the doors will be locked and you won’t remember even leaving the party, much less how you got here.

You’ll compulsively check your account and find that your margin call exceeds the value of your entire portfolio because the bottom dropped out while you were in a Fed-smack-induced haze, dreaming of prancing unicorns and angels dancing in the head of a pin.

Only now will you understand you were not a trading genius who would get out at the top, no problem, but a bagholder, played perfectly by the big dealers who sold to you. Now you’re wiped out because you don’t have enough cash to cover the margin call that’s left after your portfolio was liquidated.

You thought that monkey on your back was light as a feather, but now it transmogrified overnight into a crushing gorilla. The dealers who you thought were your pals at the party made sure you wouldn’t be around to cause a scene when you found you could no longer count on the Fed’s baggies of the good stuff.

While you gird yourself for the agonies of cold turkey, consider Exhibit 1, the Fed’a balance sheet in February 2020:

• 2/5/20 $4.166 Trillion

• 2/12/20 $4.182 Trillion

• 2/19/20 $4.171 Trillion

Notice anything about the Fed’s supply of free-money smack? It dried up. But all the junkies didn’t notice because they were so sure that the Fed’s supply of junk was infinite.

A funny thing happened on February 19–the market topped out and crashed the following week. Now look at this month’s supply of Fed smack:

• 6/3/20 $7.165 Trillion

• 6/10/20 $7.168 Trillion

• 6/17/20 $7.094 Trillion

Umm, notice any similarity?

Fed junkies know one thing: the only thing that matters is the Fed’s junk. Real economy: doesn’t matter. Corporate sales: doesn’t matter. Corporate profits: doesn’t matter. Tax receipts: doesn’t matter. Household income: doesn’t matter.

The only thing that matters is the Fed is supplying baggies of the good stuff. Spoken like a true junkie, my friend, but once the high wears off consider what the Fed can’t do:

1. It can’t reverse the unprecedented wealth inequality its policies have pushed to the point of social disintegration and breakdown.

2. It can’t make people take on the risks and heartaches of starting new businesses.

3. It can’t force employers to hire more employees.

4. It can’t make unprofitable businesses profitable.

5. It can’t force people to buy assets at prices that no longer make financial sense.

6. It can’t make insolvent businesses and local governments solvent.

7. It can’t force people who now realize their priority is to save money to spend their cash, even if the Fed forces negative interest rates.

8. It can’t lower the unaffordable cost structure of the entire economy.

9. It can’t de-link all the financial dependencies in the financial system that make it so vulnerable to the first domino falling.

10. It can’t stop people from selling their assets.

In summary, The Fed can’t stop the unwinding of an unsustainable bubble of epic proportions. We are entering The Greatest Depression because Fed smack has zero effect on the real world; its only effect is to increase the delusion that asset bubbles are all that matters.

Also recall that the Deep State is not going to allow Jay Powell to re-elect Donald Trump with a stock market rally. From the point of view of the inner circle of the Deep State, the market collapse in March was simply a test to confirm what happens when the free-money smack is withdrawn. The test was a success and now the real crash can begin. Only this time it won’t last three weeks. It will last all the way through October because, well, you know why: Deep State to Powell: Stop Goosing Stocks Higher Or You’ll Re-Elect Trump (June 9, 2020)

*  *  *

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