Fed To Buy Stocks? The Reckless Mania Is Here – Mike Maloney

by birtanpublished on August 15, 2020

And so that's what the Fed is allowed to buy it's illegal for them to buy stocks currently but they've figured out a way around it around it and their buddies are gonna get rich off of this it's great for everyone except you well the stock market remains insane I'm gonna

Get right to the news um this 15 years of wiped out but jobs are still overstated I'm gonna be covering some of these stories I just wanted to point out I'm not going to cover this one odds of another recession this year are pretty

High if Congress doesn't pass more aid and this is by the chief economist at Moody's rating service and when I read this I realized that he doesn't have a very good grasp of economics the weird gonna be in a depression it's not going

To be a recession but he says if Congress doesn't pass more aid we'll get into more of that later but passing aid just dilutes the currency supply it's not creating any more real wealth goods and services that's the real wealth you

Create more dollars which is the measurement tool of those goods and services and there's more of these measurement tools so your dollar is basically measuring a smaller piece that's it that's called price inflation

When they do that but it also causes wealth redistribution and we are going into a period of time where velocity is slowing down and as velocity slows down we have deflation even though they're inflating the currency supply that's

It's very complex but I'm just going to get into the news here definitely read this one this is excellent a crash in the dollar is coming by Stephen Roche and Stephen Roche is somebody that I do respect when it comes to his knowledge

Of economics and so on but if you read this article what he's saying is what I've been saying in my presentation the death of the global dollar standard that I've been giving for a decade now and he's giving

Sort of a very recent update and some very good analysis of why the dollar is no longer going to have it's it's no longer going to enjoy its exorbitant privilege and that privilege is that it's the world's reserve currency so we

Can print dollars that our debt is denominated in no other nation can do that this allows us the enormous trade imbalances and and and all of the deficit spending that we're able to do it's also a wealth transfer from the

Rest of the world to us it's like a tax on the rest of the world because a lot of the US dollars half or more exists outside of the United States and if we inflate more dollars it doesn't just dilute the ones insight inside than the

United States it dilutes all dollars globally and so if it D values all of the dollars globally is transferring purchasing power from the rest of the world you know half of the purchasing power that whoever gets those new

Dollars first gets the stolen purchasing power from the dollars that are in existence if half those dollars exist outside of the United States and the rest of the world then 50% of the stolen purchasing power comes from outside the

United States that's one of the reasons that we've had this extraordinary standard of living that we've got in the United States the next article is from mich and he's always great good to read 15 years wiped out but jobs are still

Overstated and what he's talking about here if you look at the amount of jobs out there the growth in jobs you see this pull back in 2008 the global financial crisis and then this huge run-up that we had then this little

Angled top and this huge crash this is all monthly data and so this little angled top is is the very end of the first quarter most likely and then this huge crash we've a little rebound however in this article

He shows that you know two months ago the Bureau of Labor Statistics the BLS I like to call them the BS and the National Bureau of the National Bureau of Economic Research admitted that the job estimates were overstated that they

Miscategorized a lot of people and that the actual amount of jobs was far lower than than they had estimated now this is an unemployment this is employment so the number of jobs was far less than they

Were reporting but they said we're not going to change the charts we're going to leave the statistics just as they are even though we made it a horrible error and hugely overestimated the number of jobs that there are out there and then

Guess what they did it again this month so they and this is what the article is about for the second time they've miscategorized the same number of people basically the same percentage so I'm going to move on and want to show you a

Chart that I just generated and it's of GDP and you'll notice that same PO back in 2008 of GDP so the size of the economy and then it goes up here and we've got a little tiny pullback an angle on the top of this now this is

Quarterly data though and so this angle it was GDP was positive until the second half of March so this is just the last two quarters of the first the last two weeks of the first quarter that caused the whole first quarter to go negative

In GDP and if you look up here this is from May 28th was the last time they updated this and it's updated quarterly so it took from the end of March until May 28th to compile and give you this data which means we've got 11 more weeks

Before they come out with the next gross domestic product chart but guess what it's gonna look like this I'm sorry I'm like I say if you can't laugh about it you gotta cry about it and I'd rather

Laugh they just keep on making all these stupid mistakes with what they're doing they don't really understand economics but here's that same contraction in the global financial crisis and there's a little but this is monthly not quarterly

Data there's that little angle in this huge crash so this is what we've got to look forward to I believe with GDP another article that I believe everybody should read pent-up demand won't save us from economic

Destruction this is on the lid Vic von Mises Institute and I highly recommend reading it Ludwig von Mises Institute tends to be a lot more technical so some of the reading some of it speaks over the heads

Of the readers but Harry Dalton here does not everybody should be able to understand this it's very very good and it's just saying why this big recovery isn't going to happen why the government can't just turn on the off and turn on

The economy like it was a stopwatch very good article this one is a definite must read Wall Street on parade Blackrock authorized the bailout plan before the there was a crisis now it's been hired by the three central bank's

To implement the plan and guess what these are the people that authored this new thing on Blackrock they all work for Blackrock this is Stanley Fischer former Federal Reserve Board member and he's from the Swiss National Bank their

Central bank and he's from the Bank of Canada so these people are in the revolving door going from the private sector working for big financial firms and having big payrolls and big commissions and big bonuses going and

Serving with central banks and having the central banks now as buddies and financial firms and then going back into the private sector they're the revolving door people there in the private sector with their

Influence on the central banks and what has happened here is I'll skip further down in here the Blackrock plan further explains why for the first time in history the Fed has hired Blackrock to go direct that's the name of the plan go

Direct and buy up seven hundred and fifty billion dollars in both primary and secondary corporate bonds and bond ETFs a product of which Blackrock is one of the largest purveyors in the world adding further outraged to the Black

Rock run program Blackrock will will get 75 billion of the 454 billion in taxpayer currency to eat the losses on its corporate bond purchases which will include its own ETFs which the Fed is now allowing it to

Buy in the program so the Fed is creating this currency you know the 454 that comes from taxpayers from the Treasury and is given to the Fed for this program the Fed then use uses a fractional reserve and and expands upon

That and they can make it earlier in the thing in the article it says four point four five four trillion bailout plan so the Treasury gave them this the the Fed just creates the balance from nothing deposits in their accounts and they get

To buy their own ETFs so they are both the buyer and the seller and they're making Commission on both ends of the deal it's like the Fed creating a bunch of currency and saying okay we're gonna pay you to buy a house open up account

An account and you do you deposit the they deposit brand-new currency into the account that didn't exist before thats stolen purchasing power from other people because it dilutes the currency supply you get to buy the house with it

But you're also the realtor and you get a commission on buying the house and you you also own a house that you're selling and so you buy the house from yourself and you're the realtor representing the seller which is yourself

And you get a commission on that end this is just hilarious I can't believe it's being done but this is going to cause a further income inequality and the social unrest will only increase in the future one feature of the Blackrock

Plan that is certain to get wide public pushback in the u.s. is the proposal for central banks to buy stocks equities this author the the authors of this plan write any additional measures to stimulate economic growth we'll have to

Go beyond the interest rate Channel and go direct that's the name of the plan again with a central bank crediting private or public sector accounts directly with currency they call it money currency and so the central bank's

Create currency that didn't exist credit these accounts and then a one way or another this will mean subsidizing spending and such a measure would be fiscal rather than monetary by design without what they're saying their fiscal

It's the government that creates fiscal policy it's the central banks that create monetary policy so this would be on the government side this can be done directly through fiscal policy or by expanding monetary the monetary policy

Toolkit Ben Bernanke used to talk about the monetary policy toolkit and he used to talk about expanding it here it is expanding the menu of assets that the Federal Reserve can buy that was way back in 2002 and I based my book and my

Entire life off of what he said in that speech back in 2002 deflation making sure it doesn't happen here with an instrument that will be fiscal in nature such as credit easing by way of wait for it

Buying equities so they've created this thing so that the Federal Reserve can do what is currently illegal for the Federal Reserve to do they cannot buy equities they're only allowed to buy government backed assets which means

Bonds and and and mortgage-backed securities that the government has purchased and so that's what the Fed is allowed to buy it's illegal for them to buy stocks currently but they've figured out a way to round it around it and

Their buddies are gonna get rich off of this it's great for everyone except you next up on the list the Fed really needs to look at this chart deflation ahead and this is from deflation calm and I've never seen this chart and it's a great

One so this is the m2 velocity so the m2 currency supply how quickly is it changing hands year-over-year and it's a measurement of it as a percentage change year-over-year and you can see that the percentage it's on this scale over here

Has just absolutely fallen off of a cliff and this is probably last month's data or Medivh may even be actually it looks like it's probably quarterly data so this has not been updated it's going to fall further but then they've got it

With US core consumer price index so the core CPI is the Consumer Price Index that measures inflation after they strip out food and energy so it's not a real measure if as long as you don't buy food or heat your house this is the

Measurement of inflation that you use or fill your car with gasoline so if you don't eat or go anywhere and you freeze to death or bake in the heat then this is this is the inflation that affects you but look at the similarity in these

And how they track each other with a seven quarter lead the the velocity of m2 leads prices by about seven quarters so we've got quite a few we've got a bit of time left before prices collapse if this continues to track as true now at

Wheat according to Google Trends searches for how to buy stocks just hit an all-time high all-time high by far this means that the total amateurs who have never bought stocks in their lives and they're googling how do I do it

Believe that this is the best time to buy stocks yeah I think I'll do the opposite great tweet and that goes right along with Sven Heinrichs article crash number two and this is a great article it's full of charts but I'm gonna skip

Down near the end here and go to a quote that he's got look for the sp2 turn positive for the year with a boost from the fed in the week ahead that's the sentiment that at the moment and probably the most frustrating aspect of

A mania the most reckless looked like the most right and the most reasonable look like the fools for not chasing the stock prices and that is you know it's hard to be wrong year after year and I've you know people say oh you're wrong

Stocks have gone up gold didn't go anywhere and that was true for a long time but we're in this big secular gold bull market and then inside of that there was a short-term cyclical bear market which I can't measure and predict

With accuracy I can measure the long term bear market and I do believe that it is not over the bull market not the bear market the long term gold bull market and we're about to enter the second phase of that soon but this end

Is great I may well be wrong on this but the circus-like atmosphere in context of historic valuations optimism and good along with the bears crying that you know the bear is being in pain the people of that have bet against the

Stock market sold their stocks or gone short on stocks they're all in pain right now are exactly the type of conditions that have ended bear market rallies in the previous periods in history to think that it's different

This time is to count on it being different this time well in one aspect it already is different this time the first stock mania inside of a recession not discounted far below at all the all-time highs but rather sitting on top

Of the largest disconnect between the economy and the stock market ever inside of a recession no less and I could not agree more with spin and then we've got Robert Breedlove a human lying can process 120 bits per second the feds 20k

Employees can process 18 terabytes per year the world's 7.5 billion people can process 6.8 quadrillion bytes I guess that is per year bits per year the Fremont therefore the free market is three million eight hundred thousand

Percent more intelligent than the Fed thank you very much Robert Breedlove and Robert I want to ask a question I when I was a kid I grew up in Culver City and there was a breedlove that lived just a few miles from me and when he was a in

His early 20s he built a car in his garage I had a model just like this when I was about 10 years old and he took that car to the Bonneville Salt Flats and he became the first person in 16 years he

He was he broke the first land speed record in 16 years and became the first person to go 400 miles an hour in the spirit of America and then he had a crash in this car that was quite devastating on his run where he became

The first person to go 500 miles an hour and that crash he got he his parachutes just shredded and he kept on going way beyond the end of the track at 500 miles an hour hit an embankment got airborne and ended up in this lake and

It's a good thing because if he if that hadn't been there there was an oncoming train and he would have broadsided a train at 5 this is the fastest accident in history until his next accident and so that car they

Recovered and they restored and it's in museums today and then he built another car and went on to become the first person to break the six hundred mile an hour barrier and this that was in 1965 so in 63 four hundred miles an hour

Sixty four or five hundred miles an hour 65 six hundred miles an hour this was one of the most uplifting times in history this was an when the Jetsons were on TV and I had one of these little models in the future was so bright and I

Just wanted to leave everybody on a high note we have the potential to still have a bright future we just have to make sure we don't go the wrong direction I want to thank you for listening we'll see you next time

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