• 141 days Could Crypto Overtake Traditional Investment?
  • 146 days Americans Still Quitting Jobs At Record Pace
  • 148 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 151 days Is The Dollar Too Strong?
  • 151 days Big Tech Disappoints Investors on Earnings Calls
  • 152 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 154 days China Is Quietly Trying To Distance Itself From Russia
  • 154 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 158 days Crypto Investors Won Big In 2021
  • 158 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 159 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 161 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 162 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 165 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 166 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 166 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 168 days Are NFTs About To Take Over Gaming?
  • 169 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 172 days What’s Causing Inflation In The United States?
  • 173 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

Quantifornication Revisited

As a general rule, the most successful man in life is the man who has the best information.

Californication is a brilliant 1999 song by the Red Hot Chili Peppers. Many of the lyrics reference the often insane, unrealistic, impossible dream images Hollywood sells to the world.

"Space may be the final frontier but it's made in a Hollywood basement."

Quantifornication is the term I coined for what the Federal Reserve is selling to the world - the unrealistic, insane fiat dream that the monetary policy employed by the Fed could fix the predicament we are in.

In the movie the Matrix, Neo is given a choice by Morpheus, if he takes the blue pill he will return to sleep unaware of the truth, if he takes the red pill he will wake from the dream and become aware of the illusion, created by the AI entity, and fed to the humans in their pod dream world.


The Blue Pill

Life will be rainbows, sunshine


The Red Pill

US Labor Force Participation Rate

The civilian labor force participation rate is the number of employed and unemployed but looking for a job as a percentage of the population aged 16 years and over.

Quarter-to-Quarter Growth in Real GDP

Real gross domestic product -- the value of the goods and services produced by the nation's economy less the value of the goods and services used up in production, adjusted for price changes.

US Total Credit Market Debt % GDP

A Shrinking mIddle Class and a Grwing Lower Class

The middle class has shrunk to just under half the US population for the first time in decades, with more of the population shifting to the extremes both above and below the middle.

Allianz's Global Wealth Report 2015 dubs the U.S. the 'Unequal States of America' because the U.S.'s wealth inequality is even more gaping its income inequality.

Allianz calculated each country's wealth Gini coefficient -- a measure of inequality in which 0 is perfect equality and 100 would mean perfect inequality, or one person owning all the wealth. It found that the U.S. had the most wealth inequality, with a score of 80.56, showing the most concentration of overall wealth in the hands of the proportionately fewest people.

When the Organization for Economic Cooperation and Development (OECD) examined income inequality, it found that the U.S. has the fourth highest income Gini coefficient -- 0.40 -- after Turkey, Mexico, and Chile.

Food Stamp Participation Totals

Supplemental Nutrition Assistance Program (SNAP). Food stamp use remains near record highs, up by 78 percent over the past ten years.

The U.S. Federal Reserve ended their quantifornication program in 2014.

S&P 500 with QE Notations

The S&P has more than doubled since 2009, while the Dow Jones has actually tripled.

Stock buyback programs, fueled by CEOs borrowing hugely from the bond market, have supported the market since the Federal Reserve stopped pumping money into the system.

Stock Buybacks

Here's a must read on the current, and future state, of stock buybacks from Wolf Richter over on Wolf Street:

"Share buybacks have been a key part of the well-oiled Wall-Street machinery of financial engineering. They hide the dilutive effects of stock compensation programs and stock-based mergers and acquisitions. And they inflate earnings per share by lowering the number of shares outstanding...buyback announcements are suddenly plunging...But that plunge in buyback announcements hasn't made its way to reality yet, and the waves of prior buyback announcements are still being implemented and are still propping up the S&P 500 at this point. But gradually, that plunge in announced buybacks is going to translate into plunging actual buybacks." Share-Buyback Announcements Plunge, Stocks Risk Getting Clocked


The Great Gold Rush

Think Central Banks, gold bullion buyers and precious metal ETF purchasers are onto something?

"Data from the World Gold Council showed that central banks scooped up a net 45 tonnes of gold during the first quarter. According to Capital Economics' commodities economist, Simona Gambarini, central-bank demand in the first quarter climbed 28% versus a year ago.

Of the buyers, Russia (+46 tonnes), China (+35 tonnes), and Kazakhstan (+7 tonnes) were the most active in the market, Capital Economics says. As for why the central banks are buying, here's the research firm:

The primary driver of central banks' gold buying continues to be diversification away from the US dollar with some also looking for a hedge against currency volatility more generally. Indeed, historically gold is negatively correlated with the US dollar, the main asset held by central banks across the world, making it an effective hedge against future dollar weakness. What's more, gold tends to have little or no correlation to other traditional or alternative reserve assets, like government bonds." ~ Jonathan Garber, China Destroys the Dollar, Business Insider

ETF Gold Holdings

US Gold Coin Demand


Conclusion

Aliens

Are you a blue pill person or a red pill type of person?

The rocky shores of awake reality are far different than our political masters, and the mainstream media, would have you believe.

What's playing in your pod?

The ending of Fed quantifornication, the coming end to share buybacks, and perhaps owning some gold, should be on all our radar screens, are they on yours?

If not, they should be.

 

Back to homepage

Leave a comment

Leave a comment