Damn the deficits! Full speed ahead.
—Admiral Donald J. Trump
Don’t despair, Dear Reader.
The check is practically in the mail.
From the Washington Post…
Trump appears to back another round of stimulus checks, though jumbled remarks make plan unclear
Asked by Fox Business if he supports ‘another round of direct payments for individuals’ — a reference to the $1,200 stimulus payments — the president said: ‘I do. I support it. But it has to be done properly. And I support actually larger numbers than the Democrats. But it’s got to be done properly.’
Republicans have so far rejected Democratic lawmakers’ push to send out $2,000-per-person a month to Americans during the pandemic.
And here’s Stansberry NewsWire:
House of Representatives passed a $1.5 trillion infrastructure bill, highlighting the potential for additional economic stimulus.
Yes, more money is on the way. ‘Larger numbers,’ too.
U.S. businesses are declaring bankruptcy faster than at any time since 2013. That pace is likely to increase. Bills typically trail for months before they catch up with a failing business.
Small businesses, without much capital, and with no lobbyists and little political power, are especially vulnerable…and largely unnoticed.
Self-employed people do not line up for unemployment benefits. They do not get laid off…or fired. They just roll over…and fade away.
And bankrupt businesses do not rehire their workers. The $600 per week unemployment bonus expires at the end of this month. And, we predict with great confidence, come July 31, there will still be plenty of people without a job.
Professor of Finance at the Wharton School of the University of Pennsylvania Jeremy Siegel:
If investors tried to come up with an index of mom-and-pop businesses, it would show devastation far worse than what we saw in the stock market, and it would still be down dramatically today.
There are two systems in America. One is fake. The other is a ripoff. Together, they transfer wealth from the many to the few…and destroy the economy, too.
Crazy? Sure. But get ready for more of it.
Wrong is now right. Up is now down. And insolvency is the new Triple A.
Wall Street corporations operate in the fizzy financial economy, where they can be gassed up by the Federal Reserve’s fake money, lent out at giveaway rates. Their stock prices go up…their borrowing costs go down — even if their business is getting worse.
As part of its rescue program, for example, the Fed buys corporate bonds…thus pushing down interest rates (yields go down as prices go up) and helping companies borrow.
Among the bonds bought by its agent, investment management company BlackRock, are those of Warren Buffett’s Berkshire Hathaway, which is sitting on a pile of $137 billion in cash.
Buffett needs no help from the Fed, in other words. But thanks to the government, his companies can now borrow more cheaply.
The whole program is a fraud…a flimflam only possible in the fantasy world of unlimited, fake money.
But small businesses operate in the real world. They have payrolls to make. Bills to pay. Employees to train. Customers to satisfy. Few of them have much margin for error…or deep pockets.
You’ll recall that investors practically tripped over each other trying to buy stock and bonds of Hertz, even after the car rental company declared bankruptcy.
Imagine a small, mom-and-pop business that has gone broke. It has to go, hat in hand, to a local bank. How much money do you think it could raise?
Moms and pops support themselves by providing real goods and services — at a profit. They earn their money, in other words. And that’s how real wealth increases.
And since the feds create no wealth, this is the wealth that the feds must steal (using their fake money) in order to ‘stimulate’ Warren Buffett and the financial economy.
But the government shut down millions of businesses, large and small, in March. The latest estimates by the Atlanta Fed tell us that GDP for the second quarter likely fell by 40% — a decline that’s ‘off the charts’…five times worse than any recession since 1960.
This confirms our view that capitalism can create a crisis…but if you want a real disaster, you need the government.
And the worst is still ahead. The idea of the COVID checks and the Paycheck Protection Program was to ‘tide over’ businesses and consumers until the economy restarted.
But now, it is obvious — the economy is not restarting as planned. Virus sightings are becoming more frequent. And though there is no evidence that universal shutdowns and beach closings really save lives, several states are backing off from ‘reopening’ plans.
Even the Trump campaign is rethinking its rally schedule…
So, reopening will not return business to ‘normal’ any time soon. Instead, it will be piecemeal, hesitant, and imperfect.
But wait…there’s more. In their zeal to bail out their friends on Wall Street and in Congress, the Fed has added another nearly $3 trillion to the U.S. monetary foundation (its own balance sheet). And the federal deficit is projected at $4 trillion, about 20% of GDP.
A few years ago, anyone who suggested that we would be facing this level of fiscal madness would have been considered mad himself.
And the idea that, under these circumstances, a Republican president would suggest even more spending…well, it was crazy.
But here at the Diary, it’s an iron law: When the money goes, everything goes. The signposts get turned around. The maps are turned upside down. Men put on dresses. And we all walk on the ceiling…
…until we fall on our heads.