Time’s up

Coming to an economy near you

There are times or events in your life that you never forget. Often these are tragedies like the Kennedy assassination, Space Shuttle explosion, or 9/11. The event can also be a good one, like the birth of a child or a marriage, however the human brain is hard wired to more aptly remember traumatic events as part our self preservation and defense mechanisms. It seems odd, but my focus is such that I feel like I am experiencing such a moment. Has there been an “event”? Not really? Covid started roughly a year and a half ago. Riots? Last year too.

My sense now is that we are approaching some kind of “singularity” when it comes to human hubris, greed, and outright deceit. A question you might ask yourself is “does anything matter?” Statistics seem to have little or no meaning. You don’t agree with results of a study? Child’s play, just ignore it and attack the source. You want to get a vaccine approved in less than 2 years when it normally takes 4-5 years? Simple, just ignore the need for long term safety data and remove the control group, so you have nothing to compare against. Something went wrong with a military pull-out where people died? Hey, its the predecessor’s fault. Can’t afford something? That is so 1970’s; we print money so who cares about a budget? A political ally is no longer useful? C’mon, all you need to do is leak accusations and make some shit up. The list goes on and on and on. The fact is we live in a post truth world. The truth doesn’t matter, it is whatever someone says it is, as long as it fits the narrative.

What this means, at least from this humble person’s perspective, is that we have yet to experience the “big one” where all of what I describe above is exposed and then washed away. Natural forces always win out. Covid is (was) big, but it seems to be just a pre-amble. I mean, did the black plague have a 99.8% plus survival rate and even higher for people under 70? Alternatively Covid could be a part of a series of events, where there is no big “1” but rather a multi year cascade of generational “grey” swans.

So far, only the folks on the bottom part of the social and economic spectrum have been impacted. Many people are barely getting by; free money or no free money. The chattering crowd continues to yawn at double digit inflation while sitting in their 2MM estates (1MM is so 2005) and drinking top shelf liquor while watching the latest sport to go woke (bread and circuses, anyone?). In the end, you can’t print food and if people would rather not work than be forced to take a vaccine, you will likely have a shortage. Goods and services still have to go from point A to point B. Suffice to say the chattering crowd better pay heed, and now.

Is it different “this time”, i.e. we have entered an age where indeed nothing matters and everything is simply by decree? Nope, never. Except “this time” will be of a magnitude perhaps never before seen, and not in a good way.

Surveillance weaponized…again.

In the world of Banana Republics, some things occur that are more Banana Republic-y than others. Spying on political opponents to intimidate, harass, and suppress ideas is at the top of the list. You would think the brazenness of intelligence agencies would at least be curtailed after they were exposed in the blatant spying and unmasking of the Trump administration on the basis of a false dossier paid for as opposition research. You would be wrong. These unelected bureaucrats don’t even pretend to hide it anymore, especially now that regime change has been achieved in the Executive Branch.

Based on the Obama/Biden Spy-Gate precedent, it is now well known that US citizens communications can be secretly surveilled if a part of communications with foreign actors at varying degrees of separation. Meaning the NSA is supposed to only surveil foreign targets, but can collect communication of US citizens that communicate with foreign actors, or even secondary communication between US citizens if one of the parties originally communicated with a foreign actor. What is particularly appalling in this case is the “unmasking” of Tucker Carlson, and leaking of his private emails and text messages to the press. An objective observer might ask, where were the unmasking and leaks prior to when NBC news actually interviewed Vladimir Putin? Who approved the unmasking and who leaked to the press? Was Carlson unmasked because he is not an “approved” news source of the current regime? All very troubling questions to ponder. I can’t help but think we are so far down an Orwellian path that it has become irredeemable. It is like a bad combination of “Dark Knight Returns” and any particular episode of the “Handmaids Tale”.

At a higher level this is just further evidence of a complete ongoing breakdown of our Republic and the freedoms it once represented. President Biden was right when he said we face the biggest threat to our Democracy since the Civil War. Except that it is coming directly from radical elements within his own party and administration rather than a bunch of unarmed hippies that “sieged” the capitol on Jan. 6th.

Fauci’s Tangled Web

Here is Peter Daszak, President of Eco Health Alliance, describing the  process of “insert[ing] spike proteins” into viruses to see if they can “bind to human cells” as being carried out by his “colleagues in China”. Eco Health Alliance was funded by…drumroll…the National Institute of Health headed by Anthony Fauci. Therefore my assumption is that when Fauci denied that the NIH funded gain of function research at the Wuhan lab, he meant only in the narrow sense of the NIH directly funding the lab. What is increasingly clear is that the NIH was indirectly funding gain of function research thru intermediaries such as Eco Health Alliance, who then directly collaborated with and funded gain of function research at the Wuhan Institute of Virology. In sum, this looks like a massive cover-up. Of course, we are to rely on the WHO investigation to determine the origins of Covid-Sars-2. Who is the head of that investigation? Peter Daszak, the guy in the video. You seriously can’t make this stuff up.

The 10th Man

This is my mood as of late, kind of like the contrarian on steroids. But hey, summer is here and it is time to spend more time outdoors with family and friends. Good thing we don’t have to worry about an engineered bio-weapon that escaped from a lab this year. Whoops. In what is likely the most Babylon Bee-ish satire but not satire story of the year, the scientist who’s company was collaborating with the Chinese on gain of function research at the Wuhan institute of virology is now leading the WHO investigation into the origin of the virus. You read that right. Is it any wonder that many people have zero confidence in “official” institutions? SMH.

Fire and Ice

Hi folks. It has been a while since I posted, so thank you if you are still following this lowly blog. The past two years has been incredibly difficult as many of you know. Losing a parent is devastating, but losing both in a relatively short period of time is a huge gut punch. It feels like a permanent emotional hole has been blown thru the center of your body . If that weren’t enough, I just had a close call with cancer. I went in for an elective procedure to have my tonsils removed and some other work on my uvula which is the little flap that prevents food from going down your airway or in your nose while eating. As part of the normal post-op procedure, the removed tonsils were sent out for pathology. In one of them they found a small cancerous tumor. Scary AF, I know. The good news is that I had a follow up PET scan and no other cancer was found in my body, at least from the neck area to my thighs. So I think I dodged a bullet and was very fortunate it was found this early, by chance of me getting my tonsils removed. I do have to be monitored moving forward, but there is a sense of relief that I am in no immediate danger that requires chemo or some other treatment. Whew, I am glad that is off my chest.

Please don’t confuse the title of this post as a cynical comment about climate change, although I could offer much commentary on that subject, and will eventually. When I reference fire and ice, I am using the terms in the context of inflation and deflation. You see, much of what is advertised to you by the press is meant to confuse on the subject. It is the notion that inflation is subdued, and we are living in world of unicorns and rainbows where money can be printed without consequence. Of course, nothing could be further than the truth. Without showing a bunch of charts, many of you know that house prices are hitting all time highs. Food prices have skyrocketed in the past year. Energy prices are now following suit. Costs of basic materials such as copper and lumber are rising in parabolic fashion. Meanwhile officials at the federal reserve have the view that all of this is “transitory”, and that it is OK if inflation runs hot for a while.

I often follow Dr. Michael Burry of the “Big Short” fame. He is a very unconventional fellow, having gone to medical school and then started a hedge fund in lieu of practicing medicine. I love guys like this, partially because I consider myself to be unconventional as attested by many who know me. Burry was actually the catalyst behind the recent Game Stop mania. It started when an industrious and observant member of the Reddit forum known as “Wall Street Bets” noticed that Burry had taken a position in Game Stop in the fall by virtue of reading his quarterly disclosures. Burry was bravely taking the other side of the trade versus other hedge funds that were shorting the stock. Then of course the reddit crowd got involved and supercharged the situation. As it turns out it is the same as it ever was, in that most people lost money on the parabolic short squeeze and then crash that ensued. Back to my point regarding Burry, recently he has been commenting on twitter about the prospect of hyperinflation in the US. This is not a new sentiment, but when I guy like Burry feels strongly enough to put his thoughts out there on the subject, I take notice.

Recently many have observed the very sharp rise in mid to long term interest rates here in the US. For some, notably members of the Federal Reserve and other “establishment” types, this is viewed largely as a good thing, i.e. a sign of growth. Others have rejected this premise and noted how fragile and dependent the US (and world) economy is on ultra low borrowing costs. The conventional view however is that Fed will again come in and save day by instituting “Yield Curve Control”, which is just a re-branding to describe more quantitative easing (money printing), albeit perhaps in a more targeted fashion as to achieve specific results along the treasury curve. This is where I will offer an unconventional viewpoint, and one that ties in the concept of runaway inflation. Whenever you have an exogenous buyer of last resort that buys indiscriminately, i.e. a central bank, eventually the “tonic” that is buying (QE) becomes the poison. Why, you ask, hasn’t the “real” market for government debt always lowered rates (increased demand and prices) of bonds in anticipation of the Fed buying? Well, that is the case provided the Fed’s balance sheet AND rate of purchasing don’t become so big that they risk the underlying the currency depreciating at an uncontrollable rate. It is the market participants view, i.e. the real world demand of government debt, that will judge this, not the Fed. Taking it further, when the Fed’s balance sheet becomes big enough, it will become a systemic risk to the US and the entire financial system. Why? Because quantitative easing and MMT (modern monetary theory where free money is handed to the plebs) are explicitly inflationary and will eventually cause rates to rise. In which case the Fed’s balance sheet will decline in value precipitously, with the currency falling right along with it. What if the Fed says it will never sell, or sell sometime well in the future? Same result, rates will rise since they can never escape what they have wrought. And if they say they are going to sell? Guess what, the market price for debt will drop because it knows exogenous supply is about to be dumped on the market. In other words, a liquidity trap.

The above commentary doesn’t consider the other evil sister of inflation, increased taxation. Never in the history of the world has out of control debt issuance and money printing by the taxing authority resulted in anything other than complete devastation of the underlying economy. So here we are, in a massive liquidity trap that has created the biggest asset bubble in the history of mankind. Linking this to equity markets, many of you know that I thought the drop in March was the beginning of the “big one.” It turns out I was wrong, which is outright scary. The Covid induced drop last year was simply a warmup drop before the final leg up where we currently reside. So, the “big one” is still in front of us, and may very well result from runaway inflation and the dollar “officially” losing its status as the reserve currency of the world (a process which is already underway). That said, if you are playing at home, I have re-shorted the macro indexes via futures. This includes the Dow, Nasdaq, and Russell 2000 (small caps). I am also long VIX call options, long gold as of this morning (re-entered around 1725ish), and long OOM April call options on Gold Miners (GDX). Honestly, I hope I am wrong. However we hope for the best and prepare for the worst. As this involves human nature and the ability to repeatedly make the same mistakes over and again, which is then amplified by a complicit media, I feel it is prudent to take a crash position posture.