Sean Corrigan On The Inflationary Diabolus Ex Machina, And Bernanke As The Modern Incarnation Of Shiva, the Shatterer of Worlds

From Sean Corrigan of Diapason Securities

Under Two Flags 

However firmly we hold to the view that the hypertrophic, state-coddled, fractionally-based financial markets in which we must operate are not exactly the embodiment of dispassionate rationalism in their workings, it is nonetheless true that, over time, commodity prices can be shown to trace out a path not wholly divorced from that followed by the real-world processes which utilise them—especially industrial production and the internationally-dispersed network of outputs best reflected by global trade flows.

In making a claim for the influence of what might be broadly termed 'fundamentals', this is not to assert the patently indefensible proposition that commodities — much like stocks, bonds, houses, classic cars, vintage wines, or antique furniture—are not also subject to alternating waves of avarice and abhorrence—the 'temperamentals', if you will—which may occasionally swamp the underlying pull of such mundanities as supply, demand, and inventory.

In fact, given our global system of unanchored (and frequently unhinged) money and credit, even this ostensible distinction between price movements supposedly soundly based on metal in the warehouse, or barrels at the refinery and those caused by the wilder, speculative herding founded on chart patterns, lever¬aged groupthink or blind computer algorithms is much less definitive than it appears.

If hot money and overabundant finance can sometimes be shown not to be pouring directly into purchases of cotton or copper or crude oil as mere gaming counters in the global casino, these evil twins will, nonetheless, be feverishly driving economic activity into channels of commodity-consuming activity which, both in their form and scale would not otherwise be taking place.

This logically implies that the commodity 'fundamentals' - as well as the equity, the currency, and the bond 'fundamentals' - still rest, albeit at one remove on this occasion, upon the very same malign effects of monetary laxity, budgetary overstretch, and misdirected enthusiasm as before.

That said, we cannot stand on the sidelines in a huff of purism. Since we must always be aware that the field of battle is not the pristine sandbox of the officer training school, but rather a dead ground-riven labyrinth of swamps, ravines, and gullies, this implies that if we are to contend at all, we must trade, invest, and practice our entrepreneurship amid the far from perfect conditions we have been given, sticking to our principles but being pragmatic enough to tailor them to the circumstances which confront us.

So, let us not here debate the merits or the long-term sustainability of what we might here term the 'Globalised Asia' model, let us just accept that it is, for better or for ill, the dominant feature of our world.

Whether their leaders' coy mercantilism or the cynical machinery of exploitation which funnels their vast pools of captive savings into the blind service of the great, native industrial combines will ultimately squander the admirable energy and technical prowess of these most assiduous of peoples, only time will tell but, until the wax melts on the wings of these oriental Icaruses, theirs has irrefutably become the main voice in the fundamental pricing of commodities.

Indeed—to the extent that we trust an aggregate of aggregates to paint an accurate picture of the world— not only are growth rates of industrial output and 2- way trade volumes rising faster in Asia than in the Euro-American West, but, having fallen less far in the Bust and having recovered better in the meanwhile, their absolute magnitude also appears to be greater.

Thus, if we can argue that commodities tend to follow global developments in these two key metrics, we must also take cognisance of the fact that, at the margin, these latter are being dominated by events taking place on the eastern edge of the Pacific, not the Western, In fact, for those more traditional asset managers who have come to favour emerging market equities over the more traditional kind (a switch which has paid an annual 13.5% total return premium over the last decade), this is hardly the most stunning of news since the ratio between the two groups of stocks has been a facsimile of the output and trade ratios between the two regions over this same period, though whether this is an  accurate guide to the creation of genuine shareholder value or simply an artefact of market perceptions is a question upon which it is not our purpose here to comment.

Furthermore, this has brought about a pronounced shift in the relative pricing of raw inputs and finished manufactures, reversing the previous two decade decline of the former vis-à-vis the latter into a steep, sustained rise in the ratio between them.

If we consider that much capital investment and technological know-how has been transferred to the Asian export hubs in the past ten years, there to be mixed with cheaper labour, arguably underpriced currencies (especially after the mid-90s devaluation in China and the Asian Contagion which shortly succeeded it), and a range of overt and covert financial and fiscal—as well as material—subsidies and couple this with the fact that such centres have been the nuclei upon which a much more wide-ranging local development of industry and infrastructure has crystallised, then the re¬ordering becomes fairly self-explanatory.

A glut of cheap, finished goods on Western markets (still their biggest exhaustive consumers if no longer, alas, the Lords Paramount of their creation) has therefore had as its counterpoint a greater degree of scarcity of the commodities which both go into their fabrication and upon which the incomes generated along the way have been later spent.

While this situation persists, it implies that commodities should continue to enjoy robust demand and advantageous pricing power, amid a struggle to maintain an adequate supply—fully incentivised though this may be—and with a level of inventory cover which becomes rapidly depleted when the engine is firing upon most (if not all) of its cylinders.

In the case of industrial metals, the trends in demand are clear and if stock:use ratios are still markedly cyclical (as well as subject to the vicissitudes of the individual metal), the general pattern toward lower and lower cover is also fairly apparent. As the example of steel also shows—not only the world's second most traded commodity after oil, but also one of the least subject to signal pollution from financial markets—the effect on price is also evident.

In energy, matters are even less equivocal. Here, Asian usage is fast approaching 40% of the world total and its share is growing at such a pace that, if nothing inter¬rupts the trend between now and then, the region will account for a majority of global uptake as early as 2020.

Put another way, over the ten years to 2009, BP estimates that world energy use increased by roughly a quarter. Asia-Pacific accounted for four-fifths of that increment, with China alone responsible for three-quarters of the region's contribution.
For all those in the West about to ruin both their finances and the view from their windows by littering the landscape with banks of appallingly inefficient windmills and uneconomical solar farms, in pursuit of the hysterical Gaian cult of carbophobia, it should be a chastening realisation that almost half the total rise in demand was satisfied by burning coal-85% of that addition emanating from China—a surge which took the fuel's share to a 40-year high of 29% of total use, largely at the expense of oil.

Given the inevitable, post-Fukushima backlash against nuclear energy (a revulsion, again, felt most keenly among those countries fortunate enough to have largely forgotten what it is like to be without a reliable supply of electricity), the call on hydrocarbons can only be the greater and, should China become serious about cleaning up its own environment (a desire richer nations progressively have the luxury to accommodate), it would seem that natural gas— conventionally-sourced, coal-bed, shale, or liquefied— might be called upon to advance its contribution from the vicinity of 23%, at which point it has been stuck for over a decade past.

Of course, what is true for energy is also these days partly true for agriculture, not just because Asian populations are both growing and moving up the protein chain away from a bland, but relatively efficient diet heavily dependent on staple crops, but because the combined effect of governmental mandates to burn what could otherwise serve as food and fodder in fuel thirsty vehicles have reached the point where nigh on 40% of the US corn crop is misused in this manner, an amount fully 2 1/2 times the country's exports (which themselves make up around 55% of the global total) and approximately equal to all shipments from the two next biggest sellers, Argentina and Brazil, combined. With yields per acre for wheat, barley, and oats showing signs of stagnation this past 10-15 years, across several key growing regions, and with rice yields in China growing at far less than half their previous trend rate, the easy pickings from the Green Revolution may already have been harvested, meaning that, barring a sea change in attitudes to both GMO technology and bio fuel boondoggles, the so-called 'war for acres' looks set to remain intense.

As a consequence, here, too, does pressure on stock:use ratios seem bound to persist, reducing the cushion we all need to protect us from the capricious buffeting of meteorology and man-made malfeasance, a feature which not only tends to keep prices elevated, but also makes them far more subject to sudden spikes and the optionality of sharp backwardations.

What we have already argued for emerging market stock markets and their co-movement with commodities has also become increasingly relevant to developed world stock markets, too, as surges of growth optimism—or, more crudely, waves of 'Risk On' activity push commodity prices higher in concert with equities. This has been true in spades ever since the collapse of AIG/LEH when r-squared between the two has amounted to no less than 0.93.

At the same time—continuing a pattern which has held ever since the twin Russian/LTCM panic of autumn 1998 first sold the great asset market put/moral hazard call to the world's largest financial players and their swarms of leveraged pilot fish—bond yields (for example, those on 10-year US 1-Notes) have tended to follow equity markets (e.g., the S&P500) up and down, as can be seen in the diagram opposite.

Now, it may not seem that significant, but what we have here is a veritable revolution for, over a much broader sweep of modern financial history, bond yields have tended to move contrary to equities (and, hence, bond prices in concert with them) while commodities— 'real' assets, if you will—have tended to move in opposition to this financial Tweedledum and Tweedledee.

Intuitively, what this implies is that investors have long been happy to assume that 'growth' —for so long as inflationary pressures are not intruding too insistently—means greater wealth, a more abundant capital stock, hence lower nominal discount rates and so lower capitalization rates and, ergo, higher financial asset prices.

But, as Hayek once said, if labour competes with capital in the productive structure, then commodities compete with both (though, strictly, what he meant by this was end-consumer goods). Let commodity prices rise too sharply in this era, therefore, and the whole virtuous circle would be unwound, whether because of a voluntary repricing of future earnings streams to take account of their shrinking real value or because of actual or anticipated tightening of liquidity, either as the result of a likely drain of metallic or foreign exchange reserves, or thanks to central bank action taken to fore¬stall these and/or cool the economy down.

However, after the so-called 'Great Moderation' of the 1990s and early 2000's when many pundits, gurus, and soi-disant futurologists were happy to declare not just the 'end of history' but the 'death of inflation', this paradigm was slowly abandoned.

The exquisite technical prowess of our pecuniary masters at the central banks had seemingly allowed them to fine-tune the vast, unknowably complex, organic interaction of the free market, while—in a kind of perversely back-to-front re-interpretation of the phenomena we have already discussed—the outsourcing of so much effort to the emerging markets meant that commodity prices had largely lost their bogey-man status since their rise was merely the obverse of the subdued trend in the far more closely-scrutinised price of manufactured goods being delivered in all their 560 million TEU-a-year profusion to the ports and railheads of grateful, Occidental installment buyers.

Thus, commodities were increasingly not seen as harbingers of inflation (strictly, as we shall discuss, the tangible vectors of what is only ever a strictly monetary pestilence), since inflation had been utterly vanquished, but as co-participants with equities in the growth of this Brave New Era of effortless prosperity founded on ever-increasing debt levels among the chronically underproductive. As for the ostensibly 'risk-free' bonds, well, who really needed them when there were so many gains to be made moving out the credit spectrum into not just the blues and purples, but the far ultra-violet and even beyond?

Such instruments were no longer part of a proper in-vestment portfolio—they were merely a convenient parking space whenever the market hit a speed bump—for, in a world where central bankers were deliberately turning themselves into easily-predictable, 25 bps-a-time up and 250bps-a-time down facilitators of 'the search for yield', only 'men without chests' could hew to the merits of a relatively certain, (if secularly-depressed) stream of income on boring, old AAA governments when there was so much more fun to be had using incalculably arcane (and often decidedly deceitful) derivative structures to fund incontinent welfare dispensers, greater-fool housing bubbles, value-destroying LBO merchants, and asset-stripping private-equity vultures.

If only things were truly that simple for, as people are only now dimly beginning to rediscover, the Credit Cycle IS the Business Cycle and the Business Cycle is nothing if not an Inflation Cycle.

Here be Dragons

If easy money starts by stimulating growth, it also starts the insidious process of distorting prices in such a manner as to mislead both entrepreneurs and those who invest in them, bringing about a capital misallocation which is no less widespread for all that each specific cycle tends to see the worst excesses concentrated in its own, individual sector.

As we never cease to underline, it is NOW that we lose our money and squander our wealth, by making mistakes here, during the Boom: we merely recognise these errors— and, ideally, realise them and rectify them— during the travails of the Bust.

By attempting to subvert this cleansing process through the inflation of a new bubble of false asset pricing on the ruins of the old—a development the Fed has explicitly been trying to engineer—is not to break the cycle, but to intensify it, as each intervention becomes more radical, less well thought-out, more plagued with unwonted side-effects, and more rapidly self-defeating than the last; the whole bringing about an increasingly costly and accelerating hysteresis of 'Stop-Go' capital destruction.

Thus, if the Ghost of 1933 got us into this mess— i.e., the mainstream's fervent adherence to a largely mythical narrative of the Great Depression, centred on Roosevelt as Messiah— the Spectre of 1937— an alarmist rendering of the dire consequences of a 'premature' interruption of gross market interference—has guaranteed that the Fed will only make matters worse.

But where can an inflation arise when we have unsold homes, partly-idled assembly lines, and large numbers of men and women still without work? Are we not confronted with an 'output gap'? And does the persistence of such underemployed resources not testify to the fact that monetary policy is ultimately ineffective — that we face a 'liquidity trap' — and that its implementation has been too timid, rather than too intemperate?

No, no, and thrice no! For the lack of a bidder for such capital assets and human resources (at least, the lack of a bidder willing to pay the price acceptable to their owners, or to pay one sufficient to discharge the obligations incurred during their acquisition or production) is the starkest possible testimony to the mass miscalculation induced by easy money during the Boom.

If we all borrowed money to construct a profusion of neo-gothic follies, borrowed more in the course of buying and selling such monuments of inutility back and forth to one another, and borrowed yet more to be able to spend some of the resultant illusory and thoroughly notional gains on the trappings of an affluent lifestyle, it is little wonder that—once the madness passes— these edifices sell for little more than the cost of materials salvageable from their otherwise useless bulk.

To argue now that, should we flood the land with newly-printed money, this will restore these monumental vanities to their previous price, before it has first driven up all the prices of things people actually still want to buy, is to practice self-delusion on the grandest scale.

Somewhat more subtle, but equally decisive, is the fact that the happenstance of stonemasons and scaffolders being out of work in the Bust (and angle-grinders and construction cranes being found everywhere in profusion) does nothing to alleviate the scarcity of dairy herdsman or car mechanics, each of whom may find a much greater monetary demand for their highly-specific efforts as a result of the policy of inflation, even as the skills and equipment of their less fortunate neighbours go largely unwanted.

Egalitarian socialists and aggregate-loving macroeconomists may both deny this, but the capital stock is not homogeneous—and so is not costlessly interchangeable. Neither are innate human abilities, nor their overlaid training and experience, a matter of indifference to people's hopes of securing work. Inflation may therefore swirl straight past such glaring, post-Boom 'output gaps' as attract so much intervention, while furiously funnelling into a spate where entrepreneurs have not adequately prepared to meet such a cash-engorged upwelling of expressed demand.

Finally, the idea that to destroy the allocative ability of markets for capital means by suppressing interest rates, subsidising asset prices, and condoning false accounting is in some way a panacea (because it will delude people into making the very same misapprehension of their means as was the initial cause of their woes, while allowing the marooned owners of overindebted property to offset their very real legacy of losses with new, fictional gains) is also to risk burning down the entire house lest the embers in the grate of an unoccupied room flicker and go out, untended.

Burning Down the House

So where has the inflation come from? From the usual place, of course— central and commercial bank creation of demand deposits though one difference since the Crash has been the degree to which this has been accomplished not as a counterpart to lending to a booming private sector, but by financing (monetizing) the vast Keynesian deficits which are piling a Pelion of corporate welfare upon the Ossa of the Provider State, in terms of debt levels.

To be clear, central banks do not always lead the expansion, but they (and the other regulatory authorities) must always accede to it, if only by refusing to set binding reserve and capital requirements upon the commercial banks who are then responsible.

Conversely—and this is a point which seems to have escaped most of the 'pushing on a string crowd'—they can easily compensate for any lack of vigour by those same commercial banks during the Bust by creating base money through the act of drawing cheques upon themselves in order to purchase whatever assets they please. This is particularly simple when those 'assets' are issued in abundance by a Treasury doling out monies in a measure wildly beyond the sum of its tax receipts.

Where the common herd has gone badly wrong (again) is in forgetting the truth that Leland Yeager long ago encapsulated, viz., money does not have to be borrowed into existence, since it can be spent into existence right up to the point where the malign effects of all that unbacked spending lead people to distrust it sufficiently to refuse to accept it as a medium of exchange, a final repudiation which sounds the death knell for what has by now become a hyperinflation.

In fact, a glance at what the central banks and their favoured coterie of TBTF clients have been up to these past 2 1/2 years shows that - yes, Mr. Chairman - the blame rests squarely with them and with them alone.

The classic case in point: The efforts of the FRB to repeat the follies of FDR while keeping
the world safe for TBTF banking. Balance sheet expansion—first by an alphabet soup of ad
hoc measures to bail out banks, then buying MBS and Agencies to bailing out the GSEs,
then buying USTs to bail out Washington (and, via its BAB programme, the Muni market)—has
seen MONEY supply rise and credit spreads compress, followed by an increase in business
revenues and gains in the price of equities and commodities while depressing the foreign
exchange value of the dollar.

Easy money at home thus all too readily becomes easy money abroad, whether via the willing, private acceptance of FX risk in the 'carry trade' or via the public move to absorb trade surpluses by issuing the home currency against export (as well as FDI and portfolio) receipts. If you really wanted to be perverse about it, you could even think of this as somehow comprising a 'saving glut', or in one infamous, pre-Crash reductio ad absurdum, a 'global asset shortage'.

One often overlooked reason why inflation proves to be so damaging is the change in prices it brings about (an effect which today is confused with its cause) is never the same for all goods and services. Thus, inflation is not simply a matter of all boats being gently lifted, allowing a painless continuation of government aggrandisement, smoothly bilking the savers who are the bane of the Underconsumptionist world view, fattening up stock brokers and investment managers rich on the fatty flesh of beta, and keeping the workforce contentedly at their lathes and laptops as the soothing breeze of money illusion lulls the Lumpenproletariat into temporarily abandoning the historical preordination of the class struggle.

Rather, the higher any generalized index of prices rises in a given period, the more variable do its components become. Prices— relative prices— become more erratic in their behaviour leading to wide and often unhedgeable disparities between input costs and realized selling prices. Plotting the spread around the overall index of changes in 72 sub-components of the Personal Consumption Deflator offers an insight into just how violent this arbitrary election of economic winners and losers under inflation can become.

Indeed, this contention was borne out last month by a Duke University-CFO Magazine poll of American executives in which they posed the topical question of what would be the projected outcome if US CPI were to accelerate from its current level to a 'surprise' 4% (in truth, not such a diabolus ex machina given that, over the past ten months, the measure has already been running at that pace on an annualised basis and has even quickened further, to an equivalent of 6%, over the last four). The answer should be a sobering one: profits would be cut in half.

As price rises grow larger and come faster, margins become more uncertain and, as the empirical record shows in our chart of prices paid and received in the Philadelphia Fed survey, less attainable on average. As entrepreneurial judgment becomes more and more sorely tested, as our other charts show, both real free cash flow and real returns to capital also shrink (it may come as a chastening truth to learn that, over the last six decades, the aggregate, median, real return to the universe of US non-financial corporations which appear in the Flow of Funds data is, in any case, not significantly different from zero).

At the same time, the degraded informational content of money (a crucial property of the medium of which the mechanical macromancers have absolutely no concept) — not just between goods, but across the choice-filled time which stretches between present and future goods—begins the savage process of reducing investment horizons, raising societal time preference and with it the discount rate. The upshot of this is that the multiple attached to those less uncertain earnings also starts to contract and, as any equity analyst will tell you, multiple expansion is what drives the greater part of stock market returns in good times and bad.

Granted, inflation may at first boost nominal revenues, some of which increment will be converted into higher nominal - and sometimes even real - earnings. Granted, too, that it may initially price people back to work in those industries temporarily favoured by its whimsy - most notably those in exporting or import-competing branches, on the not always certain assumption that the currency translates the growing domestic surfeit of money into an internationally-perceived one, too.

However, inflation also greatly hampers economic coordination (by which we mean the bottom-up, wealth-creating, spontaneous kind, not stultifying, top-down, state dirigisme) and confounds entrepreneurial calculation: it is nothing less than an engine of immiseration.

Inflationists are typically ignorant of the fact that the complex, multi-stage, labour-divided, task-specific, dynamic whole which is a modern economy intimately relies on much more spending than is captured in the flawed totem of GDP. They are further unaware that much of that spending is highly discretionary—that the bulk of it, in fact, represents gross capital formation via saving— if we define saving as making an outlay not to consume what is acquired finally and exhaustively today, but with the aim of giving rise to a greater income tomorrow, most routinely done by adding value in the course of a productive/entrepreneurial process.

It may be so much a part of the routine of economic life as to seem unexceptionable, but every time a businessman devotes some part of his cash revenues (usually the great majority, in fact) to merely continuing the cycle of production which he oversees and not only to expanding it or changing it, he— every bit as much as the figurative widow prudently putting aside her hard-spared mite— is making a highly individual, non-predestinate, inherently revocable choice to forgo the personal enjoyment of that revenue now in the hope that his immediate sacrifice will bring him greater deferred rewards in the days to come.

Let anything interfere with either his ability or his incentive to do that and the consequences are not only profound but, given the intricacy of the networks of decision-making and mutual interdependence which link the material interests of parties who, on the whole, are entirely ignorant of each others' existence, their ramifications can spread far and wide—and in a nonlinear fashion—to boot.

The key feature of this dense, reticular system of mutually-beneficial interaction is that it in no way relies upon any centralised control function—indeed, for all the weasel words of the rag-bag of anti-market intellectuals, from Krugman and Kaletsky to Stiglitz and Soros, every time the attempt has been made to impose one, the result has been to unleash at least three of the four horsemen of the Apocalypse upon the unfortunate victims of the Planners.

But what is essential is that the results of one individual's actions are faithfully transmitted to all the others who in some way overlap with his expressed combination of means chosen in the attempt to realise his own unique and subjectively-ordered menu of ends, for then they can adapt to the change in a fitting, lowest-cost manner. For this we need nothing more or less than an effective price system so that each man's 'votes' can be fairly counted and the material goods being offered can best be matched up to the bids being made for them. That pivotal property, in turn, is critically bound up with maintaining— insofar as is possible— the integrity and stability of the medium which transmits the prices, i.e., the money in which they are denominated.

To the extent that, in their primitive adherence to the toilet-flush hydraulics of their facile, consumer-demand model of the economy, the Bernankes of this world adulterate that money and deliberately contribute to its inconstancy, they—more than Robert Oppenheimer, even—are the modern-day Shivas, the Shatterers of Worlds before whom we should tremble.

Changing of the Guard

From a practical perspective, what we have argued above is that while commodities have traditionally moved in antiphase to financial assets—i.e., opposite to both bonds and stocks which have themselves largely moved in step with one another— the last decade or so has seen a switch to the rough coherence of commodities and equities and their joint opposition to bonds, either as part of a 'growth' enthusiasm or as a mark of a more general appetite for 'risk' in an environment of artificially low interest rates.

If we are correct in the assumption that the abandonment of today's horribly misguided economic dogma and the deep-rooted nature of the rickety collectivism, whose triumph over rugged individualism it has served to finance, will not come this side of a complete economic and social breakdown, then it seems likely that, as the spiral of growing indebtedness and state- dependence leads to a progressive productive enfeeblement, commodities will eventually come to function once more as the mercury in that thermometer by which we will check the progress of the pernicious monetary malaria we are now in imminent danger of contracting.

Just as the medical disease is characterised by alternating bouts of fever and chills, interspersed with periods of deceptive remission, so too will be the dire economic reality we can envisage becoming our lot. Though commodities will be anything but a one- way bet in such a world—particularly during the painful transition away from the current regime in which they have been acting as quasi-equities — they are, however, likely to re-assume the part of antithesis to paper assets and hence to perform the dual-role of being both heralds of, and partial protectors from, the increasingly abrupt inflationary outbursts which seem set to define the next few cycles of Boom and Bust.

In this possibility lies perhaps the principal rationale for continued investment in them in the years to come.

Comments

[geekgrrl]

+1

I said the same thing above before I came to your post.

But to encourage other zh'ers to take the plunge, I thought I'd share a paragraph where Smith talks about money:

"In all countries, however, men seem at last to have been determined by irresistable reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce anything being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be reunited again; a quality which no other equally durable commodities possess, and which more than any other quality renders them fit to be the instruments of commerce and circulation. The man who wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must have been obliged to buy salt to the value of a whole ox, or a whole sheep at a time. He could seldom buy less than this, because what he was to give for it could seldom be divided without loss; and if he had a mind to buy more, he must, for the same reasons, have been obliged to buy double or triple the quantity, the value, to wit, of two or three oxen, or of two or three sheep. If, on the contrary, instead of sheep or oxen, he had metals to give in exchange for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for."

How can any PM bug not be entranced by those words? To me, it is like PM poetry.

[Texas Gunslinger]

THIS ARTICLE HAS 2 MANY BIG WORDS! WHO DOES THIS GUY THINK HE IS, MR DICTIONARY?????  JEEPERS CREEPERS! 

CAN ANYONE GUESS WHAT TOMORROW IS?

??

DOGFOODDAY!!!!!!!!!!!!!!!  TOMORROW I BUY DOG FOOD!

OH NO!  OH MERCY!!!!   I HAVE NO COUPONS!!!!! IT WILL BE SO EXPENSIVE!!!!!!!!!

I REPORT.  YOU DECIDE.  WEEK TO WEEK.

[plocequ1]

Dont get Dog biscuits. They contain bone meal that eat up your stomach. Try the wet canned stuff. Its fucking delicious. Helpful hint: Throw in some German Bologna, A nice glass of Hair the Dog that bit me ( Bourbon ) and enjoy.

[Arkadaba]

I think you can't write a paragraph using upper and lower case properly?

[Sathington Willougby]

His state isn't immune to hubris of central planning.  So if he's a product of a state school, we have our smoking gun.

[Ying-Yang]

I never expected to see the day when girls would get sunburned in the places they do now.
Will Rogers

[dogbreath]

that quote was from when, maybe the fifties and its still getting laughs.  Thats eloquence.

[akak]

TexasGunslinger,

I liked the writing style of the operative who was using your handle on Friday much better.

Also he, unlike you, could at least find the "Caps Lock" key.

But I understand how you guys need to work in shifts.

[blunderdog]

As far as recreation, I suppose that's a really nice piece for the folks who like financial porn.

But it's rather difficult to tolerate all the poetical phraseology when reading a piece which is supposed to be demonstrating a point described by the huge number of "facts" and charts which served to interrupt the literary flow.

Overall I'd say only that, given long-term perspective on the convergence between classical philosophical literature and the development of a rigorous scientific system of econometric analysis, the author falls victim to both rhetorical indulgence and data-driven intellectual overload: if the charts do, in fact, prove the points as raised in the explication, it serves only to weaken the emotional case made for the motivated reader by the fiery metaphor and logorhetic grammatical construction.  Although the perspective of but a single reader may not weigh heavy on the clearly passionate and motivated speaker, I'd respectfully submit the constructive rejoinder that this is a fifteen hundred word piece severely diminished by the additional thirty-five hundred words of bullshit.

[Vlad Tepid]

I just skipped the charts.  They made my eyes hurt.  He fully made his point without them.

[Sean7k]

Nice!

[SamuelMaverick]

+1. This was painful to read.

[gmj]

This is a parody, I presume?  If so, nicely done.

[I am Jobe]

Banking in darkness – FDIC system insures over $7 trillion in deposits with a dwindling insurance fund. Americans are offered close to zero percent interest rates to stuff their money into this banking vortex

http://www.mybudget360.com/banking-in-darkness-fdic-system-money-banking...

[bob_dabolina]

I have come up with a new concept.

I guess I can drop the name here, but the concept is still being worked out.

Biflation.

Standby.

[I am Jobe]

Quick get that patented. Never know. Worth the Bendonkey Dollars.

[topcallingtroll]

You have reinvented the wheel.
Stagflation is the proper term.
It's not like inflating oneself out
of a severe recession is anything new.

Bi should not ever be used as a prefix
unless it refers to the female gender.

[css1971]

Reinventing the wheel is what people do best. My workplace is full of people who do nothing but re invent wheels. They see a perfectly good wheel which is deemed to be unsuitable for some reason and months are spent creating another wheel, this time wth red spokes.

[takinthehighway]

Yes, but don't you know..."RED IS THE NEW CHROME'"!!!

Forget essentials - bling is the thing!

Don't keep up with the Joneses - BE the Joneses!

Don't bother junking...you can't make me feel any worse than I already do for knowing how many times in the past I and those I love fell for such claptrap...

[pwn3ros]

Seemed interesting and thoughtful, but, man, I could have used about 8 times the number of periods.  Alas, all I had to work with were commas, parentheticals, goofy dashes, and more goofy dashes. Sentences, bitchez!

[lasvegaspersona]

“I didn't have time to write a short letter, so I wrote a long one instead.”  Mark Twain

[Ying-Yang]

Experience is by far the best teacher. You know, ever since I was a little girl I knew that if you look both ways when you cross the street, you'll see a lot more than traffic.
Mae West

[scratch_and_sniff]

He’s either an avant-garde postmodernist or a schizophrenic. Either way, my smoking jacket needs patches sewn on the elbows after reading that and my cravat is covered in chin dandruff. What blatant masturbation; he’s obviously trying to confuse the shit out of his clients. I would hand over money just to stop him slabbering... nice guy though.

[css1971]

You can interpret what he has to say as "Silver bitchezzzz"

HTH.

[I am Jobe]

Maybe he was recreating his writing skills from college days? You know those skills are still needed in todays market place. Not the texting crap which is being done using crackberries. Still think he could have condensed it down into bullet points . Geez hate to take a class from this guy , however he will make a great Govt Worker, since no one know WTF they write anyway.

[Nassim]

Can someone please tell me what DCI stands for?

I checked out http://www.acronymfinder.com/DCI.html and nothing quite fits.

[scratch_and_sniff]

http://www.diapasoncm.com/indices/DCI/subindices/index.php

[lolmaster]

Tldr looks good though. Can't agree with the premise . I look around and see bb Hank p Soros and friends winning every hand dealt to them. An in a sense they are just playing their cards as slavery can only be imposed with a receptive and welcoming audience. The masses are their own destroyers and always will be. What's the worst that can happen a subset cruise w mozilo?

[BlackholeDivestment]

...if we are lucky, we will eat more shit and die?

This guy is smart.

[Al Gorerhythm]

This guy is verbose. Like reading war and peace. The long and flowery version.

[Ying-Yang]

I've been looking for a girl like you - not you, but a girl like you.
Groucho Marx

[Rusty Shorts]

What I look forward to is continued immaturity followed by death.
      -- Dave Barry

[Al Gorerhythm]

Had a girlfriend once that looked just like you. Long red hair flowing right down her back. None on her head, just down her back. - Al Gorerhythm

[dogbreath]

Tolstoy was paid by the page and he wrote fiction.

[I am Jobe]

Jamie Dimon Says Banks Are Being Nice to You When They Take Your House

http://www.nakedcapitalism.com/2011/05/jamie-dimon-says-banks-are-being-...

[css1971]

He's almost certainly already marked for the chopping block.

[I am Jobe]

Agreed. Question is when and by whom? I think the court cases are useless in the USA. All judges bought and paid for and it is only a show piece.

[Zero Govt]

forget the crones (US Govt regulators) on this one as a sad fuking joke... but you can depend on all the private litigation, from pension funds etc, sold pigs ears as Triple-A rated silk purses to do what the rotten politicos will not ....the private litigation is mounting, will drag on for years and cost Wall Street their shirts (Goldman, JPM and BoA are toast)

[riley martini]

 JPM is also using cancer victims in a media blitz to gain favor for their cause and to keep the media on their payroll. Unlike the PR media spots would imply JPM is making money off cancer victims and is not a charity  for the cause.

[css1971]

I had to get my dictionary out on that one, clearly I should spend more time reading  Marx and less ZH. The "Lumpenproletariat"?

There is one more chart you should have included which would have been highly enlightening on why monetary expansion is producing inflation now and less so in the past decade, and that is the chart of world kWh per year of energy produced, plotted over the same period as your existing charts. I'm fairly sure the Chinese have done so, which is why they have been spending so much time making bilateral agreements with energy producers.

[old naughty]

"I'm fairly sure the Chinese have done so..."

The huge rag [lumpen] proletariat class in China does not use electricity, they can't afford to.

So when Shiva hit the nuclear plants...They survive with their candles and coal-burning cans.

[Clowns on Acid]

Yo Tyler...fantastic post...you must have channelled Hayek for this one.

[Urban Redneck]

Damn- a research note I couldn't read and digest in under 30 seconds.  The diction and argument construction probably require more effort on the part of clients to properly comprehend than they would be likely to exert.  However, it is a refreshing alternative to the arrogant marching orders issued to mindless lemmings by under performing investment managers.  Furthermore, it would be hypocritical of me to criticize Sean Corrigan for argument construction camouflaging nuance.  The thesis Diapason advances would seem to endorse an active management approach instead of an index based approach, which is either surprising given their website content or a reflection of surprising honesty;I am almost tempted to drive to Lausanne and solve that riddle.  If I wanted to go back to work for someone else that might be interesting bunch to cast my lot with; too bad they are on the surrender-monkey side of the country.

I have to agree with blunderdog's first criticism though, the eye candy for the illiterates should have been included as an appendix.

[Al Gorerhythm]

You two should find a room. This public display of self-aggrandizing conceit, is too much of an assault on this poor boy's teeny little brain.

[Urban Redneck]

Bankers (and I'm using the term extremely loosely) when in each others presence- fight, either against each other or together against a common adversary, and since the spoils of victory include bragging rights- the combat is best done in public.

Now if you put a banker and a customer, hooker, secretary, or spouse in a room- someone is getting fucked, and it's not the banker, unless it's one of those rare female bankers.

In case you missed the conceit within the display of self-aggrandizing conceit, it was actually an admission that there is a how or why aspect to the article that I can't fully grasp right now.

Thorstein Veblen made a rare ZH appearance the other day.  An economist and truly sadistic author in regards to the price extracted from his readers, it's a shame more ZHers can't stomach the pain, since he probably more than any other economist advanced theories that the broadest cross-section of ZH commenters might agree with.

[The Alarmist]

I would almost go so far as to say that Uncle Ben et al are Shiva incarnate, except that Shiva, (1) as a true karma Yogi would not take credit for his actions (while Ben has made it clear that he is here to save us), and (2) some good in the form of re-creation comes from Shiva's destruction of the old world (good which we all know will never come to pass).

[tao400]

I would argue that the unecessary wordy words are far in excess of what is needed and thus are themselves by definition inflationary.

[plocequ1]

Count Orsini Rosenberg to Baron van Swieten in reference to Mozart: " A young man trying to impress beyond his abilities. Too much spice. Too many notes"

[THE DORK OF CORK]

MMT must go - its completly divorced from the physical world - its a giant monkey on all of our backs.

We need a real reference point to make sense of this epic disaster.

[gkm]

Pointlessly impenetrable.

[RockyRacoon]

By some, yes.  By others, not so much.

[hardcleareye]

Paragraphs are made up of SENTENCES!!!!!!  

By way of example, Reggie Middleton's articles always have minor (and sometimes not so minor) grammar mistakes but the points are very clear, concise and his data is cited.  Reggie's work is a pleasure to read.  Sean misses the mark on all four of these points.

Furthermore, the creditability of this author is in question,

"but because the combined effect of governmental mandates to burn what could otherwise serve as food and fodder in fuel thirsty vehicles have reached the point where nigh on 40% of the US corn crop is misused in this manner, "

According to the Department of Ag, 27% of the this years corn crop will be used for the production of ethanol!

How many other data points has he distorted/spun to support his "personnel opinions"? (Just so we are clear, I don't believe that ethanol production is economical prudent.)  

This one wins the award for the " ALL TIME, MOST POORLY WRITTEN ARTICLE ON ZH", although I have to say his charts are pretty, (pity you can't trust his data)!!! 

Maybe he should apply at FOX NEWS, they might like his style....

[hardcleareye]

I've been junked I feel so loved!!!!! lolololol

[Calmyourself]

Well, Rocky is "invested" in this one for some reason struck a stray prion perhaps loosing a God particle thereabouts.. Time to stop mixing my nueorpharm with nuclear theory again, back to the comic books.
night all..

[Urban Redneck]

http://www.usda.gov/oce/commodity/wasde/latest.pdf

Looks like 40% +/- to me

FOX/MSNBC/CNBS - all the same shit

The 40% number has been tossed around the industry for months, most recently in a Barron's article Friday.

Next Ag report is due the 11th, unless you've had a recent informative meeting with Mr. Beeks that you would like to share the results of...

Perhaps you should go back to whatever ideologue you serve and get better and more recent statistics.

[kaiserhoff]

The 40% is based roughly on extrapolations of current law for "renewable source fuels" and guestimates of future crop yields, set asides, and all sorts of things that may or may not happen, so it is not current, yet not entirely bogus. 

Other than that, agreed, this dude can't think or write.

[takinthehighway]

With all of the rainfall and flooding in the US Midwest, that number may approach 50%.

[Urban Redneck]

I went back and did the math on a calculator.

The official USDA April 8, 2011 estimate was already up to 43.290% (see p12).

[I am Jobe]

A Crisis That’s Four Times Bigger Than 2008

http://gainspainscapital.com/?p=268

[1100-TACTICAL-12]

Thanks Jim in MN, after 1/2 of a half gallon & numerous cervasa's last night, My eyes & brain are not up for lenghty analysis....

[Alex Kintner]

I was exhaused after the first paragraph. This is Shakespeare's, "Julius Caesar" translated for economists, right?

I didn't read the play either. What happens to Caesar?

[RockyRacoon]

So you admit to being a literary troglodyte?

[akak]

I imagine a response such as:

"Just what do dinosaurs have to do with anything here?"

:-)

[Wakanda]

"...the complex, multi-stage, labour-divided, task-specific, dynamic whole..."

That could apply to my workload this week.  Did I really need to wade through this grammatical nightmare  of an article? 

Maybe some Shiva will yank the rug from under this poor excuse for an economy.

[Samsonov]

It's a shame Sean Corrigan is illiterate.  I have the impression he might have some interesting thoughts, but the maze of jumbled logic, grammatical incompetence, and word-diarrhea make this impossible to read.  No one commenting here has read this mess, much less understood it.

[Ying-Yang]

There are two things that are more difficult than making an after-dinner speech: climbing a wall which is leaning toward you and kissing a girl who is leaning away from you.
Winston Churchill

[ebworthen]

LOL

Couldn't have said it better.

[nevadan]

I read it in its entirety, and was thoroughly fatigued by it.  The article suffers from acute verbal diarrhea and some mental constipation imo.

[RockyRacoon]

Translation:  You can't read it so it must be bad.  Got it.

[proLiberty]

".., money does not have to be borrowed into existence, since it can be spent into existence ..."

One other way that spendable money is created is the expansion of balance sheets by quasi-government corporations such as when Fannie Mae moved to boost the amount of conforming mortgages by going down to 2% reserves (50:1 leverage). 

In any case, wages and prices will not be bid up until the expansion of credit puts money in a place where it can be used to place bids.  It appears that a lot of the current money creation by the Federal Reseve Corporation (FRC) has put money in the hands of member financial instituions who have sequestered the money by lending it back to the Fed at interest.  

Since the member financial institutions are the sole shareholders of the FRC, the banking system seems to be focused on an in-house "carry trade".   One insurance company I am familiar with has been told by one of the local banks that it did not want to accept a $100,000 purchase of one of its CDs.  It was not interested in borrowing the insurance company's money, and if it did, it would pay almost zero interest anyway.

Small businessmen and real estate developers complain of the stringent loan conditions, that is if they can get a loan at all.  Why lend at all when you can make money with zero risk? 

Yet, this money creation will show up in higher bids for wages and prices, if only because the federal government is busy borrowing money to pay for appropriations that eventually must result in real people doing real things.  Of the ocean of money that the Fed has created, this is the fraction that will cause what is commonly called "inflation".  That fraction is not the whole line on the famous money supply graphs that scare every rational person, but it is still a significant amount of that increase.

[Franken_Stein]

In-house carry trade, that's what that is, man.

You nailed it !

All the money is funneled through several stages and layers of indirection, until it finally ends up on the bank accounts of top-level bankers in the form of bonuses, stock options and  basic salary.

Here's the chain of money transfer:

National debt => Federal Reserve => Primary Dealers => Prop trading / Treasury Bills / Derivatives bets / Private Wealth management / FX carry trade => bank's annual earnings report / balance => banker salary / bonus

Krony Kapitalism at work !

Socialization of losses, privatization of gains.

And the small businesses see NOTHING of the money.

They starve to death.

[Ying-Yang]

Communication is the activity of conveying meaningful information. Communication requires a sender, a message, and an intended recipient, although the receiver need not be present or aware of the sender's intent to communicate at the time of communication; thus communication can occur across vast distances in time and space. Communication requires that the communicating parties share an area of communicative commonality. The communication process is complete once the receiver has understood the sender.

[schizo321437]

Interesting trick.

[Rockfish]

[Scroby]

Jim: Spot on, thanks.  I'd like to see your comments inserted before Sean's article, "executive summary" style.  --Scroby (also in MN)

[Caviar Emptor]

There's an ideological mindset out there that the Fed and Gov response to the Great Depression is similar to the response we've had since 2008. But it's not. Key difference is that today most programs are "supply-side" and back then they were aimed at demand-side. Most of the money and effort is being put into saving banks, Wall Street and large corporations which couldn't roll debt into frozen capital markets. After the 1929 crash the goal was to shrink Wall Street through attrition and also as a side-effect of de-leveraging and criminal investigations. Laws like Glass-Steagal ensured that things wouldn't pick up where they left off. 

So whereas the New Deal facilitated economic restructuring and creative destruction, the Fed today is preventing them. You can guess the rest. 

[SilverDoctors]

TEPCO to release radiation in Fukushiam No. 1 reactor into atmosphere!
http://silverdoctors.blogspot.com/2011/05/tepco-to-release-radiation-fro...

[Zero Govt]

"...Bernanke As The Modern Incarnation Of Shiva, the Shatterer of Worlds"

Rope in greedy criminal Bankers and the completely corrupt institution called 'democratic Government' and that's a wrap

[Occams Aftershave]

Only one denomination of Hindus consider Shiva in the way the author describes.  He's making a point, yes, but to clarify ...   

Millions know Shiva as God: Creator, Preserver, Destroyer, as well as two other divine functions, depicted artistically as the Divine Dance.

Just sayin'

[Mountainview]

I'am sure Bernanke is a fine dancer!!!

[A_MacLaren]

Ben dances around transparency on twinkle toes while touting tulips.

[Franken_Stein]

Who of you does not think that senator Joe Lieberman is a zionist / globalist ?

He once demanded the installation of a "kill switch" for the internet, so the POTUS could arbitrarily disrupt all internet communication.

It's all for your own safety, of course.

Boy, what kind of psychopaths do you Americans elect into your highest parliament ?

[JR]

Boy, what kind of psychopaths do you Americans elect into your highest parliament ?

Answer: Not psychopaths; lobbyists.

Lieberman is a safe vote for every pro-Israel issue; he favors a tighter clampdown on Americans from internet censorship to use of full-body scanners; he is a point man for AIPAC, and has always delivered for his Connecticut-based insurance companies whenever Obamacare comes around.

On the current aggressiveness toward Pakistan from the pro-war Hannitys et al., his position is clear, once tellling an interviewer that Iran (even though he favors military options) is not Israel’s biggest threat, but it is in Afghanistan and Pakistan.

[Muir]

-

Well I only skimmed it, because it had so many big words and all, but I'm sure it's bullish for silver.

-

[JR]

His manner and Italian smile are as cheerful as a sunny day, but few commentators can match the violent thunder Gerald Celente brings down on the heads of power brokers now ruling our country.

“Just four days before Bin Laden was killed,” he drawls, “a new Public Enemy No.1 held his organization’s first ever press conference. Federal Reserve Chairman Ben Bernanke told the world that the United States would continue its low interest rate polices and, in effect, continue to flood the world with cheap money…

“Needing neither a mountain lair nor sequestration behind closed Fed doors, the new Public Enemy No.1, “Osama” Ben Bernanke committed, in broad daylight, an act of financial terrorism that would have far reaching and long lasting implications for the American public. As the value of the dollar went down, the cost of nearly everything would go up…excepting the cost of ‘risk.’

“This meant that financiers could continue to speculate and exploit the equity markets, with the profits going only to the 10 percent of Americans that owned 90 percent of the stocks, bonds and mutual funds. Moreover, the Fed reasoned the cheap dollar would also give a competitive edge to big US exporters. But as exports rose, so did the price of imports, putting further strains on average consumers whose real wages fell ever further behind the pace of inflation.”

Then Celente moved in to ask the toughest question of the week: "Why did Osama bin Laden, former mujahedin ally of the United States, turn against it to become Public Enemy No. 1?

“Was it that he and his Al Qaeda fighters suddenly decided to hate America’s ‘freedom and liberties’ as George W. Bush maintained? Or was it remotely possible that the attacks were motivated by US foreign policy – with its unconditional support of Israel and concomitant support of the same Middle East monarchs, autocrats and dictators now being toppled in the wave of revolution?”

With the facts concerning the Bin Laden event changing every news cycle, Celente saw the emerging hypocrisy.  While Obama declared that “the world is safer” because of the killing, Hillary warned: “We must redouble our efforts.”

Says Celente: “With the death of Osama bin Laden, the restored, rebuilt, new and improved terror bandwagon rolls again…and it will keep rolling until Election Day 2012. Whether a real terror attack happens or not, Barack Obama, as he has done before, will take a page from the G.W. Bush playbook and keep the American public in a state of fear and hysteria.”

http://www.lewrockwell.com/celente/celente67.1.html

[Muir]

I don't know this guy but this was well written and truthful.

[topcallingtroll]

BORING!

Anybody want to fight?

Pick a side, choose your team, and get started.

Bonus points for first

ad hominem
Slippery slope
Nazi reference
Invocation of Godwin's law in response to said reference
Concern trolling
Bitchez, attached to anything
Mis spelling odummer's name
Building a strawman
Knocking down said strawman
Accusation of paid government troll
"Backing up the truck" statement
Sheeple, zheeple or any derivative thereof
Galt as a verb

Lots of ways to score! Everyone can be a winner!

[Gordon Freeman]

Well, I lumbered through this bloviation during a workout (so it wasn't a total loss...)

Sean Corrigan has a handful of useful points to make, and he should've made them clearly and directly.  His tortured, convoluted syntax and word choice is embarrasing--and he comes across as a pedantic blowhard.

Sean: next time, get yourself a copy of Strunk and White, and give it a better shot...

[RockyRacoon]

The real Elements of Style dictates that elementally, style is arbitrary.

[ebworthen]

Exactly.

Quality is subjective.

John Grisham has sold a lot of books but can't write to save his life.

"He focused his glasses on the table.  The table was made of white oak.  His lawyer eyes steeled like the frame of his glasses.  The oak was firm and dense; like the gun strapped to his waist.  She opened the door and walked in, a wool skirt outlining her walk.  She wore shoes.  He wore shoes.  They were attracted to each other." [NOT John Grisham, I made that up, an approximation of his writing].

Compared to Corrigan:

"The exquisite technical prowess of our pecuniary masters at the central banks had seemingly allowed them to fine-tune the vast, unknowably complex, organic interaction of the free market, while—in a kind of perversely back-to-front re-interpretation of the phenomena we have already discussed—the outsourcing of so much effort to the emerging markets meant that commodity prices had largely lost their bogey-man status since their rise was merely the obverse of the subdued trend in the far more closely-scrutinised price of manufactured goods being delivered in all their 560 million TEU-a-year profusion to the ports and railheads of grateful, Occidental installment buyers."

Need help?

Perverse economic theory supported by nebulous computer run binary markets and FED intervention have smashed the invisible hand of the markets and replaced it with a gloved finger in the anus of non-oriental consumers propping up the greedy slave masters of Wall Street, Washington, and the Orient.

[Soar07]

I agree keep it simple. The BS is so deep, that I find myself wondering what he is trying to say. Not enough tie in of charts to language. So, I guess he says commodities go back to their opposition of stocks, and inflatin continues unabated?

[cosmictrainwreck]

"if nothin' changes, nothin' changes...."

[bid the soldier...]

"Nice speech, Eve. I wouldn't worry about a 'global asset shortage' if I were you. You can always put your purple prose where the decline in existing oil production and the shortfall of new oil production to make up for it, ought to be."

[malek]

You clearly didn't get his point.

[slewie the pi-rat]

1)  in giving credit where credit is doo-doo, thanks, sean!

2)  so, not only is the the US exporting inflation, japan is kicking our ass!

3)  if it weren't for relatively unencumbered-by-goobermint emerging markets, there would be almost no markets at all.

4)  money talks and bullshit walks now = money is bullshit and commodities talk.

5)  inflation, while first fun, fun, fun, and increasing "sales" may (supply side) introduce such uncertainties into earnings that stock valuations & multiples may suffer, and thelma & louise may decide to take a few daze away from "the guys."

6)  if you think counterparties aren't ris-kay, just stay at the par-tay.

7)  we are freaking doomed!!!   

[ebworthen]

Nice summary slewie.

[ebworthen]

 (see below)

[ebworthen]

Genius.

This is so dead-on right and well written.

Over (or through) the heads of many who can't or won't digest it.

Corrigan importantly alludes to the value of individuals skills and talents, key for the future.

We have, since the 1950's, been raising generation after generation of consumption machines who increasingly could not start a fire without a lighter if their life depended on it.

iPhone/iPad sales through the roof, and when that generation needs to chop wood, feed livestock, or plant grain they won't know how to do it.

We have inflation of prices of real commodities but also an inflation of a societal and cultural meme nearly completely unhinged from the earth and the realities it imposes.  This is the much bigger house of cards beyond the obvious one Corrigan illustrates so well.

Look back in your life, in your mind or in pictures or physical artifacts and think of how many things, how many details have changed - a parabola of changes.

Now ask yourself where parabolas lead?

[banksterhater]

I guess this guy is trying to justify his fees by being the most long-winded piece of crap I've seen here in months, I could ax 2/3 of the text, and boy! your vocabulary is impressive! How many of you guys get rich off this crap is a wonder.

Hot money leads to CRB spike w/ carry trade. who knew?

[linrom]

Crack-up Boom.

[Franken_Stein]

All your lives have been VIRTUALIZED, totally detached from physical reality.

And that leaves its mark inside your brain structure.

Besides, you surround yourself with so much plastic garbage.

Where will all this garbage end up ?

Do you know how littered our oceans are with plastic garbage ?

Already now ?

There is not a single beach in thie world, where there is NO microscopic plastic garbage washed upon by waves.

So many fish and sea birds already poisoned and their stomachs filled with small pieces of plastics.

[A_MacLaren]

I thought it was an enjoyable Sunday embrace.

Comprehensive, colorful and correct; a marvelous meter of monetary madness.

The sound-bite seekers and wham-bam-thank-you-ma'amists can suck on the hind tit.

[Ted K]

You know what I love about these comments on ZH???  Is that 95% of the complainers will be the very first to bitch and whine when QE3 is yanked from under their feet.  Fiscal spending would have helped the long-term economy much more than monetary policy---but  you didn't want that.  You stock market "geniuses" made your bacterium and creepy-crawly infested bed----now sleep in it.

[tom]

Excellent piece. And all you whiners complaining about the big words should shaddup and go back to your Rush Limbaugh and Fox news. Sorry, but there are contexts in which it is appropriate to use elevated language. I appreciate Tyler posting these kinds of pieces, and I don't give a damn if you think the words are too big.

[malek]

+1

[rlouis]

Excellent insights, appreciate the thought and effort of presenting the information.

[uhb]

the bernank a shatterer of worlds? dont be silly

[4 wheel drift]

well...    nice prose, but...

hey, you put too much cream on your tacos man.

less would have been more palatable....   burp !

[michigan independant]

70% of Americans is the bill due at the end of the month, not the marginal efficiency of capital.

Keynes denied the existence of a liquidity trap.

The most miserable month ever according to the Misery Index was June of 1980. The all-time high for the Misery Index was reached on June 1, 1980, when it hit 21.98%.

[ebworthen]

I mean really gang - the charts and graphs alone are worth the price of admission - get a grip.

[Coldfire]

Enough of the sound bites already. But seriously, no one puts it like Sean Corrigan, the finest living 19th-century financial writer today.