This page has been archived and commenting is disabled.
How The Fed And Wall Street Are Eating Their Seed Corn
When it comes to the stock market these days the overriding theme you hear from the financial media is “You’ve got to get in.” Another is, “Buy on the dips and average in.” Or, “You can’t profit if you aren’t in it” and more. So many more it would fill its own multi-volume set. However, there was some truth to many of those quips just a few years ago. Today, the amount of hidden reality to the actual destruction of one’s wealth is far more factual than any will let on. Let alone reveal.
I hear and speak to a lot of entrepreneurs who are absolutely mystified by not only the rise in the markets since the financial crisis in 2008. Rather, what many just can’t wrap their heads around is: “If the markets are a reflection of the economy. Then how in the world did we get up here?” That line of thought I rendered down to be the overwhelming theme when discussing the current state of business affairs throughout the economy. This confusion is coming from a group of people who at one time would seek out Wall Street aficionados for insight or expertise. Today, they tend more to distrust what they hear. For what they lack in stock market expertise – they make up in spades with an acutely precise B.S. meter honed by years of business acumen. And many confirm today; it’s off the charts far more than they can ever remember. So much so, as to avoid stepping in any of it – they just avoid it all together.
At one time entrepreneurs were not only sought out by Wall Street, rather, entrepreneurs did the same in kind. Before the advent of 401K plans and more it was entrepreneurs with the sale of their business, or profits from something else that fueled many a brokerage firms bottom line. And in many cases that relationship did well for both sides. There was true expertise needed to help one navigate the pitfalls of exactly how and where one was to put their money to work (usually a substantial amount such as after a business sale etc.) in relative safety as to finance the remainder of one’s years. Today, not only in much of that expertise gone – so too is the safety.
There’s probably no better example of this than what transpires at any bank branch today (those that are left that is). Opening a checking or savings account? You used to be incentivized to do so. But what this initial transaction is really designed for today is more along the lines of “a soft opening” to ask…”So, do you have a 401K account elsewhere?” Then the sales pitch is on by some seemingly just out of grad school quota seeking “financial adviser” with an array of pamphlets, jargon, and sales phrases anyone with any financial sense can see through. “Index this… diversify that…dividend paying yields ” and on and on. Along with whatever might be the latest tagline from the financial shows.
This is the true face of Wall St. today. As much as Wall St. would like to think of itself as it was in the glory days of a Gordon Gekko – that image is long gone. Today, what most people see is nothing more than some recent college grad trying desperately to say anything that might convince one to switch 401K accounts as to possibly make this months quota. For if not they too will have to join the hordes of recently dislocated tellers they once worked with. And the numbers show this to be true because not only is the vast majority not switching – they aren’t even staying, let alone “getting in.”
Let’s use a few scenarios that are emblematic to the challenges facing the likes of both the recently cashed out entrepreneur as well as a recent retiree of any sorts. I’ll use the dollar amount of $3,000,000.00 ($3MM). To some this may seem high, to others it’s not all that great. However, for many entrepreneurs it’s an amount easily understood as well as feasible. I also use if because it’s a representative amount even Julian Robertson of Tiger Management™ has used to describe the dilemma many entrepreneurs find themselves in with navigating today’s financial morass.
(The following of course is over simplified, I mean it as such. However, the questions, answers, as well as premise can not be over stated as to their importance.)
The “buy and hold” strategy. Sounds great, makes perfect sense – unless you can’t hold. Retirement for many means just that: no more working to generate income. Income is now derived via their stock holdings. If one doesn’t sell (e.g., their stocks) – there’s no money to eat. Better to “stay and hold” in one’s business and take their chances rather than try to “cash out” and place their livelihoods (i.e., money) in someone else’s hands. Especially what constitutes as today’s “investment adviser.”
“Buy stocks that pay out dividends!” Again, sounds great and seems to solve the problem of the above. Problem is, in a stock rout, what’s the first thing companies cut? Dividends. You had just better hope and pray the companies that do cut – aren’t the ones you were sold. Or, you’re now cut out. But not too worry, they say skipping a meal or two here and there is healthy. And that’s what you’ll need to remember when there’s no food on the table because – there’s no “dividend” in the mailbox. I’ll also add: it’s probably safe to assume in another financial rout, the “financial adviser” that sold you those “dividend” plays is no longer employed themselves. So calling them for further “advice” might be more challenging than it is frustrating.
“Buy the dips!” Sure, there’s only one problem. If there is a “dip” doesn’t that mean the markets lost value? So if one didn’t sell at the heights where is the money to buy on the dip? And if one is selling on the high to fund retirement as to eat and pay bills: That money is now gone. There is no money to now “buy the f’n dip!”
“A stock market correction of 20% to 30% is a gift to buy great companies that are now on sale!” No. A 20% to 30% market correction is a loss of $600,000.00 to just shy of $1,000,000.00 of ones net worth. More than likely a “net worth” that was to be “worth” food to eat, and pay living expenses.
“If you’re nervous about the markets just be diversified.” This line means squat. Diversified as in what? Other markets? Other vehicles? Lot of good that did during the financial crisis of ’08 when everything was going down and coming apart together. And if one believes the markets to be more stable today, and better fortified to withstand another such calamity, even one only half as extreme – I have some beautiful oceanfront property here in Kentucky I’d love to sell you. Cheap!
Don’t like the “markets?” Don’t worry – you can be safe in bonds. Only problem? Today they pay next to nothing. The bigger problem? Tomorrow they may charge you. All while having to be willing to accept: if you want out sooner than later – it’s gonna cost you a plenty if that sooner is at the wrong time. But don’t worry. It’s not like you need to eat or pay bills anytime sooner or later, right?
Want to keep your money as safe as possible? “Keep it in liquid instruments such as C.D.’s or savings accounts here at our bank.” Unless of course it’s over $100K. Then depending on the bank not only might you have to pay for the privilege, if they deem you have too much they might ask you to take your money elsewhere. Why? Easy. Your “cash” is now a hindrance that needs to be protected as well as accounted for. And that’s not what a “bank” is in business for any longer. Silly you for thinking “bank” today means anything what “bank” meant in the past.
“Don’t like banks? Put you’re money in a money market!” Right. Only problem there is after the financial meltdown of 2008 where it was shown a great deal of distress was caused by funds needing to keep 1 for 1 notional values in their cash accounts, it’s now been deemed that pesky thing of trying to preserve someones cash balance was just too hard. So a new rule was implemented where this pesky detail is no longer relevant. Now if your “cash” value in a money market account resembles an equation of cents on the dollar rather than a dollar for a dollar – oh well; it is 2015 after all. And the times – they have a changed. I’ll bet you didn’t even get a toaster when you opened that six or seven figured account. So there should be no need to whine about not having any bread to cook in it. After all it’s no longer even clear when you may gain or regain access to it (if there’s anything left) in another market rout. For any doubts on this just look to the bottom of your latest statement. it’s written right there in black and white. (Just have your 10X magnifying glass at the ready is all I’ll say.)
I could go on and on, yet I believe, you get the point. Ask just one of the above scenarios to what constitutes a “Wall St. maven” today and I’ll bet dollars to doughnuts you’ll hear more back peddling or more evasive, jargon laced, mumbo-jumbo – it will have you questioning humanity itself let alone just financially.
What both Wall Street in general as well as the Federal Reserve has wrought is a market so adulterated, so anemic, and so mistrusted the euphemistic “money on the sidelines” has more in common with nursery rhymes than it does with anything reality based. There is no money on the sidelines. Nobody wants “in” to this market. Anyone with half a brain and a modicum of common sense wants out – and the outflow numbers show it still to be true.
“Buying the right index, diversification, and thinking like a billionaire” is not only nonsensical in today’s marketplace. It can cause one a whole lot of pain when one is unable to fully comprehend as well as separate euphemisms for real world panic and dismay. All one needs to do is look east to see just how well that type of thinking is doing in China today. For “bubbles” no matter the culture when it comes to one’s money “pop” the same way: First panic – then distrust – then the repeating of another euphemism that sometimes lasts for generations: Never trust a bank or the markets. Never, ever, ever!
- 14973 reads
- Printer-friendly version
- Send to friend
- advertisements -


Well...looks like Greece was not the event...Now what? Did you see Trump call out McCain.."He is not a war hero, I like the ones that weren't captured.." LOL
LOL! ol' "Songbird" McCain! LOL!!!
The Fed, Wall Street, and CONgress are "eating" our grandchildren by saddling them with unpayable future debt!
Takeaction2:
You'll know the 'event' when the central planners tell you that this is the one. It could have been Greece, and from here on in it could be anything, just like it could have been any one of about 500 events over the last few years. It just depends what the timing is in their central plan, and they aren't going to tell until we need to know. That will be the same day they tell us to start panicking.
It'll sound like this: The president is declaring a National Emergency...
when you take on massive amounts of debt you need to deregulate, de-tax, and de-NSA the country to release investment and entreprenuerial energy from the grip of monopolies and corporate fascism.
Otherwise the debt is wasted and just results in artificial market highs with debt driven stock bybacks creating a temporary "wealth-illusion"
Whatever, pfft.
BTFD BITCHES!
Putting any money in will definitely make you "sidelined"... As in an old football axiom "sidelined with an injury".
Agree. Article nails the paradox of a grey zone economy (both in market cycle and asset allocation choices).
Stay in cash = the decay of non-core inflation will eliminate the PPP.
Barbell in bonds = rolling over at negative rates will also eliminate the PPP.
Same paradox as 1969, only without the gogo girls.
How are Washington and Wall Street eating their seed corn?
I have NO TRUST AND NO ALLEGIANCE of or for either.
I am certain I am not alone.
God says: Trust in Monsanto.
He was captured. And his line of BS has been broken wide open. I get it. Many bleeding heart 'Muricans don't. The Armed Forces is still one of those sacred tenants like go to college and get into debt you'll never be able to pay off.
Or work 10 years more and buy PMs. Wait for reset.
"you can't profit if you're not in it"
there is no profit until it's sold, never while you're 'in it'
Fucking Trump went easy on McCain....That little hot headed fuckwit son of a military brass is no hero....Dumps the first ailing wife and hooks himself to a billionaire's daughter to further his Heroic deeds....That little cocksucker just HAD to have his RIGHTFUL TURN to be President. What a slimey weasle....He has sold this country down the toilet on more than one occasion. I wish those fucking losers at the POW camp would have twisted more than that fucked up arm that he's always got either in someone's fucking pocket or up their ass. Hammer down Donald...I don't care that much for you, but it's fun to watch you launch some handgrenades into that clusterfuck of Rino's .... He's fucking up their little GOParty....I've ranted off on at least 10 Republican National Committee Fundraiser phonejerks....just kept laying it on until they couldn't take it any longer and hung up....
Fuck the GOP....Fuck em all.......Bring on Hitlery....let's get the bus up to full speed toward the wall.
Rant over. Have a great evening
Thank You for that my friend...made me smile
As previously mentioned on ZH, Trump is a stalking horse for Hitlery.
Think about it...he donated at various times to the campaigns of Pelosi, Reid, Hitlery herself, and Schumer. All this blather has nothing to do with McCain, or the border, or illegals here in this country. His job is to create a circus in the Republican camp, which he is doing very well, and something he would not be able to do if Republicans actually had their act together.
I always like Mark St Cyr articles. Very plain language showing a general perspective.
The problem with the stock market is the same problem the general economy has: it's all run by a privately-owned Central Bank (although even a government-run central bank would not be much better) which has the privilege of being the legally-coerced sole issuer of the nation's money. So it's a centrally-planned economy centred on bad money, and that bad money has just about run its full course.
The stock market is a symptom of this problem, of a centrally-planned economy run by a private criminal enterprise, as are so many other aspects of the economy.
The money on the sidelines -- such as it is -- is too smart to entrust itself to criminal hands. It is not now nor is it going to come into what remains of the 'stock market', regardless of the MSM and government advertising that works only on idiots.
Oh, and keep voting, sheeple.
Jimmy Crack Corn
Burl Ives - Blue Tail Fly (Jimmy Crack Corn) Live ...
Thanks Atom, that video actually made my brain contract. Think I'll head out to the barn now and chase some mice.
Eating their own GMO seed corn.
There, fixed it for you.
But it's Illegal to collect Seed Corn or soybeans or wheat.
You've got to by NEW from Monsanto, or else they send the Sheriff to confiscate your land and machinery.
Janet operates under the same logic. THERE IS NO SEED
PS: it's also illegal to collect RainWater in the State of Colorado ---- Yeh the Legal WEED State. Keepum' otherwise occupied.
look to china to see the next moves. when this fucker turns down, look for lock down of markets.
hotel nasdaq...
[quote] “If the markets are a reflection of the economy. Then how in the world did we get up here?” [/quote]
Ask myself that very question. Where were we at, around 13k when the market crashed while the economy was going gang busters in o8.
Now here we are sputtering along some creek bed in 5th gear for the past 7 years and the dow is up over 18k.
Manipulation? Oh Come On! The Fed would never manipulate the market, Right?
"How The Fed And Wall Street Are Eating Their Seed Corn"
They are eating other people's "seed corn," not "their" seed corn.
They're thieves.
Liberty is a demand. Tyranny is submission..
It is one big circle jerk....the best the "investor" can hope for is a reach around.
The problem with the stock market is the same problem the general economy has: it's all run by a privately-owned Central Bank (although even a government-run central bank would not be much better) which has the privilege of being the legally-coerced sole issuer of the nation's money.
The history of government money so outperforms the history of private money it is not even worth comparing. This "legally-coerced" term is a planted false memory in mankind. The plain fact is, money is law. So, there is no such thing as legal coercion, it is a logical contradiction.
Greenbacks in the U.S. were NEVER issued in more volume than legally set forth. America had many examples of legal money, since wiped from the collective conscious, such as Massachusetts bills, or even Continentals. The Continentals got a bad rap because they were counterfeited by the British. But, a solid argument could be made the the U.S.A would not exist today except for the Continental. Thomas Payne said to history that it should not be forgotten, the Continental was the cornerstone of victory. Looks like we forgot?
So, here we are, in the future, and people think that legal treasury money is somehow bad. Where is the evidence?
I've expounded on this forum about Canada's debt free sovereign system they ran from 38 to 74. Only 30 million people and their output was nearly that of the U.S.. They bacame highly civilized people, with free medical, free University, low cost housing, low cost business formation and NO PRICE INFLATION. By 1974 they had little public debt, and little private debts.
Coin history is for some 2500 years, those coins were issued by the Sovereign. Should we ignore this immense span of time?
How about the Talley stick system, which lasted nearly 600 years? It worked very well. The Hanseatic league, the Venetian bank, Guernsey Islands, even Australia all ran systems that were legal money.
Usury out of private banks funds to have books to be banned, or their content altered. The idea is to continue their rent seeking game by sending out a cloud of confusion. Works of Aristotle in English are missing key phrases from German translations, etc. Even Adam Smith promulgated nonsense that had no connection to reality - suggesting that he was on the banker take as well.
It is only in the last few years that the Bank of England finally came clean, and told the world how banks really operate. Even today, there are many Economists that think banks intermediate funds.
The hypnotic trance is deep.
When has Canada ever had free medical, free university, or low cost housing? We are hewers of wood, catchers of fish, miners, and producers of oil - Activites the Feds receive royalties from.
I paid 28k in income tax last year, visited the doctor once, and had to pay for my own prescription.
I hear and speak to a lot of entrepreneurs who are absolutely mystified by not only the rise in the markets since the financial crisis in 2008. Rather, what many just can’t wrap their heads around is: “If the markets are a reflection of the economy. Then how in the world did we get up here?”
This is exactly where I'm at and suspect most on this list too.
You should have told them you were going gambling in Las Vegas.
The Tentacles of Goldman Sachs are embedded so deep in the Federal Reserve and Treasury Department of Government that a dozen new recruits were smothered to death in the revolving door.
I gotta think the safest repository for lump sums of electronic USD cash right now is one that avoids all banks, money markets, equities, bonds, CD's, other weird securities, etc. is US Treasury Direct, buy 4 week bills or just leave it in your immediately liquid zero interest C-of-I account. Nicely hardened log-in, easy to transfer small (or large) sums to various types of commercial depositories to be accessed as greenbacks as needed. Might as well stash it in the bowels of the beast.
No, I think that to get change, all must starve the Beast. There would be much Blood it an attack, as many try to cut off the Snakes Head..............But it does deserve it, just it's minions are paid to protect it. You just can't fix Stupid.
who cares any more?
you need to be pretty damn clueless to not know that pretty much all equity markets are rigged..in fact ALL markets are rigged.
most people would be better off just saving their money and living frugally..investing works for the rich because they have insider information and can trade/invest in stuff the layman can't..ETFs bridge that gap alittle bit but whose making money on them?
me buying an ETF that tracks corporate CDS doesnt do much for me, to be honest..nor does it do much for anyone else.
Never trust anyone involved with money. I was raised by a Chartered Accountant and can honestly say that my own father ripped me off financially by going back on promises made long before he died in old age. I would characterize Chartered Accountants as untrustworthy after experiencing my own financial problems with my father, and his estate.
Never trust, always verify, and get it in writing.
They're not banks any more, they're "financial service providers"