Caveat Emptor

For those of you who went to public school, it means, "Buyer Beware!" As many of you know, we, at Evolution predicted a market correction in June. Didn't happen. Sorry, about that. Our thinking, leading into that calendar date was the market was not realizing what we saw, unemployment. As far as that matrix is concerned, we are on the money. The market was at that time and for the foreseeable future is banking on the Federal Reserve bank to provide low interest and print MONEY. The market has excess greenbacks. This is changing what we think at Evolution.

March 12, 2021

On that evening and into the next morning, the Federal Reserve created one trillion dollars out of thin air. Magic! 

They had a fear concerning the Repo market. Printing of money is their favorite cure.

When your rent or mortgage is due - when the wife nags about should we send the kids to school with the virus and if we do, we need new clothes, sneakers and school stuff - when you wish that you could afford cable to see the new Star Wars or whatever gets your interest - when you need to refill the gas tank and on-and-on, who you gonna call? Ghostbusters!

Well, you would have a better chance than counting on the Fed to do the right thing. Every dollar that is printed, lowers the value of the currency. When you shop and see rising prices, your defense kicks in. You seek to avoid inflation by substitution. But, there is a problem. Everything is going up. Then, you see a coffee or cereal brand that you like with the old price. You grab it. When you get home, you realize that you have been bamboozled! There is less product in the package. This is the old playbook of grocery chains and their suppliers. Dear Reader, it is worse than less product in the box or inflationary prices, everything is a lie!

Chief Bull-Setter

Jerome Powell, chair of the Fed, said recently in response to what he previously said about inflation. He called the "recent" price increases as transitory. That recent date was late February of this year. Now, he expands on his BS because the timeline of his public responses to inflation has already exceeded his projected date. He now gives his transitory timeline until the end of this year. So, my June correction call should be given an equal chance by extending the date to the end of the year. Anyway, Powell goes on to explain what he understands as transitory and inflation. He says, "Transitory does not mean that prices will reverse. What is happening is the restart of the economy."

So much BS! How about a second opinion? Lawrence Lindsey was a Fed governor in the 70s when inflation was out of control. He said recently, (he speaks from experience) "Once you get 3% inflation for six months, it is embedded." We have passed that point. He also talks a lot about supply side economics. He is from that school. The trickle down economy was BS, so I never give these guys trust. However, he is long retired and he is speaking some truth in his old age. As to supply and demand, he says, "Today's Fed only answers demand. They consider unemployment as supply." This is why the government always wants some unemployment. It acts as a check to inflation. The problem is wages. Higher wages cause inflation. History shows that wages never keep up with inflation. When will government leaders learn to back workers because producers own everything anyway? We foresaw the unemployment picture. People are sick and tired of low wages, no benefits and no future.

Transitory and Prices

Powell is speaking out of both sides of his mouth. If prices go up and they do not reverse to the prior lower level, this is inflation. What he fails to admit is inflation is a delusion. Prices appear higher because the value of a currency shrinks. This lowers your standard of living. It takes a long time to return to the equilibrium or in this case, your prior standard of living. The Federal Reserve printing has been shrinking our dollar's value for decades. This is why we have a shrinking middle-class. It explains why people sleep on the street. This year's budget deficit will be 100% of our GDP. Do you know how long it will take to return to a deficit of 5% or less? Don't bother. We don't know or anyone else for that matter. This is why we need to End the Fed!

It is a nice slogan, but it won't happen. The powers-to-be are betting on that horse. They will ride it in the hope that like the 70s, when inflation raged, the nation will move on and live for another day. The thing that puts some doubt into the system is this census fact. Half of the US population today, was born after 1981. They have no knowledge of inflation, currency valuation and the changes to our society by outsourcing of wealth and jobs. They do not understand how wealth is created. They only know that free student loans sound good. That a basic income without work sounds great and free medical for any procedure is a right. They don't understand that our government has usurped its power in the economy to 30%. They, like the military, should be seen, but not heard. We are capitalist in name only. Nothing is transitory. You will never get a new Mustang for $1999 like in 1965. That is no misprint! When prices rise like a stock, they may retrace. They may consolidate for a period of time, but the price increase stays. For example, the market crashes like it did in 2008. A stock falls 50% in value. However, their product still costs the new higher price. They just sell less. This is only one aspect of the many problems in our economy and society.

Wall Street "Expert" Prediction

Even though the stock market has been bullish since the 2009 lows, a Wall St. analyst predicts the bullish trend to last another two decades. Didn't a Federal Reserve Governor say the same thing in early 1929? You betcha! Today, we see things like the following...

Used Sneakers, $1.8 million

This example points to excess money printing and the effects of lower purchasing value. Someone won a auction bid on Kenny West old sneakers. He paid the stupid figure above. Now, he wants to make his purchase of a celebrity collectable into a firm. His plan calls for an IPO. You can buy a piece of a celebrity collectable for $15 a share. This is what happens when markets peak.

Tulips, New World Land, etc.

Idiots in Holland paid a kings ransom for the latest tulip bulb back in the day. In France, citizens, barons and idiots of all classes purchased shares attributed to land in the New World. In both examples, their stock markets were hitting new highs all the time. Neither country ever regained the economic level of that period after their markets crashed. It takes a long time to regain equilibrium. The above sneaker example is just one of many. People are buying stock shares of firms that have big promises, but never made any money. One example off the top of my head, Robinhood (HOOD). The share costs $54 and the firm does not make any money. Go figure? 

Crypto Over $2 Trillion

Just because the fake coin is encrypted for security that does not give it value. All these suckers are doing is creating new billionaires running this bank as opposed to the old ones running the banking industry. This is a poor use of technology and someone will decode the code to steal all your real money that you used to buy this crap.

Trophy Trees

Yes. People are buying old trees to be transplanted into their back yard. The cost is in the millions. A New Jersey diner which never made money is offering an IPO. Penny stocks, to which are notorious as "pump and dump" are trading up 200% of initial offering. There were over 500 IPOs since June. How about digital art? Crap on a printout! One sold for $69 million! Idiot! People are bugging Biden for free student loans, moratorium on rents and mortgages and at the treasury, while they print, they play Sonny and Cher, "The Beat Goes On" all the time.

Truth!

The Fed will not raise interest rates. The 30-year T-Bill yield is 1.93%. Folks, we already are experiencing 5.4% inflation just this year. Can you see the lie of 30 years at less than 2% and over 5% now? If the Fed raised the 10-Year note to just the low end of its historic yield, it would be 4.5%. Our government would have to budget over 30% of its revenue to just service the interest. Everything is a lie! CEOs are cooking the books!  For those of you born after 1981, the market crash in the 70s took 25 years for the equilibrium or return to a previous level.

The only think that history has proven is what is the enemy of state? It was included by our founding fathers in the constitution. The corruption of money on our leaders has caused them to violate the constitution with its reference to our currency. The answer is gold. We now have fiat. So, ask yourself this:

Who would you pick in an economic fantasy draft, Powell or Franklin? Yellen or Jefferson? Get some gold. Sell, and take a profit, if you have some. In any event, get out of the market. Everything is a lie! Peace.