Gov't in 2008, Fed in 2020

The recession caused by the financial crisis in 2008 revealed many things about our economy. The plan by our government to address the many issues showed their lack of leadership, poor vision and courage to address the loss of manufacturing due to trade policies. Their resolution was to increase debt and use tactics employed by socialist nations whose corporations are really government sponsored entities. The list is like songs on an oldies radio station. Do you recall...?

*TARP: Troubled Asset Relief Program which provided (gave) $700 billion to banks and another $100 billion in pork.

*TAF:    Term Auction Facility or TAF-fly. This made toxic mortgages an asset and could be used as collateral.

*TALF:  Term Asset-Backed Lending Facility or son of TAF-fly. This was for student and auto loans.

*CPFF:   Commercial Paper Funding Facility. Corporations piggy-bank.

*AMLF:  Asset-Backed Money Lending Facility. Used to cover problems in money market funds.

*TSLF:   Term Securities Lending Facility. Used for bank swaps and bad mortgages for Treasury.

*SLF:     Special Lending Facilities. Bailout for firms like AIG, J.P. Morgan, etc.

*PDCF:  Primary Dealer Credit Facility. Help for broker/dealers, non-bank categories piggy-bank.

If you look closely at the various programs, it has the Federal Reserve written all over it. The unwritten law that the market knows is this: The Federal Reserve is socialism for the banking industry. It allows banks to "bank" the profits and socialize the losses. The first modern proof of this was the Long-Term Capital Management crisis back in 1998. The firm used math programs to trade. They had over $127 billion in house. They were moments away from collapse. The Fed stepped in and provided (gave) enough dough to bailout the firm and further damage to the market. In state sponsored nations, this provision is a given by the government. This is not suppose to happen in a free capitalist economy. We no longer have a true free market. This is why the disconnect with the recent market rally to the main street economy with faces multiple bankruptcies and job losses is happening. The Fed will back corporations who spend recklessly and borrow foolishly. The real internal problem is the excessive printing by the Federal Reserve. The only reason that the value of the dollar has not declined severely is due to all nations doing the same thing with their currency. However, in the US the economy is mostly service orientated. This is code for low-wage. When money circulates within a region, the word to describe this action is the velocity of money. Low wages curtails the velocity of money. This is evident in stimulus. The effect wears off like a drug dose to an addict. It takes more and more with a higher dosage to provide relief. Our economy is at that point.

Meanwhile, the distinctions between government and the Federal Reserve is becoming less and less. If you noticed, government appointees like Janet Yellen in the new Biden administration or those in the Trump service, the line is blurred. Then, there are these Federal Reserve emergency programs in 2020 to keep the game going for the status quo. They do nothing for main street except lip service. You can compare these to those of 2008. Keep in mind that the following are only classified as emergency programs. They have so many and so much power, to which I say again before its too late, End the Fed!

*Repurchase Agreement. Buy your junk.

*Money Market and Mutual Fund Liquidity. Provide money for market stability.

*Main Street Lending Program. Funds went to big firms. All spent (used) at the moment.

*Discount Window Borrowing. Cheap money for banks.

*Central Bank FX. Used for liquidity swaps.

*Payroll Protection Liquidity Facility. This program just expired...for the time being.

*Primary Dealer Credit Facility. Continuation of 2008 program.

*Commercial Paper Funding Facility. Continuation of 2008 program for corporations, a.k.a. piggy-bank.

*Corporate Credit Facility. Buy your junk loans.

As you can readily see, our economy is totally bogus. The real issue is taxes as tariffs should be put in place to drive corporations back into the US. We need to stop the shrinkage of the middle-class by returning to a producing economy. Service jobs are for high school kids to earn enough to go to college and not to exist or raise a family. This concept is classified as protectionism. All nations employ it, but whenever the US attempts it, it receives backlash. It will take real courage and leadership to which at present, our government lacks. Hope your holiday was enjoyable. Peace.

When You Think About It

 If you give pause tomorrow, Thanksgiving, what would you think? I hope our national holiday has some good memories of family, of friends and pleasant times. It may be hard for many this year with the pandemic, and or, loss of job, health, family member or friend. With all those possibilities and others, it will strain your attitude to see positives, to count blessings. However, we, at Evolution ask you to give the day a moment of reflection. Maybe like George Bailey (It's A Wonderful Life), you might say a silent prayer and request? He thought that his request was denied. He didn't know God works in mysterious ways. So, we will also say a prayer for you and our nation. I also want to thank some good, American nuns for the following thought.

                                                                       Gracious God

I thank you for the gift of life. In these times when blessings are sometimes hard to find, give me the grace to be aware of your loving presence, especially when I am anxious.

Help me to embrace each moment as an opportunity to see your goodness reflected in my life and in your creation.

Keep me safe and healthy in mind and body, and protect my family and friends with your healing touch.

May compassion flow through my grateful heart to others in need.   Amen.

Have a good week. Peace. 

Fed's Inflation Lies Revealed

The Federal Reserve has gone on record as saying that they would like to see a target of 2% inflation. Then, they go on to say that one problem with our economy is that we cannot even approach this low level of price increase. Lately, they have modified their stance to say that the 2% target could be a yearly average and not just a one month occurrence. Dear Reader, I have shown repeatedly the dangers of the central bank. With their excessive printing, they have monetarily devalued our dollar. 

There are other forms of inflation like asset class: home costs and commodity costs. Then, there is the one form that everyone sees: consumer inflation. Today, I have a new window to view the Federal Reserve's view of inflation to reveal their hypocrisy and lies.

We all know that this is a presidential election year. What we didn't know was who would win and the ramifications of the winner to the economy? In addition, the pandemic wrecked jobs, businesses and supply chains. The second wave of the virus has extended the economic hardship. However, last week the Bureau of Labor Statistics (BLS) gave out a very revealing report. For the first time in a long time, the BLS actually published an honest picture of the economy. Maybe the changing of the guard gave them a chance to do their job without interference? Maybe by being honest, they were expressing an internal belief that the Democrats would seek true honesty and transparency? By issuing an honest report, they might retain their job. The reasons are many. The facts will speak for itself.   

No toilet paper?

Do you remember that after the realization that this virus is dangerous? Supermarkets that resembled third world countries? The Fed chairman, Jerome Powell never said anything about this sad truth. He stuck to script about the economy not reaching his 2% target. This BLS report says groceries have risen since March by 4.1%. This is the largest increase in 50 years. 

By the way, the Fed does not include the three things that we, at Evolution declare are essential: food, energy and shelter. The Fed does not include the three in its matrix. They talk about how the increase quality of a computer at a low price keeps inflation down. BS!

Diary...

according to the BLS is up 10% this year.

Beef...

is up 10.8% this year...and we have more and more people coming to food banks due to food insecurity. Poverty is rising.

Eating out is out until the virus passes, but the pain in many restaurants could be a death kneel.              

Clothing and its industry have suffered massive losses from online competition and the virus. The survivors will need higher prices to stay in business. Specialty firms that make things like handbags had the same problems as the clothing industry, but the supply lines magnified the stress.

Stamps and postage...going up whether the post office or private concerns.

Computers and electronics...prices have remained low, but supply chains have suffered severely. These distributors will need higher margins and the increase will be passed to the consumer. This will also happen for video games and similar items.

Textbooks...even if schools continue to go viral, the old tome is the bedrock for education. Books have gone up in price by 30%. How is that for an inflation number?

Home Improvement and supplies...staying at home has resulted in more home upgrades. Higher demand, higher prices. This gets extended to furniture as well. The connections of the lockdowns extends to fitness. No gyms? Fitness firms have filled the void. Prices for equipment have not risen, but then again, they were high in the first place.

Health Insurance...the notes in this category could fill a whole chapter. Experts say prices could rise from a low of 4% to a high of 40%. Co-pays will see price increases as well. In a related aspect, sanitizers are up 25% this year.

Energy bills...expect to see a 2.8% increase in 2021.

Homes 4-sale...when the moratorium ends, evictions and foreclosures will rise. Home flippers will keep prices in check as they purchase these units. However, at some point the price climbs will continue. We are trending to a rental nation.

Airline tickets...expect to see a slow rise as travel picks up. By 2025 airline tickets will rise by 27% according to experts.

Social Security...will get a 1.3% increase. Yay!

There, you have it. From the mouths of a government agency to experts in the field. Higher prices will be coming and if Joe Biden keeps his campaign promise to raise the minimum wage to $15 per hour, the effect will get the inflation genie out of the bottle. Together, this screams the meme, End the Fed!

  

This Is How It Will End

I was reading a great work by Reinhold Niebuhr called, Moral Man and Immoral Society, when my mind left the pages to focus on a thought. The book was written in 1932. This will help you to understand the dialogue at the time. Karl Marx with his teaching were the seeds for the Russian Revolution. Unions were still not accepted by producers and there were constant conflicts with strikes between workers and owners.  Oh, yeah, the world was in the mist of the Great Depression.
The global community did not have the instant communication that it enjoys today. Before I continue, let me digress on the last sentence. Rapid communication also allows too many people to post their opinions to which, most are diseased. These same people go to bed saying, "I want this..." and they wake up saying, "Give me that..." This is central to the theme of Niebuhr's work. There is an injustice. It is right to protest, however one must make sure the answers to the injustice does not cause a new injustice.

Debate

There was a running debate in the journals at that time between remedies for workers injustice, wages and benefits (seems like nothing changes over time) and the outcomes of those solutions. These debates were mainly between capitalist, socialist and Marxist. A German economist, M.J. Bonn agreed with many Marxism complaints about capitalism. This was rare because Bonn was not a Marx follower. This is what he wrote:
- "The capitalist world in which we live has formed the habit of conveying credit, the elasticity of which is exceedingly large, mainly into channels of production. It is still obsessed by the precapitalistic notion that consumption is an evil which represents a more or less unavoidable extravagance...Apart, however, from consumer-financing, which, after all, constitutes only a
comparatively small part of total consumption, the fact remains that production is over and over again expanded with the aid of credit derived from or built up on savings, in particular by the construction or expansion of costly plants which can turn out goods as cheaply as estimates proclaim, only if they are fully employed; whereas consumption is left to itself..."
He conclusion, "production far outsteps consumption..."
The complaint Niebuhr had was the effect. The blind self-interest of power in a world of unequal economic power.

Dear Reader, this is what I ascertained from the debate. Banking put its money into production of goods, but failed to realize the common competitive practices of the global community. Everyone was doing the same thing. Production exceeded the demand. With too much supply, prices decline. This was the world in 1932. When demand disappeared, layoffs followed. Now, the media with the backing of big money say that tariffs caused the depression. It may have had a part in the play, but the central cause was too much production caused by too much available credit from banking. Bonn had it right.

Next step...

Banking had too much credit. It needed an outlet for its money to grow because the self-interest of banking is wealth and power. The world went to war and debt multiplied. The US had over 200% debt to GDP and this was a time due to the war that production was full throttle. You may not know that the US tax rate was as high as 90% right after the war. The government made a progressive push to cut debt. This gave banking a gloomy outlook.
Then, some new ideas to stimulate the economy came into play. The G. I. Bill helped housing. It also had school loans. The demand for housing was huge. President Kennedy, a Democrat was the first to suggest a tax break for citizens. This made another big impact. By the way Kennedy also had one balanced budget and very little deficits in his other ones. His total deficits were less then the present interest on debt that we are currently paying. Another tidbit? The Republicans were fiercely opposed to his tax cuts, Now, that is their only idea for the economy.
Bottom line: the economy rolled and the consumer played a big part in the recovery. People in those days paid in cash and their dollar was strong.

Banking took notice...

Within the banking community new venues were opening up for the industry to lend money and credit. Technology added to the success of banking. The advent of the credit card was the next step. It gave banking tremendous growth. Consumption grew its power in our GDP. We began losing manufacturing jobs, but the American inventiveness grew a service industry. It grew into its present position of 70% of the economy. However, the limit of consumers to add growth to the economy was demonstrated with the last financial crisis in 2008. Banking needs the next step to maintain its power and wealth. Today, US consumer debt is at record levels at $14.5 trillion and growing which adds more risks every day. The present "work freeze" due to the virus will not only explode consumer debt, but the repetition of stimulus packages will rocket the national debt off the charts. When the dust clears, realization of the true value of the dollar could be a death knell.


Derivatives and more...

Derivatives is a train wreck waiting to happen, but that is only a tip of the iceberg. After the financial crisis, banking was forced to reexamine itself. It does not like what it saw. It needed something more than insurance of the derivative market. It fears that within each nation a backlash is coming unless they find a new way to continue the game of fiat money with endless credit to ensure their future. The debt ratio to GDP in every nation would be their choice.

Negative rates

This is banking's answer. They roll over debt into new debt, but at a lower rate. Society has not the voice to challenge their power. Citizens are disenfranchised. Banking is buying time and hoping a new option appears on the horizon. It won't! The new push for a "cashless" society is another option for banking to buy time.
Negative rates says money is worthless. They prove it by giving you less than you invested. They do not admit that they are failures. They will use their power to force new regulations, but eventually, this will awaken the masses to their crimes. The end won't be pretty. It will be more destructive than the Great Depression. When will it happen? Cannot say. Possibly, the warning signs are already present. In banking's second step for power and wealth, they have already destroyed the retail industry with consumers existing from week-to-week, paycheck-to-paycheck. Currently, we have a repo crisis that is being hidden like the Chinese tried to keep the lid on the virus. I can say this. The home team, you and I are losing late in the game. Our relief pitcher just gave up a home run to the virus. Things are not looking good. Our other relief pitcher has an ERA that is terrible like the rising bankruptcies in the US.

Our only chance is to rescind all debt owned by central banks and end central banks. Regulate all banking to a utility purpose. They don't create anything. They bleed society with usury. We need to return to a gold standard. We need a balanced budget all the time. We need to reevaluate how GDP is assessed. If the economy grew, but so did pollution, what is the real economic situation? Is this progress? Is this real growth? If you cannot service debt, you should not be allowed new debt. People, there is a beauty in stable prices. It helps stabilize family life. This is a most overlooked necessity in our nation. We lack a homogeneous society. At present, 24% of the population is in poverty. We are beginning a period of economic divide in job formation and pay. Technology advances like driverless cars, electric vehicles and the continuing retail catastrophe will further expose our society. If one thinks school shootings is a national issue, wait to you see mass civil unrest. The currency issue will cause the pot to boil over.

It is no longer an if, but when the global community forces the issue, probably through the IMF, the US dollar will lose its status as the world's reserve currency. The abrupt consequence will be severe inflation. This will be more apparent as those 24% grow older. This points to a future with one in four that could end up dysfunctional, violent and unproductive. We are not promoting the general welfare. This is why we need a stable currency. All of the Fed's policies are destabilizing. This is I always say, End the Fed!

With a strong currency, there is no inflation. People work and live their lives the best that they can in pursuit of happiness. Sadly, no candidates understands economics, the joy of peace and not letting the paranoid control our government with phony ideas like our national interest. They are war mongers and the military budget is their self-interest. Our national interest should be peace and seeking ways to maintain its presence along with promoting the general welfare. We also need a new third political party to which the cornerstone is a foreign policy of less military and no foreign entanglements. At home, government should do what is best for our workers and citizens. Even if the party fails to take a solid position in our political system, the ideas will eventually be included into the two main parties. They are smart enough to know when ideas are captured by the public.

Remember, the GPO stands for Guardian of Privilege. They only promote their general welfare. They say that they are for capitalism, but like the stimulus package, they will use socialist's subsidizing of corporations. Democrats are egocentrics. They have sold out the working class a long time ago. They have no principles. They will say anything to get elected with no real conviction in whatever they declare. It appears that by offering enough largesse, they have fooled the public again. We live in dangerous times. If our nation continues like both political parties are doing, we will lose the reserve currency status of the dollar. It would have already happened except the global community cannot agree on how to replace the dollar. The future holds a day of reckoning with all the debt that we created. It may be too late at that time to realize that self-sufficiency is the key to a stable society that seeks the pursuit of happiness.

Note: This is the most important insight that I posted on financing, especially considering, the limited space.

Physical Money vs. Cashless and Digital

Whomever wins the election is going to face a serious currency crisis during their term in office. This will emerge after another economic crisis: retail bankruptcies. The excess money printing by the Federal Reserve due to the pandemic is causing fears for investors, whether individuals or nations with our bonds and holders of dollars. The only reason that "King Dollar" has not declined severely lays in the point that all central banks have been utilizing the printing press. When the pandemic ceases to be a civil and economic problem, the data on the amount of US dollars that were printed will be alarming. By the way, we, at Evolution are predicting the virus begins to fade by the February-March 2021 timeline.  

King Dollar...

was as high as 104 in May of this year. For those of you that do not keep track of the purchasing power of the dollar, this would be a good time to broaden your horizons. It settled at 94.04 last Friday. It has been range bound since it fell sharply in June. At the same time, competing currencies like the Euro, Yen and Pound have all been gaining strength. In our economy which is serviced orientated, a strong dollar keeps things like oil, utilities and food lower in costs. A weak dollar will be noticed immediately, as the price of those items will rise dramatically. The charts indicate that the dollar will eventually fall below 91. Then, it will form a new range from 87 to 92. The crises will arise as other nations will seek to dethrone the dollar as the world's reserve currency. We, at Evolution see an international compromise engineered by the IMF. It will be a power grab by the agency, just like the recent power grab by our central bank, the Federal Reserve. They will devise a basket of currencies that will form the reserve for trading. It is a step for China to be declared the new king of currencies. The future is no brave new world. 

Anyway, the aspects of this outlook will generate the talk in our media about turning our economy into a cashless society. They already have one in Sweden. The writing on the subway walls all point towards this transformation. We say this will be another nail in the coffin of US individuality and our free, capitalist economy. As long as you have money in your pocket, you cannot be arrested for vagrancy. The idiot millennium generation does not think about repercussions of this change. They only see a quicker service by taping their iPhone to pay a bill. The Fed sees power to know your every movement with money. They can follow the trail that you leave in digital dollars. If that was not scary enough, this millennium generation had better read, "1984." Advocates will cite the use during the pandemic and as a result, the growing use even after the virus fades. A survey by Trans Credit Union already points to this conclusion. Yeah, well, this is how we see value in actually using cash in a transaction.

* Credit cards mean less profits for any business doing business.                                                                * Society gets more divided as not everyone has good credit to use credit cards.                                        * Privacy is lost in many, many ways and as data is collected, even newer ways will result.                      * You are open to theft from hackers.                                                                                                          * If there is a power outage, bank holiday or similar, you will suffer hunger and other problems.              * You are tempted to buy and pay later. It is like eating too much, you get fat and medically sick.            * Banks wait to charge you late fees, any kind of fees. You get yourself in debt.                                        * If you make late payments, banks can raise your interest costs. Read the fine print!                                * You forget how to budget. Freedom of buying with no added concerns like monthly checks to cover        bills, a need for stamps or time on the internet to do the bookwork.                                                        * Most important! You forget how much and how hard it is to make "real money." And if some concern      is going out of business, having cash in your pocket allows you to get a great deal as opposed to              having your transaction declined because you have reached your credit max level.                                *  Having a dollar in your pocket means that you will never go hungry. Food for thought. Peace. 

Odds and Ends: October 2020

Within a week of this post, America should know who will reside as the president for the next four years. I say "should" because this election won't just include the voter's choice. It will be inundated by lawyers. Due to the pandemic and social distancing, voting locations may not be open long enough to register every vote. Then, there is the reduction of voting locations. This is suppression to the right of voting. In some situations, this reduction maybe due to the virus. Nevertheless, litigation will come about for these and other restrictions. The vote should be close. This too will allow lawyers to call for a recount. All in all, the 2020 presidential election will be marred with problems. 

Two liars:

Here, at Evolution, we do not care who eventually gets elected. We are on record as saying that both political parties are corrupt. All one had to do was watch the last presidential debate to see through the so-called debate. Candidate Biden stated that he would declare the 11 million illegal immigrants, citizens. Nothing like buying the Hispanic vote. Then, he said he would raise the minimum wage to $15. Again, he is seeking to buy votes. President Trump was so on the attack that this "inflation effect" was not addressed. The only positive that Biden had was that he would push for alternative energy.  

President Trump was a one pony theme. He kept harping on Biden's ideas. If he had these points, why didn't he present them while he was in office? Trump made points in saying, "All talk, no action!" As president, Trump showed inconsistent leadership. He says one thing and the next day, rebuffs what he declared as fact. He has no vision other than throwing money at something. His policies are crushing our currency. There was a study by the St. Louis Fed back in 1980s that showed it takes 12 quarters in lag time to reflect changes in money supply. Our Economic Evangelist believes that sometime in 2022, our dollar will fall in value. This will cause inflation and other economic hardships. The only positive in the four years of Trump was in his calling out of China. However, if he had real courage and convictions, he would have slapped tariffs on all Chinese imports. He only displayed a token response. This was to appease voters and companies seeking relief. He has no real convictions.

I could go on-and-on about the phoniness of both parties: Trump with hotels in Moscow. Biden's son in deals with Ukraine and China. This is why we do not vote. If one votes for either candidate, you are validating the system with just two political parties. The system itself is fine, but the process is corrupt. Buying influence gets government action not true needs and issues. More and more fellow citizens are realizing this point. There are more Independents than either Democrats or Republicans. The seeds are being sowed for the...

Liberty Party

At Evolution, we advocate a new political party, the Liberty Party. The cornerstone is this: protect American workers which includes protectionism. Use policies that work under our founders believe to "promote the general welfare." It also means dropping out of international agencies like the WTO. The other part of the platform is to end military entanglements. At present, our warmongers at the Pentagon display their idiocy. Case in point. After WWI, Billy Mitchell went to the navy with the idea for an aircraft carrier. He was labeled an idiot by them. Today, we are still building aircraft carriers that cost in the billions. They are obsolete. A smart bomb can find and sink them with lives, jets and costs beyond imagination. Winston Churchill said it best, "You can always count on America to do the right thing, after they tried everything else." Nothing has changed since his observation. Just recap the virus actions and inactions. Our unpublished book addresses this and puts forth other ideas to really make America great again.

Farm to Fork...

initiatives are being pushed by the EU. The EU wants less pesticides and antibodies in their food chain. We like this idea. The problem will be rising food costs and lower yield. This is vital since populations keep growing. US agriculture secretary, Sonny Perdue says, "He sees not only higher prices, but protectionism." Nothing like a bought and paid shill. The EU sees another plus in climate change. The real culprit is farm lobbyists who pushed for GMOs and other artificial ingredients. This quick turnaround can shock the market, but the EU is correct to start and we should do the same. 

Fed's New Power Grab

These guys are smart. The whole agency started just before Christmas. People have their attention on other things. Today, our attention is on the virus, election and jobs. In the shadow, these crooks operate. The Fed says that the bank clearing system to which they originally pushed (ACH), is too slow. They want to establish a new clearing system under them called, "Fed Now." They also complain about citizens saving money in their homes. They call it hoarding of coins and dollars. This is probably a hidden jab at people who seek our previous money that had silver or actual goin coins. In any event, they call savers, hoarders. They have an answer. Now, you can get instantaneous checks like stimulus from them, immediately. This money will be digitized. The Fed can track the money and of course, you. They also will seek to open this "free" service to the 9 million citizens who lack a bank account. These are also people who carry money around with them and at home. By the way, this is another violation of the constitution. The first was in creating the Federal Reserve to which favored fiat money. Fiat money is the violation of the constitution. The founders also stated that Congress appropriate all monetary functions. This is the new violation of the constitution. Funny, then again, these crooks never mentioned the unknown amount of dollars being held by foreigners. Dear Reader, consider this example. When Brazil trades with Argentina, they do it in dollars. This is the true sign that the Fed has lost control of the currency. This is only to control you as the other amount of dollars out there is unknowable. Another reason to End the Fed!

Azure Cloud

the system not the color of the sky. It is poised to grow as Microsoft has made a deal with Space X. They will cover the globe.

Nuclear Fusion...

might not only be possible, but it could be coming soon, according to scientists and researchers. This is another worry for big oil and utility companies. 

Interest Rates...

are showing signs of life. Money printing is inflationary. The rates may have a lid on them in the near-term, but the sign of change is in the air like the comet that recently passed over the sky.

Do You Remember August 2019?

Question of the day: Why would anyone purchase a 10-year Treasury when the yield on the two-year is higher?

When you digest the question and answer, you will be transported back to August 2019 when the inverted yield appeared. It is defined by having the 10-year Treasury rate falling below the 2-year Treasury rate. The talk at the time was the presence of this inversion. As an indicator of the future of our economy, it has never been proved wrong. It is the most accurate indicator of a looming recession. 

When you read more into this indicator, you realized that it is a very early call as to what will happen with the economy. If you review the last four times that the inverted yield appeared, it took generally more than a year to fulfillment. Nevertheless, the recession did take place. I bring this to your attention as recent economic reports are all negative. The timeline says we are in the fourteen month. Even if nothing worse happens to the economy, the inverted yield says that a recession is coming. It will probably arrive (average time) by the end of March 2021. If you consider some points that I have gathered, this indicator will keep its title has one that has never failed in its call.

Quick Recap

The Federal Reserve tries to quickly dissipate any presence of an inverted yield. They use their printing and buying power to eliminate its presence from society and the market. This is how they operate with their machinations to engineer the economy. Just last week, Fed governor, Randal Quarles stated that the Fed should make new rules to prevent runs on money market funds. Hedge funds and banks were seeking a higher yield due to the Fed's policy of low-rate yield returns on money. They began taking money out of circulation in the money market funds because it no longer gave them any return. These runs caused a chain effect within the market to which the Fed will seek to impose new rules to control it. This small sign is also a "tell" in poker terms. The Fed is printing so much money that it is losing control of the currency. The tell has been broadcasted in the past with fiat currencies that were about to enter hyperinflation. Anyway, the last time the inverted yield appeared was in... 

2005

It took another 16 to 22 months to form the market top. Then, we had the worst recession ever. It lasted two years.

2000

The market peak came in two months. Then, we had a short recession.

1998

The market kept rising for another 21 months. Then, we had another short recession.

1988-89

It took the market another 20 months to peak, Then, we had another short recession.

Present Trends

Even before the pandemic appeared, many segments of our economy were in trouble. Restaurants and retail were constantly seeking refinancing. They kept cutting costs as best as they could. They announced store closings in record fashion. If you recall from our previous pieces, the two industries had announce 8,200 store closings before the pandemic. This number will double due to the virus.

The three big airline carriers, Delta, United and American all showed in excess of $2 billion in losses for the last quarter. Keep in mind that these carriers have all entered bankruptcy before and it is looming larger in the near-term. The airline industry employs one in fourteen workers with quality wages. This news is not good for our shrinking middle-class.    

There are over 3,500 US firms that are suing the government over president Trump's tariff policy, especially with China. They all claim that they are dying. There cries are questionable, however reports of Americans not paying rent (8-million) or mortgages (2-million) are believable. Together, all of the above will put pressure on government to enact another stimulus plan to which puts the US deeper in debt. This leads to concerns on a international level about our reserve currency status. I cannot say that the inverted yield saw all these developments, but its forecast looks to be correct.