CPI inflation is at 5% while wage growth came in at 4.18%. Even after 15 months of of quantitative tightening and raising rates all of that time, wages are well below CPI inflation:
After more than a decade of runaway monetary inflation in the form of quantitative easing, bailouts, and covid stimmies, the stage has been set for widespread bubbles, malinvestments, and economic distortions that can only be unwound with deflation, unemployment, and recession. The disease has always been the easy-money fueled boom. Price inflation is just a symptom! This leads to the phenomenon in this video below. A potential US banking liquidity crisis. In other words, no more lending to anyone. Which would have a net effect of collapsing the economy. Liquidity is a real problem for banks since the Fed Funds Rate is 5%, that is what banks pay the Federal Reserve for their loans. Yet, banks are getting less than that for their short term bonds, and interest bearing accounts. T bills, Money market accounts, and CD’s. The 3 month and 10 year bond yields have been inverted for 2 years now. Banks are losing money on loans and they have to stop lending as this crisis is deepening to that point! See the 10 year – 3 mo bond spread chart:
Then see this video explaining the symptom to this worsening bank liquidity crisis. If bank liquidity actually does dry up what will this mean to the economy? Click here to view on Twitter
Hold cash, stay out of banks, invest in long volatility assets like Bitcoin, Gold, and Silver! These assets are outside of the global monetary system and they hedge inevitable inflation much better than other assets do.
Tuesday’s blog explained why inflation falling in year over year terms so far this year is fools gold. In other words, it makes for good headlines, but the reality is it is a sign of bigger financial problems. For example, falling car prices or even house prices means demand is falling which is true. This next chat gives a big picture answer as to why that is. Home price growth is +102% since 1970, while wage growth is up only 26% since 1970. 5X more growth in living shelter than in wages over 52 years. Here is the chart below:
Demand for big ticket items is down due to slow wage growth and much faster asset bubble growth over the last 52 years. There is much less disposable income in the US than in past years.
JP Morgan has a non trivial risk of debt devault on it’s 2023 bingo card. That is no joking matter. The debt ceiling debate will start in earnest in May and June. Will the US default? Click here to read more.
This debt ceiling debate end result, could kick off the sovereign debt spiral we have talked about a lot in blogs this year! Yet Bitcoin has broken the downtrend of it’s 2022 bear market and is climbing fast!:
You see, Bitcoin has no CEO, President, Board of Directors, it has no office space, Headquarters, or employees. It cannot be sued. Bitcoin is a public ledger, and every 10 minutes a block gets added to the blockchain. The protocol for the blockchain is controlled by miners and node operators. They are global and there are 10’s of millions of them. This is what makes Bitcoin decentralized whereby every other Crypto asset is centralized. They all have founders, not Bitcoin. Satoshi Nakamoto was a fictitious group of people, and they disappeared in 2010, never to be heard from again. The original 1 million Bitcoin mined, have never been sold, and they are not expected to ever be sold. Bitcoin is not backed by politicians and militaries using force and coercion to back it. That is fiat currency. Bitcoin is backed by electrical power which is required to advance humanity. Bitcoin creates cheaper power in mining heavy geographies, because it uses waste energy that would otherwise be stranded, or flared. Bitcoin allows municipalities to utilize the power from Bitcoin mining operations during storms and freezes when power outages occur. Bitcoin mining is so flexible that municipalities benefit greatly from it, citizens also benefit from the cheaper power it produces in the community. Unfortunately, media does not portray this publicly about Bitcoin. Because it is a generational, disruptive technology for central banks and fiat currency! We are not financial advisors and this is not financial advise. Buy Bitcoin for it’s decentralized properties, it’s humanitarian advancement. Technologies that are this disruptive come around once in a generation. Bitcoin is the next iteration of the internet. It was not too well received either, in the early, and mid 80’s. Hold Bitcoin long term, you’ll be glad you did!