Tweets of the Day: Volatility, Mortgage Delinquencies, Iran, Debt

link to obatperangsangmanjur.net

@aqualech:
The job of central banks certainly is to maximize indebtedness. All the “economic indicators” they pay attention to, is little more than slight obfuscations for simple debt growth.

Take GDP: If debt grows, that new debt is spent somewhere, increasing nominal GDP. And, and this is the trick: because debt is issued by banks, who take a cut of it; and to the “credit worthy,” which overwhelmingly means the already wealthy and connected who already have all they need of all the items the Fed/BLS conveniently include in their basket of “consumer goods,” the additional nominal GDP comes without much of an increase in CPI prices. Letting Fed officials pat themselves on their backs for having “created” “real economic growth.”

Ditto for wealth: The new debt almost exclusively increases the purchasing power of those already wealthy. Who have all they need of goods, hence spend most of it driving up asset prices. Which, again conveniently for the Fed, does not count as inflation. Hence, to the gullible, uncritical and economically illiterate, it looks like the Fed just created a bunch of wealth. Simply by issuing more debt.

Unemployment follows the same playbook: New debt increases spending. At least some of which results in increased demand for labor. But again, because the newly created debt almost entirely increases the purchasing power of the already wealthy, the added labor demand is primarily for simple services like handmaidens, toe nail clippers, bedsheet changers, house remodelers and prostitutes. Doubly so because the asset price increases mentioned above, leaves more capital intensive, hence higher paying, production processes squeezed out for competitive reasons. So, while the increased debt and the purchasing power it brings with it, may increase demand for street walkers, it simultaneously lowers it for higher paid, more skilled, production workers operating in a competitive environment, whose jobs are dependent on access to lots of competitively priced capital. So, you get a shift in the labor mix, from capital dependent, skilled and higher paid, to simple servant, commoditized and cheap. Which allows the Fed to pat themselves on the back for “lowering” unemployment; without the added employment contributing to increasing demand for CPI goods.

That’s where we’re at. All the “economic” indicators” the gullible and pliable indoctrinati have been told are “good,” and they should be happy The Fed is “improving,” are just stand ins for increased issuance of debt. Higher debt issued in such a way that the increased purchasing power resulting from it, doesn’t increase the purchasing power of most people to nearly the extent it increases that of Fed officials’ closest social circle: Those in the FIRE rackets, those in government and the already idle rich. Simply because the latter already have all they need of so called CPI goods, and are hence spending their stolen windfall on so called “assets” instead.

I should have said “Understanding needs brains and ability to study something with an open mind” instead of only “Understanding needs brains”

It seems like the Central Banks’ job is to maximize indebtedness. Low interest rates do that. Would not that be consistent with them actually being private and in fact lenders? I think that the bubble got so big and obvious that the FED was required to make some token effort at tightening just to maintain any sort of credibility. As for the QT…..those Treasuries are becoming like hot potatoes. Again….private bank….why would they intentionally take a loss on assets if they can sell high with some nobel-sounding justification? All this bloviating that you hear from the FED, giving half-baked reasons for doing this or that, does not make sense for a reason – they are lying about why they do what they do.

I remember when I bought my first house and found that I had to limit my discretionary purchases to keep the debt levels manageable. I’m sure everybody else experienced the same thing. But if I had a printing press and could convince sellers that the paper was as good as gold…