"'When I use a word,' Humpty Dumpty said, in rather a scornful tone, `it means just what I choose it to mean -- neither more nor less.'
`The question is,' said Alice, `whether you can make words mean so many different things.'
`The question is,' said Humpty Dumpty, `to be master -- that's all.'"
Lewis Carroll, Through the Looking Glass
If you look at the metals calendar below, tomorrow is first notice day for June.
It is hard to tell, but I think the worst of the sell off for June option expiration is about done. But let's see what happens.
I must have heard ten times on the financial news, as they discussed the awful GDP revision, that there is no inflation because gold is down. Ron Insana said that since gold is down $35 the last couple of days, that shows that there is no inflation.
Well, this is all perception management. They took most of the damage in the GDP number now. Why didn't they take it in the upfront number? Because it was too close to the fact. In this second revision they took it down dramatically to the negative. But now it is further a long, and the story about the odd winter weather effect has had time to gain traction.
The net result is that the next number is now important, and we are not looking at what just happened because it is so two months ago. And the comparison is set rather low for the next quarterly number, which I predict will come in much higher. All hail The Recovery™, fait accompli, just in time to influence the midterm elections.
Here is a link to a nice, concise description of what the basic tenets that Modern Monetary Theory stands upon.
I think I have made my own analysis of the theory fairly explicit. It has been tried many times. The key phrase is 'a currency issuer can never run out of money.' This is true. They can print all that they want. The critical variable is the 'value.' And as for value, 'the Jobs Guarantee Wage determines the value of the dollar.' And the Jobs Guarantee Wage is a function of the government.
It is a self-referential fiat standard, in the manner of the Alice in Dollarland in which we are beginning to find ourselves today. It will stand only so far as the force of law can reach. Generally that ends at the borders, but one can always hope for a one world government that is able to dictate the value of everything to everyone at their own discretion.
It is not that we need better financial engineers, or more virtuous custodians of society, a kind of a priesthood of economic virtue, worthy of the burden of being benevolent tyrants. There is NO class that is capable of wielding such raw power, without falling into a destructive cycle of self-destruction.
As an elite impoverishes their homeland, they find it necessary to engage in various types of colonialism, to create new markets for their excess supply, since paying living wages to their people creates a blur in class distinctions.
How can I know I am sufficiently rich, unless many are exceptionally poor? This impulse to economic expansion and marriage of force and economics was the story of the British Empire. And it explains much of the otherwise odd behavior of this New American Century, and its many wars and adventures. They make a desert and they call it peace.
I hate to pick on MMT like this, because so many otherwise nice, sensible people seem to be drawn to it. But I can see such a revolutionary move is already in the cards from other corners. Nothing attracts the unworthy like the power to dictate and distribute wealth. And the more arbitrary it is, the greater the allure. As Abraham Lincoln said, it is the crux of human society.
"They are the two principles that have stood face to face from the beginning of time, and will ever continue to struggle. The one is the common right of humanity and the other the divine right of kings...No matter in what shape it comes, whether from the mouth of a king who seeks to bestride the people of his own nation and live by the fruit of their labor, or from one race of men as an apology for enslaving another race, it is the same tyrannical principle."And like most utopian exercises, some of the well-intentioned may promote it, but the worst end up controlling it for their own ends and personal enrichment. We have seen this tendency so far, at the dawning of the sixth year of The Recovery™ from the Great Recession, which formally ended in June, 2009. And isn't life grand.
Abraham Lincoln, 1858
Have a pleasant evening.
