21 March 2023

Stocks and Precious Metals Charts - Organized Indifference and Managed Discontent


"In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance."

Hyman Minsky, The Financial Instability Hypothesis

"As Hyman Minsky once said, and the moderns seem to have forgotten, 'Anyone can create money; the problem is in getting it accepted.'   He should have added, except by force [force is bad monetary policy by other means].  Reform goes hand in hand with recovery."

Jesse, Moral Hazard of the Fed's Current Policy, 24 January 2013

"Twenty-five years ago, when most economists were extolling the virtues of financial deregulation and innovation, a maverick named Hyman P. Minsky maintained a more negative view of Wall Street; in fact, he noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze. Wall Street encouraged businesses and individuals to take on too much risk, he believed, generating ruinous boom-and-bust cycles.  The only way to break this pattern was for the government to step in and regulate the moneymen."

John Cassidy, The Minsky Moment, The New Yorker, 4 February 2008

“In order that a select few might live in great opulence, millions of people work hard for an entire lifetime, never free from financial insecurity, and at great cost to the quality of their lives. The complaint is not that the very rich have so much more than everyone else but that their superabundance and endless accumulation comes at the expense of everyone and everything else, including our communities and our environment.”

Michael Parenti

"If we are indeed in a Minsky Moment, which we think we are, then monetary inflation by the Fed and government intervention without reform will most likely increase the probability of a protracted stagflationary repression in the United States, and possibly lead to civil unrest and an exogenous [compelled] reform of the system.  An abandonment of the system as it is with a turn to fascism has been the historic choice of Wall Street.  The political lobbying against systemic reform by the Bankers and their sycophants will be intense and as persuasive to the many as most appeals to fear.  However, their reckless advice leads to a trip to the brink of the abyss."

Jesse, Which Way Out of the Minsky Moment, 23 March 2008

Below is a video of a recent talk by Thomas Frank, one of the best historical analysts of contemporary American politics and economics.

I recommend you watch it, with the caveat that he begins by characterizing the Republican party in fairly blunt and unattractive terms.  But then he turns and savages the Clinton - Obama wing of the Democratic Party. 

Frank is a centrist.  That means in this polarized environment and partisan hysteria he probably upsets most everyone who holds to strong and implacable positions on the left and the right.

But it important to at least consider our current social and economic troubles in a new way, from a new perspective, since the old model has been consistently failing most Americans for the past 30 years.

You may not agree with it, but you can at least have it as a way of organizing your thoughts about what is happening during those idle moments when hating the 'other side' and big label boogeymen grows old.

Stocks were bubbling higher, floating up ahead of the FOMC decision tomorrow.

The Dollar chopped sideways.

VIX plummeted.

And gold and silver were nailed from first thing in the morning.

Given their recent gains a stiff correction was probably well in the cards, especially with a Fed Day approaching.

But still, it underscores the problem with applying the rules of bull stock markets and market driven commodities to the precious metals markets, which is a rat's nest of hidden leverage and manipulation of prices more in keeping with a currency.   

I expect the Fed to raise 25 bp tomorrow, but then to potentially say something idiotic and self-serving to the favored few.

So let's see what happens.

Have a pleasant evening.