Source:Â Flickr. By Barbra Nixon
Dear Diary,
First, we check in with the markets.
What’s new?
Not much. The Dow crossed the 17,000 mark yesterday.
Janet Yellen is supposed to address the world today from Jackson Hole, Wyoming. It is hard to imagine that she will say anything surprising… or even meaningful. Commentators all over the planet are waiting to analyze each word… hoping for a hint of what is coming.
They want to know when we will be leaving this wacky world of price fixing by central banks. They want to know when we will get back to more normal interest rates and a more neutral monetary policy.
We think we have the answer already: Only when we have no other choice.
The world’s largest economy, and its capital markets, depend on cheap credit. Take it away, and asset prices will collapse… and the economy will go into a recession/depression.
Yellen can’t allow that. It goes against all her training, her convictions, and her most treasured delusions. She will fight the inevitable downturn with more liquidity and more free credit… until the whole shebang blows up.
Then, and only then, will things go back to normal…
Going for Broke
The Congressional Budget Office (CBO) issued a report last month. Hardly anyone even noticed it. But its news was shocking…
Turns out, the US will go broke 20 years sooner than projected. Not in 2050 as previously forecast, but in 2030 – just 15 years from now.
Fifteen years is a long time. Anything can happen. But our job is to look ahead. And when we take a peek at Social Security’s finances, we’re glad we’re not counting on it to fund our old age.
The CBO says Washington’s deficit has increased 400% in the last six years. It is now $15 trillion short of the amount required to fulfill its commitments over the next 75 years.
So, what does this mean?
As it also turns out, we were sitting at our window at the Mount Juliet Hotel, in County Kilkenny, Ireland – looking down at the north-flowing river beside it when we were suddenly overcome with an insight so profound we had to grip the arm of our chair with one arm to steady ourselves… and reach for our glass of Jameson with the other.
