The Market Ticker
Commentary on The Capital Markets
Logging in or registering will improve your experience here
Main Navigation
MUST-READ Selection(s):
So What About Kavanaugh?

Display list of topics

Sarah's Resources You Should See
Sarah's Blog Buy Sarah's Pictures
Full-Text Search & Archives
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.


The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be sent unmodified to lawmakers via print or electronic means or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media, to republish full articles, or for any commercial use (which includes any site where advertising is displayed.)

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.

Considering sending spam? Read this first.

2018-07-18 13:00 by Karl Denninger
in POTD , 59 references


Cities are cool..... and this is one of Sarah's pieces depicting places she has visited.  Email now to put this unique, one-of-a-kind on your wall!

View this entry with comments (opens new window)

2018-07-18 11:16 by Karl Denninger
in Editorial , 157 references
[Comments enabled]  

I'm tired of this horse**** and those who promulgate it and then cause the nation to self-destruct, along with intentionally blowing asset bubbles through this policy that destroys the lives of millions, need to have that behavior defined as a death-sentence felony with punishment to be meted out by public hanging.

Kudlow once again ran the same crap he ran during the Reagan years about "supply-side" tax cuts, admitting that they boosted deficits (duh) but trying to argue they were akin to a business investment and would be recovered through higher growth.

The problem is he lied about the outcome; what he claims never happened during Reagan's years in office.  The Fed Z1 along with the GDP series proves this.

Further, it's not going to happen now either -- OMB says we'll run north of a trillion in deficit in fiscal 2019.  The import of this is that such a figure would be right around 5% of GDP.

This means in order for the economy to "pay that back" the growth rate would have to exceed 5% GDP in nominal terms over a period of years without further expansion of the debt.  This has never happened because the deficit spending never stops.

Kudlow knows this because he was there for the Reagan stupidity and yet he continues to run this crap, knowing he's lying.  In fact it's much worse than it first appears because the borrowing at "ever lower" ratcheting down interest rates by other actors, other than the federal government, also adds to nominal GDP yet that addition is factually false.

This is basic arithmetic folks; you must measure a thing in non-variant units if you wish to know if that thing is expanding or contracting.

Consider the measure of a "foot" as a unit of distance.  If a "foot" was defined as the length of the right foot of the King, but when you began with this measurement the King was 4 years old, then in 20 years' time could you tell me a "foot" of length was the same as a "foot" of length 10 years prior?

Of course not and any attempt to do so would be instantly laughed down as beyond stupid.

Since the amount of circulating money and credit is the denominator of the unit of dollars then in order to determine the actual GDP in invariant units, that is whether the economy is actually expanding or contracting, you must subtract from the change in a given unit of time the addition of money and credit during that same period of time exactly as you must adjust for the growth of the King's foot in order to determine whether a foot today is equal to a foot tomorrow.

When you do this you find that at no time -- not for one quarter during Reagan's Presidency -- did actual economic output during Reagan's Presidency expand.  What expanded was nominal GDP but the entirety of the "expansion" plus more was actually the expansion of the public debt and other emission of credit.

In other words in an SI, that is, an invariant unit, economic output actually contracted the entire time, and that has, with few and short exceptions, continued since!

How do we know this is true, beyond mathematics which are not suggestions?

Well, what percentage of the people are on food stamps?  There are 42 million on them today, and the last time we saw this level of "unemployment" that number was 17 million.  That's more than a clean double.  If GDP is so great then why are there twice as many people, plus more, unable to afford to buy their own food?

Is that the only example?  Of course not but it's a damnably glaring one, and impossible to ignore.

In the end, however, the bottom line is that mathematics does not hew to either suggestions or politics.  It just is.

You can fake alleged "growth" by cranking up deficit spending for a while but the only way any organization, government or otherwise, can continue to debt-finance consumption is for rates to continually decrease so you can continue to roll over said debt at ever-lower interest expense.  The laws of mathematics make such an exercise literally impossible to maintain on a permanent basis and refusal to recognize and deal with that means that the deeper you have dug the hole before you're forced to stop the more it will hurt and the more people will be abjectly ****ed and even die as a consequence.

Those who press these policies should be held accountable, directly and criminally, as murderers -- because they are.

Take your spot in line for the gallows Larry.

You've earned it.

Oh, and **** you CNBC for repeatedly running that knowing lie, to which you willingly subscribe and promulgate for profit.

PS: Powell just admitted the entirety of the above (other than my recommendation to make pumping this crap a capital felony, of course.)  "US Fiscal Policy has been on an unsustainable path for some time.  It continues to be unsustainable."  One truth-teller who will be completely ignored -- right up until the gallows get built, with or without that law being passed first.

View this entry with comments (opens new window)

2018-07-18 07:00 by Karl Denninger
in Corruption , 101 references
[Comments enabled]  

It's really quite simple.

In any market where there is either a flat-out monopoly, evidence of lock-step pricing changes among alleged "competitors" or the alleged "competitors" have "captive" customers (e.g. the government on long-term contracts), a condition that is factually present in banks, airlines and the entire medical industry (among many others) you cannot enforce anti-trust or consumer protection law with fines.


The reason is simple: The threat of being a fined is only a deterrent if imposing them raises a realistic threat of the firm's competitors destroying the company that intends to do the bad thing.

If that threat is not present then the fines will always be paid by customers -- either the general customer (that's you!) or, in the case where a "captive" customer is present, by said captive customers (that's also you, since you fund the government with taxes!)

In such a circumstance there is only one way to enforce said laws against a company and actually deter repeat offense and that is to jail people within the corporation because the company cannot force someone else to serve a prison sentence.

Congress recognized this when it passed 15 USC Chapter 1, and it is the reason that the law specifically denotes all trust and monopolist offenses as criminal felonies to which attach prison sentences in addition to monetary fines.  This is also why directly "higher prices" are not required for a violation to be present; in fact the mere attempt to restrain trade or damage competition is sufficient to sustain a conviction.

The judiciary and executive, which bring and adjudicate violations of the law, have unlawfully and unconstitutionally re-written said statutes through their "interpretation" of same despite the fact that no change in the actual language of the law has been passed by Congress and signed by the President.

The resulting refusal to both bring criminal indictments and jail offenders in the banking and health industry, to name two very specific industries where serial offenders serious enough to implicate "three strikes" laws had you as an individual person been involved is the reason why Wells Fargo (among many others) has repeatedly robbed and defrauded people yet continues to business today and why the entire medical industry has not seen virtually every board member, officer and CEO indicted, tried and imprisoned -- instead you've got medical costs that are five hundred percent of what they should be in America today.

Incidentally if you want "market proof" of this Google just got slapped with a five billion dollar fine by the EU due to illegal monopolist practices they were found to have engaged in with Android.  The impact on the firm's stock?  Nothing.

View this entry with comments (opens new window)

2018-07-17 13:00 by Karl Denninger
in POTD , 104 references


Newly made and ready to go to a new home; on canvas, hang and enjoy!

Email now for price and shipping arrangements.

View this entry with comments (opens new window)

2018-07-17 12:19 by Karl Denninger
in Monetary , 174 references
[Comments enabled]  

Powell said something very interesting in his Q&A -- that addressing the lack of wage growth is "outside of what monetary policy can do -- but is within what Congress can do."

He's right.

Then there are the grand-standers -- such as the Indiana Senator (unworthy of being named other than "sack of crap") who went after Powell with a screed about soybean prices being very low by historical standards.

There was also much grandstanding about opioids.

But essentially zero discussion was offered on exactly what Congress has done to cause both of those problems.

Specifically, it's been the "open and free trade abuse" which was specifically engendered by Congress that has led to both issues, and that is something we cannot address without resolving trade and economic policy.  Monetary policy is not only unable to materially change the trajectory in a positive way the side effects, all of which would be bad, would certainly outweigh the intended effects.

I have brought the fundamental reality of all of this up myriad times: The intentional distortions that come from enabling the exploitation of slave labor and environmental destruction through alleged "free trade" policy destroys the job market for everyone on the left side of the bell curve of intelligence and ability.

This is the intended effect of such policies.  Our Congress and our Administrations on both sides of the aisle have intentionally screwed half the population.  That the screwed have yet to find their pitchfork and torch, but some have turned to opioids and other means of distraction, should not surprise.

But that this in turn destroys local, state and federal budgets due to the presence of a welfare state shouldn't surprise either; that outcome is ordained by arithmetic when you screw half the population out of a job yet at the same time promise government "help" to all who need it.

Indeed there's a fairly decent (but cynical) argument to be made that the entire purpose of such a welfare state is to prevent the 50% on the left side of the bell curve from deciding to show up in DC and erect a gallows on the National Mall to water the grass with -- an outcome that would otherwise be rather likely when you hose 150 million people!  You don't really think that a mere million cops and available military folks would be able to put down a revolt comprised of 150 million, do you, especially when a decent percentage of those folks would likely side with those doing the revolting!

There has been exactly zero evidence thus far that anyone in Congress has or will do a damn thing about any of this; indeed all they've done is demand more screwing for those on the left of that bell curve!  Trump's trade policy changes are actually serving as a corrective force in this regard, in that they both can and will drive some of that formerly-slave labor back to the United States which will employ some of the people on the left side of the curve.  It will also, however, reset internal demand for some commodities that have had artificial boosts in the previous 20 years that never should have existed in the first place, specifically for soy and corn.  Erasing the subsidies and insanity of corn-based ethanol would help reset that back as well.  You can argue that this is "bad" from the lens of today's perspective but exactly how is it "bad" to remove artificial stimulus and demand that never should have existed and which resulted in other people getting screwed?

Now the corn or soy farmer screams, but who put him in that place originally and who did he screw on the way up?  Does that person get any sort of recompense?  Of course not; he or she doesn't count, right?

Folks, it is a fundamental truth that if you kill the so-called "global supply chain" games that on any dispassionate analysis simply amount to seeking slave labor and environmental destruction for profit you will wind up with the shipping costs of doing things "over there" overwhelming the real (not abuse-based) savings you could have through such a system.  Moving things costs money and thus the less of that you can do the less overhead you have, all other things being equal.

This will inevitably mean that production will move closer to consumption.

This is a good thing, not a bad one.  Shortening supply lines in all directions means less delay, a more-responsive market in terms of supply:demand balance, better and more-accurate price discovery, more competition and jobs for those on the left side of the bell curve right here in America.

It also means that for those products to be sold somewhere else (e.g. in China) the best option will be to build them there.  Ditto for Mexico, Europe, Canada and elsewhere.  What's wrong with that?   Do they not have people on the left side of the bell curve too?  Is cost efficiency not important to manufacturers and suppliers in other than the United States?

Let's cut the crap folks -- the garbage foisted on Americans over the last 30 years needs to end.

I'm astonished that those on the left side of the genetic lottery have not risen up and literally sacked both State and Federal Governments by this point along with the so-called "industry titans", especially given the smug, in-your-face pronouncements from people like Zuckerpig about how we all need to be prepared to pay a "universal basic income" due to AI.

Utter nonsense; what these people champion and exploit is in fact slavery and, when making things, intentional environmental destruction.

Given demographic realities within the United States and our refusal to enforce immigration laws along with so-called "free trade" it is also racism in that in the US it is brown and black people who are disproportionately (by a wide margin) screwed, and among other nations those who get screwed via the slave labor systems and environmental destruction are almost to an individual of brown or black skin.

View this entry with comments (opens new window)