This week Paul Kiker and his wife are out celebrating their anniversary, so this is a solo Finance U.
As you know, I tend to think in long-form thoughts and I have a hypothesis I wanted to run by you which concerns the degree to which our ““markets”” are really mainly narrative-reinforcing operations conducted by the usual cast of insiders.
As a bonus for them, the markets also function as looting machines while they run, offering them the ability to grift dollars from the system that they can use to buy up real assets.
While I present a range of top-down economic and market-related charts, the whole can be understood from one of its component parts, the German stock market (the ‘DAX’).
While all of the major Western stock markets are currently smashing to all-time new highs, so is Germany’s:
Today’s green candle is one of the most vigorous in the past year. What is causing Germany’s stock market to smash to new highs? Is it robust underlying economic data? A softening of relations with Russia for cheaper future energy? A healthy employment situation?
In fact, none of these things are in play and yet Germany’s stock market – like those across the West – is powering unstoppably to new highs.
My explanation for this is that the West’s Central Banks and governments are busy shoving more and more cash and liquidity into the system and it simply has to go somewhere.
So, it finds its way into the asset markets.
Their interventionist policies are unsustainable, obviously, but they are quire popular among decision-makers and the ultra-wealthy because both are supported and enriched by these actions.
For their part, the media then covers the new highs with glee and pretends as if this means everybody is more well off, when the data could not be any clearer. The 0.1% benefits the most, then the next 0.9%, and everybody else has share the leftovers.
Meanwhile, the resulting inflation hurts the bottom 75% the most, and is the most regressive and unfair tax of them all.
But, meanwhile, despite the US system’s best efforts, gold and silver are sneaking higher and higher giving away the plans.
The largest concern? That the Fed organizes a rug-pull for the down cycle catching everyone off-guard after lulling everyone to sleep with their pattern of rescues. What if they don’t rescue this time and everybody is on the same side of the boat? Well, that’s crash territory and the benefit of a crash to them is the ability to use the panic to usher in CBDCs that nobody wants. It’s simply how they roll.