iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
17,086 Blog Posts

We Don’t Need Inflation Anymore

We haven’t had any real inflation, net of population growth, in quite some time. For years, I feared the deflationary vortex, which was being worsened by wage stagnation and exportation of high paying jobs, was going to doom us all. The dichotomy between the have and have nots has progressively widened, which hasn’t meant a damned thing for stocks.

Without question, there has never been a wider chasm between Main Street and Wall Street than now. In the past, Wall Street sort of needed Main Street to drive business and produce profits, but not anymore. In a globalized economy, Wall Street merely needs Main Street to stay alive. AI and technology innovation is the main driver for higher profits. Foreign factories and a wide open immigration policy has led to lower wages, or at least stagnated them, in turn leading to higher profits.

Due to the high tax burden, regulations et al, big business has been provided with an impregnable moat that staves off competition. The big media push, via Google, Facebook, Twitter, NY Times and Networks protects these interests and promotes a socialized agenda that only serves to increase the power of the American oligarchy.

In a sense, capitalism is dead in America and has been dead in Europe for a long time. We’ve entered an era of autocracy, led by technocrats, and hardly anyone is aware that it happened.

Central Banks control the flow of money, helping banks earn easy profits that also stops them from putting money to work in the economy. And, through all of this obfuscation, stocks hit record highs, which in turn produces higher tax receipts, in turn helps keep the charade going.

The mechanization of this scheme is impressive and people won’t truly analyze what is going on until it crashes. In the meantime, we buy stocks because it’s easy and those of us who do not are ostracized and hated.

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14 comments

  1. sarcrilege

    Minsky moment and pendulum will fix this.

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  2. hedge500

    Real estate, cryptos, indexing. Wherever I look all I see are bubbles and imbeciles.

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    • Dr. Fly

      Not all RE. High end, coastal, urban.

      Rural and suburbs are good values.

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      • hedge500

        You’re right. I’ve noticed the low end running too. Near me, two years ago $70-100k are trading around 200-250k. Millennials or flippers.

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        • mrcharlie

          Hey Fly, when that Asbury bubble bursts gonna need you to swoop in for a buy at the shore. I saw a Vive property got flipped for $850K last month…sickening.

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  3. indie

    what warped analysis…

    Capitalism is alive and wild in ‘merica. Proof is the Oligopoly problem. Democratic power of citizenry breaks monopolies and oligopolies. Not the other way around. Capitalism doesn’t break them and have no interest to break them. Capitalism at its finest and wildest leads to concentration of capital. Concentration of capitals is breaking your democratic institutions. Stop blaming the media or the technocrats et al. Capitalism won in ’89 and it’s been looking for adversaries ever since. interior enemies. imagined enemies. … so they can keep winning and taking over your democratic institution, your republic. Globalization and technology has increased the pressure and quicken the pace.

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  4. indie

    tax cuts = increase concentration of capital.

    results will be more trouble. more problems. destruction of middle class. impoverishment of the working poor. most certainly less jobs as capital is the ultimate globalized item. It moves freely across borders and will be used to build factories of robots elsewhere regardless of USA immigration policies. immigration policies is a red herring for the working class that want to hear this narrative (ie: white male). it makes no difference.

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    • Dr. Fly

      AGREE TO DISAGREE.

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    • numbersgame

      I agree that tax cuts for investors/company/upper calss/supply-side, will not imporve an economy where we are seeing record profit levels, record stock levels, and very high company cash levels.

      Tax *reform* would be helpful, but the Republicans aren’t Patriotic enough to b place the long-term prospects of the country above the corporate special interest groups that feed them. Hell, they can’t even get rid of the carried interest loop hole. Instead, they go the other way and get rid of the Estate Tax, so that the Waltons never have to pay ANY tax on the capital gains of their assets. (eg: acquire stock at $10/share, pass it on to heirs at $100/share, and don’t pay a dime on the $90 increase). 0% capital gains tax rate is great for the 1%.

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  5. Dr. Fly

    I find it hard to understand WHY you would not want lower taxes, on a personal level. Quit thinking so god damned macro.

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    • numbersgame

      “I find it hard to understand WHY you would not want lower taxes, on a personal level. ”

      It’s BECAUSE I think long-term, macro. You’d rather have record-high stocks now, a Depression in 10 or 20 years? That’s so 2006…

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    • indie

      Why?

      Violence.

      How come “they” (1%) get a break while the others (99%) ain’t got none?

      The additional ressource from a tax cut will not be allocated to employment. we’re in a short supply situation. There are jobs. Just not well paid ones. People work 2, 3 jobs. part time shit jobs mind you.

      If it is toward investment there’s no garanty it will be “invested” in the USA. So, how come they (1%) get a blank check from the government while the poor and poorer gets fucked up the ass by their pharma/hospital/insurance/bank/factory?

      How about this hypothesis; the tax cuts will be used to pay for the increase health insurance cost. … fucked up hey.

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  6. numbersgame

    In terms of immigration, free trade, etc.: these are extremely beneficial to the economy as a whole, but the benefits are highly skewed towards the wealthy.

    If their is someone willing to pick fruit for $3/hour, then the guy who would have done it for $10/hour now competes for a fast-food job. So the second guy who could be making $10/hour at the fast food restaurant, is instead paid $7.50/hour because their is icnreased competition. This filters up to the middle class. Of coures, this wage-suppression effect does lower prices. However, if you are in the top 40%-90%, the benefits of lower product prices and higher company profits far outweigh the downside effects on your salary. If you are in the top 10%, you probably don’t even have a salary, and reap all the benefits of anti-protectionist policies without any of the ddwnside at all.

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  7. paradox

    A good analysis of the macro/market drivers, imho. Believe many market participants are ignorant/apathetic to what you lay out here, let alone main street. Rarely is the term paradigm change appropriate or non-douchy to use, but all these economic/social/political things you are describing almost go beyond such a cliche. Given enough people guessing where all this goes and ends a small number will end up being ‘right’ eventually, but at the end of the day no one truly knows because there is no precedent for the blend of things at work.

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