When Economic Jokes Are Not Funny
Inflation certainly distorts reality. In the future, investors might look back on this time as the era when they considered eggs some of their most valuable assets. In contrast, real estate and the dollar are currently taking a ride in the down elevator. If the Weimar Republic saw thieves dumping out wheelbarrows of cash and stealing the wheelbarrows, the US might soon see thieves bypass a grocer’s cash registers and raid the egg section. Or perhaps high schoolers will deface the neighborhood curmudgeon’s car by throwing wads of cash at it.
On a more serious note, the situation is becoming more difficult by the day. Though inflation has recently abated, it is historically still very high. And given the government’s proclivity for changing the way inflation is measured, shoppers might know the true state of the economy better than economists do. And shoppers are not amused—or at least they’re not amused by inflation. As gallows humor appears in deadly times, egg humor has abounded in current America—witness our crude attempt at the same in the first paragraph.
To get some idea of what humorists could be joking about tomorrow, take a look at or listen to one or more of the reports below. And to reduce the need for you to joke about what was once your pension or 401(K), be sure to make these communications part of your weekly reading or listening.
Key Takeaways:
- Inflation is a thief
- The money supply today remains much too loose to quash inflationary dynamics
- This week’s FOMC meeting will give a strong indication of who tomorrow’s winners and losers will be
- Gold is on a tear—but not all gold assets are faring equally well
The McAlvany Weekly Commentary: Readers unfortunate enough to have studied economics in college likely suffered through the vagaries and valuations of Keynesianism. As a method of balancing supply with demand, that “discipline” leaves a lot to be desired, but as a soporific, it is virtually unexcelled. The same is true of Marxism. If you’re having difficulty sleeping at night, just pull out an English-language copy of Das Kapital, read a few pages, and start sawing logs. The same would likely be true for fascism, but how-to texts are understandably (and thankfully) in short supply. In short, economics, as commonly presented, deserves its “dismal science” moniker. That’s unfortunate. Few disciplines affect people’s lives as deeply or broadly. Yet because of the resulting lack of public understanding, bankers, business magnates, legislators, and leaders can easily steal a march on the people, and in so doing steal their wealth as well. David and Kevin discuss how the poorly understood concept of inflation steals the wealth of hard-working people just as surely as a thief in the night, though far more effectively.
Credit Bubble Bulletin: Given the policy ramifications and personal tragedies inherent in the hot war in Ukraine, one might be forgiven for not paying attention to the war of influence over the economy raging in the US. On one side stands the Fed, raising rates on behalf of Main Street to tame inflation. On the other side stands Wall Street, thinking and acting like rate increases are about to abate and easy money return. The situation is pregnant with immense ramifications, and neither side’s victory will come without extreme difficulty for the opposing side. Doug tallies the facts and analysis from both sides and offers his own highly informed breakdown for those who have a stake in the outcome—in other words, everyone. This week’s FOMC meeting could give a strong indication of which side is winning.
Hard Asset Insights: Morgan also points to this week’s FOMC meeting as a pivotal event—pivotal in respect to its overall importance, not necessarily in respect to the Fed’s stance on quantitative tightening. As a prelude to the meeting, he rounds up the thoughts and assessments of his A-list economic surveys, indices, and analysts. “HAI has pointed out a notable deterioration in economic data since December. First it was the December ISM Purchasing Managers Index (PMI). Then it was the NFIB small business outlook cratering along with a notable drop in profit trends. Last week’s Empire State manufacturing data spoke the same recessionary language. This week it’s the Conference Board’s Leading Economic Index (LEI) banging the recession gong in convincing fashion.” Those are neither subjective nor minor indications of trouble. Whatever his decision, Chairman Powell must know that his decision will pick winners and losers on a very large scale.
Golden Rule Radio: With gains over the past five consecutive weeks and 11 of the last 13 weeks, gold is off to a roaring start in 2023. Will it continue? Will it take a breather or back off? Tory and Miles ponder such important questions this week. They note that gold is significantly overbought at this point, and that it will likely trigger some standing sell orders at its current price or soon. They also note that not all gold-related assets have fared equally well. While gold is up around $340 since late November, ETFs are sitting at a two-year low. The reason for this difference is important for investors to consider.
