Don't Bet on it!
Betting against the US and for Russia or on anything smart out of congress are all traditionally bad bets.
Were you going to bet Mike Pence was never going to do anything smart? I was. I would have lost that bet and never saw it coming. Pence has just made the biggest, smartest and easiest move against the Federal Reserve in decades, and it is exactly the move I have been advocating for the last couple of years as the simplest reform of the Fed that would bring the most sweeping changes. Never did I bet, however, that any serious US political candidate would do what I was advocating, as I have had zero influence on the matter. Pence, however, has just made one plank of his political platform the abolition of the Fed’s dual mandate that stipulates the Fed is to assure maximum labor market strength. That guts the secret sauce of Fed power more than you might even imagine!
The Fed has utterly failed at that mandate, as evidenced in my recent article with proof that wages plunged from the time the Fed was first given that mandate. The Fed has been terrible for labor. As I’ve said repeatedly in the last few years, this mandate alone gives the Fed massive power over the economy that no bankers should ever have. Pence says it is time to strip away that power and put that responsibility solely on government and private enterprise to establish a healthy economic playing field.
Strip the Fed back down to the single mandate that it maintain a stable currency, and most problems with the Fed simply evaporate. Narrow that mandate even more to state the Fed must maintain the currency for zero inflation, and their overreach ends completely. That is clearly more than they are capable of doing at present, but it would eliminate their excuses for mismanagement and simplify their role and curb their powers to such an extent that maybe they could accomplish that much as it is easily measurable and not hard to whip them if they fail … as they so clearly have. I didn’t expect that plan to come from Pence, but, as an equal-opportunity critic of both parties, I give credit wherever credit is due to either party or any politician! And that is a big one.
Those who cast their bets last year against Ukraine and against the West because they hate them so much or who bet in favor of Russia because they idolize Putin, should also give credit were credit is due. Betting against the US has for decades proven to be a bad bet. While the US does a lot of dumb things worthy of criticism, it also does very few things any dumber than its competition, and that can be seen all over today’s news!
Those betting for Russia were CERTAIN beyond all doubt that Russia would clean out Ukraine in short order. (Now some try to claim they never thought it would be easy, but that is certainly not how they sounded a year ago.) Instead, Russia is slowly being wiped like a blood stain back out of Ukraine. The Russian CEO of Wagner’s vaunted mercenary forces has repeatedly turned into the most severe critic against Putin and against Russia’s military, railing against their abject failures; but Wagner, itself, has failed to capture the tiny town it already boasted about capturing three months ago. That town and many other small towns around it have been completely destroyed by the fighting, but Russia’s continued inability to seize control of them has been a huge disgrace to Putin.
Since the towns have been reduced to rubble in all the crossfire, Ukraine’s strategy seems to be to keep Russia fully occupied in those already destroyed areas to turn them into Russian meat grinders, sparing other areas the same destruction. Let the Russian’s keep funneling in and keep crushing them there until Russian forces do as the bold and brazen Wagner recently threatened to do, and simply withdraw. Yes, even Wagner is so close to defeat that its strongman contender against Putin threatened total retreat from the area.
Those betting against US defensive weapons once scoffed by pointing out how Putin’s hypersonic missiles would easily beat US Patriot systems. Good ol’ muscle, flexing, horse-riding, bear-riding Putin! You could read their laugher and derision against the US all over the Bulgarian-owned, pro-Russian Zero Hedge, but when Russia sent its largest bombardment in a single day of cruise and hypersonic missiles into Kyiv this week, the Patriot system completely destroyed 100% OF THEM! No small task. Credit where credit is due. Some people within the US seem to be betting against their own country just because they hate it so much.
So, too, with all those who bet against the West due to Russia’s huge natural resources, saying Europe was committing suicide. Thanks to a turn of the weather and an improved turn toward greener energy that has been accelerated in Europe, Europe’s dependence on Russian energy is well on its way to over already. Many critics of the West there are who hate to and won’t admit that. However, Europe beat its natural-gas reduction goals by a solid margin this past winter, and now natural gas prices in the US, which stepped in to supply Europe and reaped huge gains at Russia’s expense in the European market, are already plunging to such an extent that US energy companies are reducing natural gas development due to declining demand! Concerns are even rising that Germany may be actually overbuilding its liquid-natural-gas transport facilities because expansion of green energy and a return to nuclear energy are going so well. There is more for Europe to do, but it has clearly turned a corner.
Of course, next winter may not give Europe the break this past winter did. However, this past winter bought it a lot of time, and a lot of change happened in that time. Europe, quite simply, faired better under the sanctions than many critics claimed it would, and Russia is forever the loser of a market it once dominated. Some may not like to hear those facts, but these are the facts as they stand in the news today: Europe made it through the winter, skirted the edge of disaster, and now is looking like it could have more liquid-natural-gas facilities than it will actually need. As for Russia being the lead source of Uranium for those nuclear facilities, don’t bet on that not changing over the next couple of years as development in Australia and other areas will grow.
Likewise, for those who have been betting the dollar will be crushed by China — something I have argued many times is just not happening. Yes, the dollar is poorly managed by the Fed because the Fed is preoccupied with something it knows nothing about — economics. Yes, the Fed needs SERIOUS reform. HOWEVER, so does China. China’s economy is not about to overtake the US economy and stomp us into the dust, any more than Japan did decades ago, as was feared back then. That bet against the US failed then. This one is already failing now and quite apparently so.
Yes, the US economy is in great peril, so is the US monetary system. Yes, other nation’s (BRICS) are joining with China to reduce US hegemony of the dollar. HOWEVER, so are all other systems failing. China’s economy is crumbling badly from within as the Soviet Union’s once did. Its real-estate and construction economies are in ruins due to typical horrible communist government where the central planners boosted their economy by creating the largest ghost towns in history under the if-you-build-it-they-will-come dream. For the last several years, the news has been full of accounts of vast high-rise real-estate tracts in China that remain empty. Likewise, the central planners choice to close down their economy completely in places to combat Covid, oblivious to economic reality, did far worse than shoot themselves in the foot. It is more like they shot themselves in the femoral artery or blew their knee cap out.
The yuan is actually losing strength against the dollar, and that slide just hit a critical level today. That said, the dollar is still declining due to weaponization, and the US would be foolish to keep acting as if it is invincible and can do whatever it wants with its currency. China is gaining some traction in use of the yuan; however, it still remains far down the list of currencies in use in the world — holding the number-six position. It runs about 6% of the global currency market. There is plenty of time for the US to turn things around IF the US smartens back up! Question is, will we? Don’t bet against us. We often have smartened back up as we did when we were losing market share to Japan.
Still, our politicians are holding a new record for dumb as can also be seen in today’s news where the family-values politician is getting a divorce while the Dem’s are doing all they can to hold power by keeping two of their nearly brain-dead politicians in office, while pretending are as mentally fit as Bernie in Weekend at Bernie’s, and they are running another in a bid to retain the oldest-half-dead-president-in-office record. Also, the day’s news. Republicans, however, seem to be smartening just a little by saying it is time to get liar Santos out as quickly as possible before the Dems beat them to it. Who would have seen that coming? Politicians rushing to kick the liars in their own party out of office? Sometimes I guess it just gets that bad!
Meanwhile, there is one bet against the dollar that is winning. Gold and silver are increasingly gaining traction in the US as renewed currencies. Alaska just made a move to make them legal-tender. Raw gold, as in nuggets and dust, will not be legal tender; but the move is toward making minted gold and silver by authorized facilities with stamps of purity legal tender. That was why coins began in the first place. The value was in the gold, but a mint was required to assure the gold was in the coin! A little real completion would be good for the Fed and for all of us.
The idea that China’s military strength is going to supplant the US is also a bet that sounds a lot more likely than it really is. Today’s headlines tell of Indonesia and the Philippines, which had recently been dead-set against the US, now encouraging cooperation WITH the US AGAINST China by readily welcoming expanded US military presence. Japan is joining them to thwart the new rise of Chinese hegemony in Asia; while India, thought to be an ally with China against US hegemony and in favor of Russia, shows again in the headlines that China remains its longtime enemy along the Himalayan border as India increases its anti-Chinese weaponry along that front.
Putin, meanwhile, has only succeeded in getting himself far more NATO and a stronger NATO than he ever formerly worried about. The strength of weapons in Ukraine keeps growing, while worries that we simply must cower to nuclear threats and let obvious imperialists have their way have not played out as the fear mongers said. The US, of course, is an imperialist nation, too, and I will always speak out strongly against its military imperialism as I ALWAYS have; AND, as I now do against the more than blatantly obvious Russian imperialism. Both must end! One does not ever justify the other. Not ever. End invasions of sovereign nations. This time, as often in the past, Russia is the invader. Regardless of its stated reasons, it IS the uninvited invader.
Then there are those bets by the stock market that the inflation war was being won. Always wrong. Even the Fed’s Bostic says today, the hardest part of the fight against inflation has not even begun yet. Those betting for the pivot just keep losing their bet, as I have said consistently they would. The Fed is not backing down from its inflation fight.
So, if you think you have the world easily figured out from your armchair, don’t bet on it. Others see the same changes happening and then jump in all of sudden as countervailing forces with a lot of strength to do something about it. I’ve seen that happen against my own bets in the past sometimes, too.
Finally, a couple of interesting twists in banking that you actually could bet on because banksters are always predictable in that evil is by nature uncreative. It is simply destructive. Wells Fargo has agreed to pay its shareholders a billion dollars in a suit the shareholders brought against the bank over its illegal shenanigans against the bank’s own customers. In other words, the bank is paying for its crimes by giving more value to its owners! Glory, hallelujah! First Republic shifts blames to its regulators by saying they did not regulate it toughly enough because there was “no way they could have seen this coming.” Now the thought that they would say exactly that is a prediction you could bank on! An equally bankable prediction would have been that UBS would find it had been hasty in its due diligence in taking over Credit Suisse. It now says it was. You can just as easily bank on a prediction going forward that they will soon use that claim to say they need some additional bailout funds from Europe or Switzerland because of how they were pressed “to the rescue for the good of all Europe.” If there is one thing that is predictable, it is banksters. That is I why I wrote DOWNTIME: Why We Fail to Recover from Rinse and Repeat Recession Cycles.
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