It’s hard to say who is loonier – the guy in the White House East Wing hopped up on steroids or the Wall Street robo-machines and Robin Hooders who slobber incontinently upon the slightest hint of another “stimulus” injection.
Either way, exactly seven hours after he implanted a tiny quotient of sanity into Washington’s fiscal madhouse yesterday afternoon by terminating talks on Everything Bailout 5.0, the Donald proved once again that he is a clear and present danger to the nation’s solvency and that Wall Street is flat-out disease-ridden with addictus stimulitis.
The fact is, the airlines don’t deserve nor need a bailout, while the idea of handing out another $135 billion of walking around money to small businesses who might otherwise lay-off redundant employees is just plain ludicrous.
Of course, the Donald doesn’t have a clue about the fact that the future taxpayers, who would bear the burden of servicing another $160 billion of public debt incurred for these two illicit purposes, are not mules to be drafted in behalf of his re-election campaign. That’s perhaps why 30 minutes latter he upped the ante by another $300 billion, promising to instantly mail a check for $1,200 (adorned by his signature) from Uncle Sam’s depleted treasury to 160 million Americans (plus a $500 tip for their kids), the overwhelming share of whom didn’t lose their jobs and don’t need the money.
Alas, this is the fiscal madness which today passes for conservative Republican government. So it literally scrambles one’s brain to contemplate what depredations the Kamala Harris/Left Progressive Regency might unleash if, as and when it landslides into office.
The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!
9:54 PM · Oct 6, 2020·Twitter for iPhone
If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now. Are you listening Nancy?
10:18 PM · Oct 6, 2020·Twitter for iPhone
Needless to say, the above nonsense from the Donald’s twitter feed is all it took. In a flash, the pajama traders’ brigade was sprinting toward recovery of all the ground lost in the last hour of cash trading on Tuesday.
So doing, they reminded one and all that we truly are enmeshed in a doom loop in which the politicians spend and borrow at will; the Fed monetizes the resulting tsunami of debt paper with alacrity; and the swells on Wall Street reward both sets of economic fools with paroxysms of mindless dip buying.
At this point we would ordinarily mention this won’t end well. But by now that surely goes without saying.
Still, it is worth amplifying the nature of addictus stimulitis because it is so deeply and stubbornly embedded in the mindset at both ends of the Acela Corridor that it is well nigh impossible to imagine a cure that leaves the patient in tact. For want of doubt, just consider the recent proclamation of one Andrew Sheets, Morgan Stanley’s chief of cross-asset
“The glass half-full view of stimulus talks is if you don’t get it today you’ll get it tomorrow from whomever wins the election,” Sheets said in an interview. “This V-shaped recovery is still intact.”
He got that right. There is now virtually no adverse economic condition, shock or even mild disturbance that does not generate a Wall Street/Washington consensus in favor or moaaar stimulus owing to five major presumptions:
- It is assumed that unlimited monetization is sustainable and cost-free;
- It is assumed that soaring public debt is no problem so long as interest rates are ultra-low;
- It is assumed that Potential GDP is a real, measurable tangible thing and that any shortfall in actual GDP can and should be eliminated via aggressive monetary and fiscal stimulus;
- It is assumed that “moral hazard” is old fashioned bogeyman of the fuddy-duddy set that should not interfere with purposeful pursuit of “no fault” macroeconomic stimulus;
- It is assumed that economic stimulus and humanitarian social safety nets are part and parcel of the same thing and that bailing out reckless companies in order to help needy workers goes with the territory.
These baleful presumptions are now a bipartisan consensus, and it doesn’t take too much cogitation to see that taken together they form a self-fueling doom loop.
For instance, the more the Fed monetizes the public debt with fraudulent
Article from LewRockwell