1/ "It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something…
2/ "The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 yrs, as far back as the Sumerians."

-Fmr BIS Chief Economist William White, Jan-16
3/ Only question is whether the effective jubilee will come in nominal or real terms; if it is in nominal terms, today's sovereigns will be the 1st in history to default for lack of printed money. Only gold & BTC win either way.

Quote above from here:
telegraph.co.uk/finance/financ…
4/ BTW - William White was one of the only senior policymakers who warned about the 2008 crisis ahead of time, but his warnings were widely dismissed by "The Maestro" and others: spiegel.de/international/…

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More from @LukeGromen

13 Nov
1/ I remember during the Bush/Obama lame duck period, a number of clients in my former seat expressed acute concern that Obama had supported union "card check" legislation as they saw significant risk that companies like WMT might be unionized under the coming Obama Admin.
2/ So I called several different long term union officials (one of whom had worked w/Jackie Presser) & asked them if they thought union activity would increase under Obama as a number of investors were concerned would happen.

The unanimous union leader response? "LOL."
3/ The union leaders all thought an increase in union activity under Obama was a preposterous concept, even as a growing # of investors were concerned it could happen. The union guys were proven totally right.

IMO there might be a lesson here for the current lame duck period.
Read 4 tweets
12 Nov
Left unasked: Why has the US government chosen to effectively keep its young people in student debt slavery to the tune of $1.5 trillion?

US political shifts are increasing the odds of a "bond fire".

#DebtJubilee #Gold #BTC
2/ If I was tasked with ensuring the US suffered from "secular stagnation" as described by @LHSummers, one of the first things I would do would be to load up my young people with $1.5 trillion in non-dischargeable student debt.
3/ Then, I would follow trade and economic policies (outsource mfg but allow the proceeds to accrue solely to the 1% instead of reinvesting some of proceeds in education, infrastr, & job retraining) that saw the majority of wealth accrue in the hands of old people w/a low MPC.
Read 10 tweets
27 Oct
1/ Stan Druckenmiller: "How did we [earn such high compound annual returns] over such a long period of time?

Very simple. While others were focusing on the present, we looked and focused on the future in terms of analyzing unsustainable situations"...

FFTT-LLC.com
2/ "And when I look at the current picture of expected tax revenues combined with benefits promised to future generations, this is the most unsustainable situation I have seen ever in my career." -Stan Druckenmiller, April 2016

FFTT-LLC.com
3/ So many debating what various election outcomes may mean when the most important choice isn't on any ballot, anywhere in the US (or in the world):

Kill the economy, or kill bondholders' purchasing power.

FFTT-LLC.com
Read 4 tweets
16 Oct
The @nytimes Editorial Board says Donald Trump is "our national crisis", but Trump is just a symptom of our true national crisis:

Thanks to our post-71 USD system, it now takes 53 weeks of work to afford essentials...the crisis being that there are only 52 weeks in a year.
2/ The US's "national crisis" will continue til the structure of the post-1971 USD reserve status is changed; til it is, nothing will change. Essentials will continue to rise in cost while wages won't, as the US suffers from worsening "USD Dutch Disease" ftalphaville.ft.com/2019/03/13/155…
3/ "USD Dutch Disease" relegates US's role in world to producing the USD's that China needs to buy up the world's finite assets, sacrificing US middle- & wkg-classes to do so. This means there will likely be no de-escalation of political tensions til the USD status is changed.
Read 8 tweets
26 Aug
How to get inflation > target in 2 easy steps:

1) US govt says: "The $864B deficit we ran in June is the new normal. That'll be the deficit EVERY mth from now on."

2) US Fed then says: "We will not allow 10y UST ylds > 60bps."

This is likely coming.

nytimes.com/2020/07/13/us/…
The world has long been gaming the USD system to its advantage; what I describe above would be the US gaming the USD system for OUR advantage for a change.

The world wants USDs? Fine...we'll MMT $10T per year of free stuff until the world adjusts the USD's value accordingly.
3/ "You want to threaten our Rx supply chain China? Fine. Executive order, $200 billion in 0% money 'loaned' to the US Rx industry to bring back mfg by 2022. Fed will hold the notes."

"INTC? Your turn. Here's $200B for you to build 10 new fabs in the US by 2023."
Read 6 tweets
23 Aug
@profplum99 @GreekFire23 @hendry_hugh @scientificecon 1/ China has a debt problem. W/finite rsvs & a non-convertible ccy, this means if China has a current acct deficit, it'll have a late-90s SE Asia ccy crisis (aka CNY crash & social unrest. China runs curr acct deficits in 2 places primarily:

1. Tourism
2. Commodity imports
@profplum99 @GreekFire23 @hendry_hugh @scientificecon 2/ Rising energy imports in particular mean as China imports more oil at higher USD prices, it's curr acct will fall closer to deficit & CNY ccy crisis = bad

China has 4 options to stave this off:

1/ Stop growing
2/ Produce more oil
3/ Buy more oil abroad
4/ Print CNY for oil
@profplum99 @GreekFire23 @hendry_hugh @scientificecon 3/ #1 isn't an option politically; #2 isn't geologically; #3 is what China's been doing w/their USDs for yrs; #4 began in 3q14 & is now accelerating meaningfully:
reuters.com/article/us-chi…
Read 10 tweets

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