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Top Three Videos – August 28, 2024

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Wolf Richter: When The Data Can't Be Trusted, How The Heck Can We Know How The Economy Is Doing? (Aug 25, 2024)

Thoughtful Money...

Summary

 

Traditional economic indicators, such as the yield curve and labor market data, are no longer reliable due to various distortions and anomalies, making it difficult to accurately assess the state of the economy.

 

Economic Indicators and Data Issues

 
  • The yield curve right now is meaningless, it just doesn’t mean anything anymore, inversion or un-inversion.
  • Data is now all screwed up, making it very difficult to use once reliable indicators as a gauge for the economy.
  • This is when really looking at the data really helps us make a much more emotion-free assessment of what true reality is going on.
  • “I’ve come to the conclusion that the yield curve right now is meaningless. It just doesn’t mean anything anymore inversion un inversion.”
  • “The Labor Market data is been, it’s just I mean it’s incredibly frustrating to see the data uh being so screwed up, and it’s and I mentioned some of it, it’s illegal immigrants that have shown up that are being captured by the data and its other issues.”
  • The FED replaces excess maturing treasury securities with new ones, still weighing on the bond market, despite reducing its balance sheet through quantitative tightening (QT).
  • The Fed’s gigantic balance sheet and the treasury Department’s actions are putting downward pressure on yields, which is helping to invert the yield curve.
  • How much faith can we have in employment data these days when so much dust is in the air?
  • If we have a bigger true denominator than the data the government uses, retail sales per capita could be falling off because we should really be tacking 10 million extra people into this thing.
  • Wolf Richter is willing to change his outlook if the data changes, showing a commitment to following the data rather than sticking to a predetermined view.
  • I think they’re overpriced, I think they’re overvalued, I think they’re very precarious, very risky right now.
  • Used vehicle prices spiked by close to 60% during the pandemic, between 2021 and mid 2022, which is completely insane and not sustainable.
  • “Inflation is there in services, it’s not in durable goods anymore, goods prices have come down and that’s not a result of demand, that’s a result of supply and unsustainable prices.”
  • I think we will have surprises in inflation, we’ll have nasty surprises, I’ve said that for two years, inflation surprises up.
  • “We’re going to get nasty surprises to the upside in inflation.”
     

Systemic Risks and Structural Problems

 
  • “Immigration itself is a huge problem and I’m telling you that massive unexpected wave of immigrants, nobody’s ready for that, you know, it’s just chaotic and it’s terrible and it should have never happened.”
  • A country that issues its own currency cannot default on its debts in the classic sense, but it can default in the backward sense through inflation, which devalues the debt and the currency.
  • One might be able to argue that contagion is harder to contain in the shadow banking non-bank system because it’s not as regulated, it’s bigger, it’s more amorphous, and it’s less transparent.

 

The End of Dining Out? The Economic Forces Shutting Down Restaurants (Aug 17, 2024)

Collapse Life...

Summary

 
 

The restaurant industry is facing significant challenges due to economic pressures, technological advancements, and changing consumer behavior, which may lead to a shift towards high-end or fast-food chains, reduced consumer choice, and increased use of personalized pricing.

 

Economic Pressures on Restaurants

 
  • Increasingly, people can no longer afford to eat out, and in turn, restaurants are losing customers and raising prices, making it even harder to afford to eat out.
  • Restaurants that took on debt to survive the lockdowns with interest rates of 1 or 2% are now looking at debt service costs in the 6 to 8% area, with very high costs considering lower revenue.
  • The only time that comes to mind when restaurants faced similar pressures was in the late 70s and early 80s, with high inflation, recessionary patterns, and a wage-price spiral.
  • The risk now involved in a small entrepreneur trying to open a restaurant is just astronomical, you would need a lot of confidence in your economic calculation and in your view of where consumers want and where they’re willing to spend.
  • Restaurants will either be very high-end, untouchable places where you can go once in a lifetime, or chains serving processed fast food, with the in-between options getting squeezed out.
  • Entrepreneurs actually want to see change and they dip into their own pockets and into their own time and consume resources in the pursuit of a better world.
  • “The money that would be spent on Ubi payments would either come from taxes, it would come from money printing or expansionary monetary policy or it would come from floating more debt all of which have long-term effects.”
  • “You’re trying to increase the amount of money that people can make working at the lowest end jobs and what happens is, there are fewer jobs to go around and people are actually losing out rather than gaining.”
  • The winners in the restaurant industry will be either the high-end, expensive restaurants catering to higher net worth customers or the massive global fast food firms with more pricing power.
  • The powers that be might restrict your food choices, saying “you’ve had enough beef this month, so you can’t order that hamburger, you have to have a salad” and make it unavailable in the app.
  • “It just sort of feels like the end of a free market and the end of freedom of choice.”
  • Innovation is developing to the point where even a not very cutting-edge version of AI can replace minimum wage jobs in restaurants.
  • Three customers walking into a restaurant, ordering the same items, could pay three different prices due to third degree price discrimination.
  • The Austrian School of Economics identifies two paradigms of entrepreneurship: creative destruction, where new ideas radically change the world, and entrepreneurial alertness, where small tweaks make a big impact.
  • The only way to resist personalized pricing is to choose a favorite producer and patronize them repeatedly, as repeat customers may pay 10-25% cheaper than one-off customers.

Lawrence Lepard: On Sound Money (Aug 24, 2024)

Peter St. Onge...

Summary

 
 

The current monetary system based on fiat money is broken and destined to fail, and that a return to a sound money standard, potentially through a gold or Bitcoin reset, is necessary to avoid hyperinflation and restore economic stability.

 

  • Fiat money ruins everything, it creates Fiat life and makes things worse by shifting your time preference.
  • Bitcoin is a form of money that can’t be corrupted or printed to excess.
  • The current crisis is all about the monetary system, which is the underlying issue that needs to be resolved.
  • Inflation broke America, and the country is broken because the monetary system is broken.
  • “Fiat money is destined to fail… it always returns to its intrinsic value which is zero.”
  • “If we don’t do it in a structured manner you know via a gold reset or a Bitcoin reset… It’s going to happen in an uncontrolled manner which is which is to say we’ll have hyperinflation.”
  • “If money has a 0% yield, then intrinsically the money has no value right, I mean by definition.”
  • “Returning to a sound money standard… everybody who has saved up wealth in the old currency loses it all.”
  • Even if we have to go through the hyperinflation event, it’ll be better on the other side, much better, quickly, very quickly, if we can avoid the war.
  • The math just does not work: once the debt gets large enough, you’ve got to pay interest on the debt, and if the GDP doesn’t grow quickly enough to pay that interest, then there’s only one other way to do it, and that’s to print the money.
  • The next financial event will require an even bigger printer, with the potential for gold to reach $5,000 and Bitcoin to reach $200,000.
     

Critique of Fiat Money and Economy

 
  • It took Elon Musk to safeguard our freedom of speech, not the 435 politicians in Washington who have sworn to uphold the Constitution.
  • “The mainstream media is really kind of a simulation.”
  • “They forced everyone to become a Speculator in their game that they control.”
  • The playbook of the other side is to create a crisis and then react to it, saying “we had to do it” for the people’s own good.
  • The real problem is the military industrial complex and the forever wars, which have led to massive debt and wasteful spending.
  • They openly admit that they manipulate markets, they openly admit that they lie, this is forward guidance, they try to sugarcoat everything.

 

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