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Monday, October 03, 2022

Gotta spend $5 trillion to lose $10 trillion

Socialists finally figured out how to take out capitalism -- by making it a ward of the state.

Zero Hedge reported, "S&P Trading Below Biden's Inauguration, Despite $1.7 Trillion In QE And $3.5 Trillion In Fiscal Stimulus."

I like that word despite, which really means because. Fed Chairman Jay Powell has fluffed the stock market just as every Fed chairman has since the economy collapsed in 2008. But all the Viagra in the world cannot sustain this economy because inflation leads to financial ruin. We are getting there.

We will, again, take the whole world with us.

Zero Hedge cited Tony Pasquariello, head of hedge fund sales for Goldman Sachs.

He wrote, "Global asset markets -- of all stripes and with few exceptions -- had been routed over recent weeks. In the doing, the risk ante has been upped, and one could be excused for having the sensation that financial history is being written -- said better, rewritten.

"When stripped down to its base elements, one central issue is a set of worsening tensions between the markets and governments. 

"In this context, you can argue that recent price action marks a clear rejection of the policies that dominated the post-GFC period -- and, were overwhelmingly deployed in the COVID era -- on both the fiscal and the monetary side.  

"Said another way: the macro complex is punishing a lack of discipline, be it on behalf of policy makers or speculators."

He pointed to recent news events and said things were worse elsewhere.

He wrote, "I continue to believe the US is the world’s cleanest dirty shirt. This is not an overly original idea -- the dollar index is trading at levels not seen since 2002, or witness specific moves like USD/CNH (from 6.75 at the start of August to over 7.15 today).  At the same time, however, the US is by no means exempt from this rejection-of-policy theme. One independent example: S&P is trading below where it closed on the day of President Biden’s inauguration ... despite the fact that, since that date, we have printed ~ $1.7tr of QE ... in addition to ~ $3.5tr of extra fiscal spending that has been passed (of that, ~ $1.7tr has been spent)."

When you blow off a million million dollars as $1tr, you are not a responsible adult but no one in financing is responsible these days. They live off the Fed pumping out more money to keep the economy going.

The stock market broke this year. The S&P 500's fall comes despite the willingness to spend $5,200,000 million -- $5.2 trillion -- $5,200,000,000,000 on nothing but pieces of paper.

The result is a market collapse.

CNBC reported, "Falling stock markets have wiped out more than $9 trillion in wealth from U.S. households, putting more pressure on family balance sheets and spending.

"Americans’ holdings of corporate equities and mutual fund shares fell to $33 trillion at the end of the second quarter, down from $42 trillion at the start of the year, according to data from the Federal Reserve. With major market indexes falling even further since early July, and the bond market adding further losses, market experts say the current wealth losses from financial markets could total $9.5 trillion to $10 trillion."

So we are spending $5.2 trillion to lose up to $10 trillion.

Simple arithmetic shows that for every $1 the Fed and the federal government spends to stimulate the economy and the stock market, investors lose $2.

So your 401k is now a 201k but you need a 601k to keep up with the rising prices. Inflation is soaring mainly through government programs. 

For example, the FDA shut down a baby formula plant over two imaginary deaths in February. Good luck finding baby formula.

This is the same FDA that waved on through three covid vaccines without proper testing and then forced adults to vaccinate. I am not anti-vax but I am pretty sure the vaccines killed at least two people.

The real big push is through the various Democrat trillion-dollar stimulus plans. This year, the federal government received record tax revenues -- but still spent twice as much as it took in. This inflates prices.

Inflation serves socialism. It must because every new socialist government such as Venezuela and Zimbabwe adopt policies that make your savings worthless.

And making the stock market dependent on free money. It's like any other drug from a drug pusher. The first dose is free.


  1. The wit and zings never stop, thanks Mr Surber. Don't forget to subscribe to Don Surber's Newsletter at substack.

  2. Great columns today, as always. Enjoyed them all.

    Probably should finish that second to last paragraph. Unless you meant 'take' instead of 'make'

  3. "I like that word despite, which really means because." That's known as a "Fox Butterfield," thanks to James Taranto.

  4. Was it over when the Germans bombed Pearl Harbor is the next question.

  5. I expect Xiden and his handlers will try to falsely stimulate the market for November elections.

  6. There's only one cure for overheated inflation: recession.

    And it's already here.

  7. the fastest way to the permanent vassel state is destroy the economy, and the dems are doing a good job

  8. Perversely, the day this was posted, we had a Wall Street dead-cat bounce.

  9. Sir Tom of NorthfieldOctober 3, 2022 at 10:15 PM

    We have been painted into a corner by incompetence and stupidity - a.k.a. the stinking government. Hard to see this mess ending well.