ZN - 10 Year Note Futures / Monthly @ 20 Yrs / The Abyss of DEBTIt is often said by Quantity Theorists echoing, Milton Friedman - "Inflation is always and everywhere a monetary phenomenon.”
Conditions... matter, they change as does the "moneyness of money" - but you can't keep the Chicago School of Economic
mind poisoning down.
That could be why I didn't play with academia, it is a toxic sandbox wed to a beach at times. Polluting the incoming tides.
Friedman could not have imagined how awry his QT has been turned on its collective head.
Gold Bugs to this day, quote this - scores of times every single day. "Were Gold Priced in DEBT
it would be $250,000+"
No one cares, least of all Central Banks who Demonetized it but made it legal to own under Nixon.
You all swap fungibles for... Silver? A Weimar home? Taco Bell?
Good luck, it's a Tier 1 asset on the Books of Central Banks for a reason and trades at a varying rate as it always has.
Q of M clearly isn't tied to it and it's not chasing away Good Money for Bad any longer... those storied days passed very
long ago.
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Money loses its purchasing power parity in a number of ways - not simply through more money chasing goods and services,
this is merely one-sided - "ceteris para bis" Jedi Mind Fuck at its finest.
Causation is always assumed from the money supply increase to price rises...a very basic truth, but ONLY a precondition
and not a fate acompli.
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The Fundamental causes of a general price inflation are still supply-side factors - for example, rises in wages or prices of factor input costs - which we see in the PMI data - to date not fully passed onto Consumes due to Supply-Side Shocks ) or demand-side ones - high demand causing price increases in markets.
The fatal flaw is QMT assumes an exogenous money world and the wrong direction of causality.
The contraction in Broad Money with a Credit Money System aka Bank Money is destroyed as people move to acquire CASH money
or what is perceived to be a CASH Equivalent.
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Simply Put: Aged Theory is flawed beyond. Supply Side Cocktails and the Ingredients of the CREDIT MONEY Elixirs are quite
different than in 1963 Uncle Milty.
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Speaking of Credit (DEBT MONEY if you can al it that) the BOE recently raised rates.
China, faced with new lockdowns surrounding the - Credit Squeeze (TY to Shevchenko for the prod to dig in and determine WTF) .
Turns out 6 property developers including the "Grande" have deferred wages the CCP now says must be paid by the start of the
Lunar New Year, oh and... yer gonna need to pay $21.37 Billion in Bonds or default.
Sounds bad huh? Not remotely...
Back wages amount to $174.38 Billion, can't pay 'em?
Lock 'em down, which is precisely what the CCP is setting up to avoid immense Social upheaval.
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Are we seeing a trend appear?
We are indeed. Debt Defaults have been propped by Governments to stave off tragic Social disruptions.
Hardly a footstep in the direction of Trust for Journey of 1,000 miles to default.
S'ok China, yer not alone, we proudly stand with you, although we've been at tit longer on this turn, so we're
just better at wallpapering over it with Currency Seniorage.
Yaun / Renminbi - only one works inside and one outside.
Hmmm...
That could not possibly happen here in the US of A, could it?
Naw.
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When you destroy the Moneyness of Money with it goes all attendant prior theory as well as the very thing used to bring
Money into Circulation @ Tier One - The BOND MARKETS.
Fractional Reserve Banking merely extends it to obscene levels of Leverage and DEBT which are far beyond repayment.
Toss in the 6% Vig the FED takes for this privilege and after a hundred or so years, they end up owning everything.
They are, after all, the lender of last resort, the DTC merely the record keeper for when the payments halt and DEBT
becomes unserviceable.
What are your opportunity costs to Debt?
What do you value?
Forget Price it's no longer a metric for the sane, merely a distended and starved stomach.
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Moral:
When Risks are ignored, they are mispriced...
