The great Greek orator Demosthenes practiced public speaking with pebbles in his mouth as a means of overcoming a speech impediment. Winston Churchill, who suffered from glossophobia, a fear of public speaking, noted, "Of all the talents bestowed upon men, none is so precious as the gift of oratory. He who enjoys it wields a power more durable than that of a great king."
Fast forward to 2022, and one of the most powerful men in the world, certainly in the financial world, dropped this knowledge on the public in answer to a question following the Fed announcement Wednesday.
CHAIR POWELL: So it's more a matter of -- I think the problem that we're talking about here is really that people are on fixed incomes who are living paycheck to paycheck, they're spending most or all of their -- of what they're earning on food, gasoline, rent, heating their -- heating, things like that, basic necessities. And so inflation right away, right away forces people like that to make very difficult decisions. So that's really the point. I don't -- I'm not aware of, you know, inflation literally falling more on different socioeconomic groups. It's -- that's not the point. The point is some people are just really in -- prone to suffer more. I mean, for people who are economically well off, inflation isn't good. It's bad. High inflation is bad, but they're going to be able to continue to eat and keep their homes and drive their cars and things like that. It's more -- so that that's really how I think of it. And, you know, we have to control inflation for the benefit of all Americans. But part of the -- part of it is just that it's particularly hard on people with fixed incomes and low incomes who spent most of their income on necessities, which are experiencing high inflation now.
What language is that? It's not the King's English, that's for sure.
But that's the meta-problem in this non-metaverse that we humans inhabit in 2022. Our economic lives are ruled by a cadre of unelected technocrats who have zero experience in the real world or dealing with real people. That's how feckless Powell could stick to the "inflation is transitory" line for months after other agencies in his own government were publishing hard data that showed inflation hitting generational highs.
Here's the thing: Powell doesn't care. Yellen doesn't care. Christine "I do my own shopping" Lagarde doesn't care. They do not care about you. They are not elected by you, nor are they beholden to you. They are really bad at their jobs...but they just keep talking.
That's my point. The comparisons to Fauci are very tempting, but, at a certain level, gross incompetence and gross corruption really are the same thing. It doesn't matter "why" they are ruining the economy...they just are.
What do we have to look forward to in the final 11 months of 2022? More of the same. Why on earth would it change? The root of this inflation is the extraordinary hailstorm of free money that the world's central banks have foisted on the public. This chart of the Fed's balance sheet literally makes me nauseous. Who thought this was a good idea? Who did not remember the basic lesson from Econ 101 that money-printing is inflationary? Economists? Really?
This is a truth that you will never hear where you get your financial news and listen to talking heads drone on about self-driving cars and 100s of other topics about which they know nothing.
We are in, as Howard Marks of Oaktree Capital famously called it, an everything bubble. Famed market watcher Jeremy Grantham has used even more dramatic terms recently, and I am thinking that we should keep Jeremy away from sharp objects. Mohamed el-Erian has been pushing the same logical story. Why aren't these investing legends afforded more time by the mainstream financial media?
Because their viewpoints, no matter how brilliant, differ from the narrative. I am in South America now, but to all my fellow Northeasterners, please enjoy the melting planet this weekend when you are digging out from under a foot of snow. But the "planet is melting" just as "inflation is transitory." Hogwash.
My HOAX portfolio is now beating Cathie Wood's (ARKK) by 42 percentage points in a little more than a month. You can live in the real world and play inflation or you can live in the world created by these unelected, feckless technocrats and watch them sip Chardonnay. Meanwhile regular people, as Powell so eloquently put it, "they're spending most or all of their -- of what they're earning on food, gasoline, rent, heating their -- heating, things like that, basic necessities."
Thanks a lot. Do us a favor and resign. He won't...and things will get worse.
I am sure Powell and his cronies will be burning stacks of Benjamins to keep warm this weekend, but for those of you that don't have that luxury, please stay warm and be careful.