And when SHTF, Congress will come to the rescue

It’s no secret that car prices, including used cars, have increased substantially over the last year; prices are at asinine levels. But there is another problem in the car market that has been going on for years: subprime/delinquent auto-loans. In other words, the high car price ‘bubble’ that started during the coronavirus will make the popping of the auto loan bubble much worse.

So, for clarity, here are some of the problems in the car market:
1) High car prices that started during the Covid-19 pandemic, including used cars
2) Subprime/delinquent auto loans
3) Increasing amount of people taking auto loans (that’s…


Our economy is a bubble economy

The Federal Reserve’s policies of low interest rates since the Great Recession were supposed to stimulate the economy. What you see on that chart above is that industrial production has gone sideways since the Great Recession. You can see that production picked up a little bit in 2018 with the Trump tax cut and interest rate hikes, but that was short-lived. Tax cuts wear off very quickly, and the Federal Reserve pumped the breaks on tighter monetary policy.

In other words, the Fed’s monetary stimulus isn’t helping. Industrial production is exactly what it sounds like: the U.S. producing things. …


And when the giant balloon pops, there will be a financial crisis.

You might remember that in 2020 there were stories of healthcare workers being laid-off, which shocked some people more than an Alfred Hitchcock movie. Layoffs might sound counter-intuitive, but since the focus was on the pandemic, certain elective surgeries weren’t a priority.

What this showed is that healthcare is not some iron-clad industry. There’s been a bubble mentality that investing in healthcare is entirely safe with very good returns on top of it! This is an illusion because it doesn’t understand risk-reward.

Evidence of the bubble

A big part of the healthcare sector now is biotech. If you look at biotech stocks, it’s laughable…


It’s not just possible, but very plausible as well.

The Fed will buy stocks. Some would say that’s nonsense or delusional: I beg to differ.

Given that the Federal Reserve not only bought corporate bonds ETFs, they also bought individual bonds. Not only did they buy individual corporate bonds, but they also bought individual junk bonds. Given that, why is it so implausible that the Federal Reserve will bull stocks? Why is it impossible for the Fed to buy the S&P 500?


Not inflation.

The inflation we are experiencing right now is transitory. That’s the simplest explanation given the nature of the case and the base effect. What ‘inflation pumpers’ can’t explain is why the disinflation we’ve experienced the last 40 years would suddenly change. The burden of proof is on them. And given that the default is for disinflation to resume, there’s no reason it can’t go negative: deflation.

You see people everywhere talking about inflation:

In the finance world, when everyone is saying and doing one thing, bet on the opposite outcome. Everyone is saying there will be inflation…


Allow me to explain.

Governments could declare Bitcoin and crypto to be illegal, but that wouldn't mean they could enforce it. That’s the case with other things, not just cryptocurrency. So, there is a distinction between declaration and enforcement. We all know that just because something is declared illegal, that doesn’t mean it can be enforced. If you really thought otherwise, you would have to think governments are all-powerful.

However, governments could certainly damage Bitcoin. By banning it, they would severely weaken Bitcoin, even though Bitcoin would still survive. They couldn’t enforce it completely, but perfection is not the relevant standard. What is relevant…


Wrong!

You’ve heard,

“Don’t bet against the United States” or “The U.S. is the global epicenter of capitalism.”

Whenever I say the same things, some silly person always comes out of the woodwork and asks, “What about the Nikkei 225 stock index of Japan? After three decades, it still hasn’t reached its 1989 high! Huh? Huh!”. As if the investor in the U.S. isn’t making regular investments or dollar-cost averaging into the U.S. markets (not to mention, reinvested dividends — and lower inflation in Japan’s case). And because of globalism, if the U.S. …


No

Some have said that cryptocurrency is more like a collectible akin to baseball cards. I don’t think that’s right.

Crypto is way more liquid than a collectible. It would also be way easier to use cryptocurrency as medium of exchange than collectibles.

Also, this suggestion that cryptos — like Bitcoin — are just collectibles doesn’t explain the fact that you can buy Bitcoin collectibles like physical coins, but we wouldn’t say those are actual Bitcoin. It’s manifestly unconvincing. It would be like saying that Gold is a collectible like Beanie Babies (or collectible bubble) because it can get spectacularly overvalued…

Jonathan Garner

Finance/Investing/Economics blogger; however, I’m also a Philosophy of Religion Blogger:https://jonathandavidgarner.wordpress.com/

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