My new book will be published next Tuesday. Preorders for the e-Book version will be available in this space beginning later this week.As I previously indicated, the book is an exploration of how 30 years of Bubble Finance policies at the Fed, feckless interventions abroad and mushrooming Big government and debt at home have brought America to its current ruinous condition.In this context, it delves into the good and bad of the Trump campaign and platform, while, to use a spoiler alert, praising it with faint damn!As Contra Corner readers recognize the only consistent way forward for America at this late stage of the game is a return to free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.
Unfortunately, that is not about to happen anytime soon—–even if by some miracle Donald Trump is elected President.
But what the book does claim is that the tide is turning against the failed Wall Street/Washington bipartisan consensus. I call this insurrection the “revolt of the rubes” in Flyover America.
This uprising against the rule of the financial and political elites has counterparts abroad among those who voted for Brexit in the UK, against Merkel in the recent German elections in her home state, and among the growing tide of anti-Brussels sentiment reflected in polls throughout the EC.
Needless to say, the political upheaval now underway is largely an inchoate reaction to the policy failures and arrogant pretensions of the establishment rulers. Like Donald Trump himself, it does not reflect a coherent programmatic alternative.
But my contention is that liberation from our current ruinous policy regime has to start somewhere—and that’s why the Trump candidacy is so important. He represents a raw insurgency of attack, derision, impertinence, and repudiation.
If that leads to throwing out the beltway careerists, pettifoggers, hypocrites, ideologues, racketeers, power seekers and snobs who have brought about the current ruin then at least the decks will be cleared.
So doing, the Trump candidacy—win or lose—is paving the way for an honest debate about the Fed’s war on savers and wage earners, the phony Bubble Finance prosperity it has bestowed on the bicoastal elites and Imperial Washington’s delusionary addiction to debt, war, and special interest racketeering.
Trumped Final
In addition to the political revolt of the rubes, the establishment regime is now imperiled by another existential threat. To wit, the world’s central bankers have finally painted themselves into the mother of all corners.
Literally, they dare not stop their printing presses because the front-runners and robo-traders have taken them hostage. Recent developments at all three major central banks, in fact, provide powerful evidence that the end of the current Bubble Finance regime is near.
Thus, today’s Financial Times carries a piece on the September 1st milestone of one trillion Euro of bond purchases under the ECB’s QE policy, and the dilemma it faces about continuing beyond next March’s end date for the program. In a word, it is running out of sovereign debt to buy, yet even a hint that it intends to stop could spook the “market” into a drastic sell-off:
A global collapse in eurozone bond yields since Britain’s vote to exit the EU has dramatically reduced the stock of eurozone government paper standing above the yield threshold set for the ECB’s €1.7tn bond-buying project — raising concern that the ECB will have to make sweeping changes to avoid running out of bonds to buy….“There are various estimates of when the ECB will hit a wall because it does not provide exact breakdowns of the bonds it already owns — but everyone agrees that it is close to reaching its limit,” said Aman Bansal, interest rate strategist at Citi. “And the bank cannot slow the pace of bond purchases without sending out a signal to the markets that something is wrong.”
The implication is startling. The ECB’s current cut-off for QE purchases is defined as bonds with a negative yield no greater than 0.4%. Yet according to the FT, there will be no German bunds left to purchase under that standard by year-end.
Yes, the Germans have been the last bastion of relative fiscal rectitude on the planet, but that doesn’t mean the nation suffers for want of public debt. In fact, Germany currently has $2.0 trillion outstanding, and it hasn’t been shrinking any time this century.
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