“Jerome Powell Is Finished”
Submitted by QTR’s Fringe Finance
This is Part 2 of an exclusive interview with Doomberg, the collective that runs the Doomberg Substack. During this interview series, we discuss oil, Bitcoin, the coming Fed chair swap, fiscal policy, politics, uranium and more.
You can read Part 1 of this interview, where Doomberg talks about the potential for $300 oil and uranium doubling or tripling, here.
Doomberg publishes skeptical analyses through the hard money/Austrian lens and its objective is to be funny without being silly, to teach without being self-indulgent, and to provoke without being polarizing. They publish 10-12 pieces a month, which you can read for free here.
Q: Hey Doomberg: of the 4 indices — Dow, S&P, NASDAQ and Russell – which would you go long and which would you go short if you had to pick two — and why?
Not to duck the question, but we rarely invest in the stock market or its indices.
Aside from a few commodity bets, our strategy is to earn income in fiat, save by buying real assets, and invest privately where we can directly impact the outcome.
We aren’t capable of gambling on a security assuming a greater fool will eventually buy it from us at a higher price, even if that is the most likely outcome.
Fair enough. What’s your take on what will eventually catalyze rate hikes, if you think it’ll ever happen?
David Dredge was a recent guest on The Grant Williams Podcast, and he had a great insight. When pondering why the US pulled out of Afghanistan, he settled on something like “they woke up one day and decided to.”
For decades, the US maintained a quasi-stable situation there until one day it was all over. Biden decided it was time to end the charade, and it happened. It is the same situation with the Fed.
Our economic leaders have decided to socialize private losses, inject liquidity into the system at unprecedented rates, run huge fiscal and trade deficits, and monetize the debt. They call it different things, but that’s essentially what they are doing. Today, everybody believes in the power of the Fed to maintain control. Every dip is being bought.
If the inflationary pressures continue to grow and real rates continue to plunge, the Fed might wake up one day and decide they can no longer keep doing this.
We should note that we are firmly in the inflation camp. Our contacts in industry have been waving the red flag on inflation for many months. The first piece we ever published back in May was on the coming supply chain crisis. That supply chain crisis has now arrived. We know many brilliant people who think inflation is transitory and if it runs hot enough, it’ll trigger a deflationary collapse. Maybe. We note that few of the people making this case ever worked a day in heavy industry. What is going on in the real economy is unprecedented.
One potential catalyst we have been highlighting is social media.
This is the first inflationary spike in the era of social media. Inflation expectations drive inflation, and expectations can be manipulated by social media algorithms. What happens when the price of a Big Mac soars to $20 and an influencer on Tik Tok makes a video about it that goes viral?
We believe the Fed has zero understanding of how viral social media campaigns could drive inflation expectations, nor that our enemies could manipulate things with nefarious objectives.
Will Powell see re-election or will someone else be next Fed chair?
We wrote a piece a few weeks ago called Jerome Powell is Finished, which should give your readers a clue as to our opinion on the matter. We were inspired to write it after listening to George Gammon on your podcast.
In the eyes of the progressive left, Powell sits squarely on the critical path to the full implementation of Modern Monetary Theory. We would not be surprised if Biden traded off Powell to get the infrastructure bill over the line last week. The steady drumbeat of insider trading leaks seems orchestrated as well.
We would be quite surprised if he were renominated, and we suspect it would be a tough fight for confirmation in the Senate.
Has the country completely lost its way with fiscal policy? Are there any politicians that could right the ship at this point?
Yes, the country has completely lost its way with fiscal policy, and no, there are not any politicians that could right the ship at this point.
The corruption of our institutions is staggering. There is no honor in public service anymore, everybody is out to get theirs while the getting is good. This sounds like a jaded view, and perhaps it is, but it is an accurate reflection of reality.
When the Speaker of the House is gambling on call options in companies with substantial legislation before Congress and members of the Fed are trading S&P futures ahead of sensitive Fed decisions, the correct conclusion to draw is that we are irreversibly broken.
Righting the ship would require substantial sacrifice on the part of the public, and there are no politicians with the credibility to convince the public that such sacrifices are necessary.
Are you expecting a “great reset” with the monetary system?
The current monetary system seems unsustainable and eventually must be reset.
However, eventually can be a very long time and it could happen in stages. At some point, the mountain of debt in the system must be dealt with. Exactly how that happens is difficult to foresee. We do not trust the durability of the dollar in our own personal life, which is why we save in real assets.
Part 1 of this interview can be read here: Oil Could Hit $300 And Uranium Could “Double Or Triple”: Doomberg
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I am long XOM, CCJ, URA, URNM, oil and uranium. I may add any name mentioned in this article and sell any name mentioned in this piece at any time. It should be assumed Doomberg has positions in any security or commodity mentioned in this article. None of this is a solicitation to buy or sell securities. Doomberg has contributed to my podcast but this interview was not part of any sponsorship or ad deal or contract, it was initiated by me because I enjoy the blog’s content and wanted to ask questions that I believed my readers would benefit from. It is only a look into our personal opinions and portfolios. These positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe.The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot.
Mon, 11/15/2021 – 17:40
Author: Tyler Durden