“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
– John Maynard Keynes

[Special Reminder: In case you missed our recent announcement, The Essential Investor has merged with legacy contributors to Agora Financial. The new, larger, more inclusive project is called The Grey Swan Investment Fraternity. If you’re interested in the scope and benefits of our new endeavor, please see what prompted us to merge here. If you’ve been a member of The Essential Investor, please keep an eye out for your new benefits.]

June 19, 2024 – Today, we’ll turn things over to our managing editor, Andrew Packer…

Andrew will unpack one of the latest pieces of propaganda from mainstream mouthpiece Paul Krugman. The New York Times columnist has declared victory over inflation. However, outside of the Times’s office, it’s a different story.

Enjoy ~~ Addison

CONTINUED BELOW…

>>>>>SPONSORED<<<<<

CONTINUED…

Let Me Pin It Down For You

Andrew Packer, Grey Swan Investment Fraternity

“Americans are feeling uneasy for reasons that are hard to pin down.”

So says Paul Krugman, the New York Times columnist who once stated that the internet’s value to the economy would be on par with the fax machine.

I get it. I make predictions too. But I try not to do it from any perceived bubble. It’s not easy, but it’s rewarding.

The reasons for unease are too difficult for a Nobel laureate in economics to define. But in the real world, where we live, it’s a bit easier to pin down. So let’s do that today.

First, the stock market hit its 31st new all-time closing high of the year on Tuesday. On paper, that sounds great. No unease there, right?

Well, yes and no. Not everyone owns stocks. About 61% of Americans do so right now, close to a record high.

However, most Americans own stocks through retirement plans, and the bottom half of Americans who own stocks own about $41 billion, or about 10% of the market cap of MasterCard.

For those who own stocks, all-time highs look good. And it’s certainly a measure that politicians running for reelection like to have in their pocket. It was certainly one of Trump’s favorite measures.

But after the inflation of the past three years, the real story is different.

If anything, the rapid growth of the market has simply offset the overall inflation we’ve seen.

In other words, we’ve run faster, but the treadmill also sped up.

For most Americans, that’s your unease right there.

For those even lower on the income and wealth scale, the recent inflation has been a nightmare.

At no point during Biden’s presidency has inflation dropped.

Remember, inflation is cumulative, like standing next to a leaky nuclear reactor. Even if you stop being exposed to inflation, the higher prices stay.

Meanwhile, if given a second term, President Biden proposes to raise the marginal income tax rate to 39.6% from 37%.

That’s not a huge increase, by any means. It’s where rates topped out before the Trump-era tax cuts.

But, taxes aren’t indexed to inflation. So not only do you have your wealth eroded from central banks and governments spending like crazy, your effective tax rate rises with inflation.

Feel the unease yet?

Now, credit where credit is due. Much of today’s inflation was borne of the stimulus checks and massive spending from the pandemic. There’s a lag effect between issuing money and its final circulation through the economy.

Former President Trump, who seeks a return to the White House, signed off on much of that spending.

That said, today’s spending is worse. We’re not at war (officially). We don’t have a pandemic with a nebulous outcome to contend with. But we’re still adding about $1 trillion to the national debt every 100 days.

And what do we have to show for it? Our oil reserves have been depleted to keep gas prices low during the summer driving season. Our munitions have gone to Ukraine, once regarded as the most corrupt country in Europe.

If China were to invade Taiwan tomorrow, we might not have the capacity to assist an ally, even if we had an administration able to.

Ultimately, the American people outside the New York Times readership bubble know the truth.

They see an out-of-control government that seems more likely to turn against them rather than help them.

They see members of Congress handily beating the market at a time when their own constituents are suffering from soaring prices in everyday essentials like groceries, auto and home insurance, and rent.

They see an administration using the power of the courts – as noted by Devin Nunes of Truth Social when I interviewed him a few weeks back – to try and stop the political opposition of the government in power from seeking higher office.

They see a country that has lost control of its founding principles. And no matter who occupies what government office this time next year, there’s no incentive by those holding power to get back on track.

Today marks Juneteenth, the latest Federal holiday. It celebrates the end of slavery in America.

But what is slavery? What is freedom? Slaves essentially had a 100% tax rate. Today, in a country founded by a rebellion over a two-cent tax on tea, you’ll pay at least 40%, and in some places more. And without the inflation

protection offered by gold or bitcoin, inflation will add a hefty bill too.

That unease you’re feeling right now? That’s the pin digging in. And only those as out of touch with the real world as Paul Krugman can’t feel it.

~~ Andrew Packer, Grey Swan Investment Fraternity

So it goes,


Addison Wiggin
Founder, The Wiggin Sessions

P.S.: How did we get here? An alternative view of the financial, economic, and political history of the United States from Demise of the Dollar through Financial Reckoning Day and on to Empire of Debt — all three books are available in their third post-pandemic editions.

(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites:Bookshop.org; Books-A-Million; or Target.)

Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com