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https://www.oftwominds.com/blogjune20/Fed-junkies6-20.html

Dear Junkies Addicted to Fed Smack: The Monkey on Your Back Is Now a Gorilla

Dear junkies addicted to the Federal Reserve's free-money smack: like all addicts, you firmly believe you're not addicted. Never mind those tracks, you can stop any time. Yeah, sure, but we all know you're going to buy the dip and max out your margin account because the craving cannot be denied.

Speaking of denial: you don't realize you're the dealers' chumps, the bagholders who bought at the top who the dealers are counting on to cling on to the bitter end because those Fed speedballs have inspired a euphoric faith in your god-like trading powers.

Here's how it ends, figuratively speaking: you'll wake up inside your Mercedes in a god-forsaken patch of urban wreckage, all the doors will be locked and you won't remember even leaving the party, much less how you got here.

You'll compulsively check your account and find that your margin call exceeds the value of your entire portfolio because the bottom dropped out while you were in a Fed-smack-induced haze, dreaming of prancing unicorns and angels dancing in the head of a pin.

Only now will you understand you were not a trading genius who would get out at the top, no problem, but a bagholder, played perfectly by the big dealers who sold to you. Now you're wiped out because you don't have enough cash to cover the margin call that's left after your portfolio was liquidated.

You thought that monkey on your back was light as a feather, but now it transmogrified overnight into a crushing gorilla. The dealers who you thought were your pals at the party made sure you wouldn't be around to cause a scene when you found you could no longer count on the Fed's baggies of the good stuff.

While you gird yourself for the agonies of cold turkey, consider Exhibit 1, the Fed'a balance sheet in February 2020:

2/5/20 $4.166 Trillion
2/12/20 $4.182 Trillion
2/19/20 $4.171 Trillion

Notice anything about the Fed's supply of free-money smack? It dried up. But all the junkies didn't notice because they were so sure that the Fed's supply of junk was infinite.

A funny thing happened on February 19--the market topped out and crashed the following week. Now look at this month's supply of Fed smack:

6/3/20 $7.165 Trillion
6/10/20 $7.168 Trillion
6/17/20 $7.094 Trillion

Umm, notice any similarity?

Fed junkies know one thing: the only thing that matters is the Fed's junk. Real economy: doesn't matter. Corporate sales: doesn't matter. Corporate profits: doesn't matter. Tax receipts: doesn't matter. Household income: doesn't matter.

The only thing that matters is the Fed is supplying baggies of the good stuff. Spoken like a true junkie, my friend, but once the high wears off consider what the Fed can't do:

1. It can't reverse the unprecedented wealth inequality its policies have pushed to the point of social disintegration and breakdown.

2. It can't make people take on the risks and heartaches of starting new businesses.

3. It can't force employers to hire more employees.

4. It can't make unprofitable businesses profitable.

5. It can't force people to buy assets at prices that no longer make financial sense.

6. It can't make insolvent businesses and local governments solvent.

7. It can't force people who now realize their priority is to save money to spend their cash, even if the Fed forces negative interest rates.

8. It can't lower the unaffordable cost structure of the entire economy.

9. It can't de-link all the financial dependencies in the financial system that make it so vulnerable to the first domino falling.

10. It can't stop people from selling their assets.

In summary, The Fed can't stop the unwinding of an unsustainable bubble of epic proportions. We are entering The Greatest Depression because Fed smack has zero effect on the real world; its only effect is to increase the delusion that asset bubbles are all that matters.

Also recall that the Deep State is not going to allow Jay Powell to re-elect Donald Trump with a stock market rally. From the point of view of the inner circle of the Deep State, the market collapse in March was simply a test to confirm what happens when the free-money smack is withdrawn. The test was a success and now the real crash can begin. Only this time it won't last three weeks. It will last all the way through October because, well, you know why: Deep State to Powell: Stop Goosing Stocks Higher Or You'll Re-Elect Trump.

....

https://cluborlov.blogspot.com/2020/06/post-collapse-administration.html

Post-Collapse Administration

I have noticed a marked tendency to think that once the coronavirus blows over everything will go back to the way it was before—or even better, because of Elon Musk’s electric flying cars and fly-thru sex change clinics or what have you. A simple explanation for this tendency is that it is what people want to think: everyone just wants to go back to what they are used to, picking up where they left off and tickling their wild fancies any way they wish. A slightly more nuanced explanation is that the new, post-collapse reality is a mysterious, unfamiliar realm and that for many people thinking about it is too uncomfortable (if done right) or downright pointless (if it consists of cobbling together stereotypes from movies such as Mad Max and Waterworld or other such post-apocalyptic theme park attractions).

Those who wish to think that what’s happening is just a hiccough caused by a not particularly deadly virus and that this will all blow over soon enough are sure to be disappointed. Taking the US as an example, the crisis clearly started before the virus hit, as evidenced by the steady and quite noticeable slowing of the physical economy since 2018, evidenced by such boring statistics as the lack of sales of new long-haul trucks. But that was before all hell broke loose.

Since February 2020 the US lost 46 million full-time jobs, which is over a third of the overall workforce. Bloomberg forecasts that these jobs will come back no sooner than in six years—and only if in the meantime there is steady economic growth. But then the Congressional Budget Office predicts a GDP decrease of 5.6% and 10 years for it to recover (assuming that the worst is already over) so steady economic growth seems like a bit of a pipe dream. In fact, the Federal Reserve is predicting a second quarter GDP decrease of 52.8%, and so the CBO prediction is only plausible to believers in a V-shaped recovery that doesn’t seem to be happening. I, on the other hand, believe that this recession/depression/collapse has been brought to you by the letter L and the number 0.

A more reasonable expectation is that with the economy already shrunk by half another 20% of full-time jobs will need to be lost in the coming months in a wave of bankruptcies that have so far been held back by various emergency measures such as temporary unemployment benefits, moratoria on evictions and foreclosures, delays in student loan repayment, three-month tax holidays, etc. To keep the financial house of cards from pancaking the US federal debt had to go from $21 trillion to $28 trillion in a rather short period of time, and how much longer this can go on is anyone’s guess, but there seems to be consensus that it can’t go on forever. Meanwhile, data from May 2020 indicates that 26% of Americans could not feed themselves independently, and as this number continues to go up it will become increasingly impossible to ignore the fact that the cupboard is indeed bare and that the once wealthiest nation in the world is now a nation of beggars.

Once a solid majority of the population becomes destitute, what will become of the world’s greatest superpower, the indispensable nation, that shining beacon of freedom and democracy and embodiment of the can-do spirit with liberty and justice for all? On the ground, there are sure to be lots of dumpsters on fire, lots of shops looted, boarded up and out of business, various sections of downtowns becoming police no-go zones (if police are still to be found anywhere) presided over by heavily armed thugs. After all the statues of white imperialist exploiters and oppressors of yore are toppled and all the white people forced to kneel before some very nice people who hail from the ghetto, there is sure to come a moment (at least for those who at that point are still capable of some semblance of rational thought) to ask an obvious question: What, if anything, comes next?....