I got a call from my friend Robert Bryce yesterday. Shameless plugs aside, he’s doing amazing work in his writing, speeches and media, talking about the many flaws in the IRA, land use challenges with wind and solar, and a litany of energy related issues. His new YouTube series is excellent and I highly recommend sharing with your non energy friends. A link to Episode 1 is at the bottom of the post.
As we do, our conversations are wide ranging and I learn so much. Yesterday, one of my favorite things he said was a quote from his father. “Too soon old, too late wise.” That’s genius.
Collectively, what do we as society need to wise up on these days? I could say energy policy- the wind storm in Denver had folks at yoga talking about reliable power and how they didn’t realize how important electricity was until it was gone. I chimed in from the shower “Wind and solar aren’t reliable you know, and only nuclear and fossil Fuels really get it done.” I stepped out of the shower and they looked at me like I was from Mars, and it wasn’t because of my appearance.
But no. To me, the fact that the core inflation reading came in at a 0.4% increase month over month and 3.5% year over year today highlights of the most pressing issue we face. The Federal Reserve is F’d. Too many 28 year old fund managers YOLO’ing right now to notice but it’s coming.
If the Fed raises interest rates, they blow upthe US deficit, real estate (especially commercial) and consumers who are sporting the highest credit card debt ever. If they don’t, prices continue to spiral higher. Then wages follow, then rents. Then prices. Then wages. Then rent.
The Fed is way too dovish and supportive in their comments to the market. Money managers continue to buy overvalued donkeys like Nvidia (down 10% since I wrote the post and went short btw) and ultimately keep home prices way higher than they should be so that young people can’t get in the market and the rich continue to accumulate assets. In truth, that flow from poor to rich has been happening at an accelerated rate since 2008 when monetary policy first started deviating massively from the strength of the economy (thanks to Mark Stevenson and “The Trading Game” for that beautiful insight at the end of the book). The rich could borrow cheap money to buy assets and the poor have increasing costs (tuition, housing, assets) that prevent them from living more than paycheck to paycheck. It’s a perfect system … for the wealthy.
The only fix is severe pain. The Fed needs to grow some balls. The Fed needs to raise interest rates and leave them there. For like 5 years. The Fed needs to blow some risk takers up and not bail them out. They need to blow up those with second and third mortgages. With horrific balance sheets. And the Fed needs to force the US government to start living within its means, address entitlements and stop borrowing.
Will it happen? Most likely not. But I’m old enough to remember 2000 and 2008 and the backdrop of this monetary disaster. With $35 trillion in debt, up $25 trillion since 2008, what we are doing isn’t wise.
With the latest jobs report showing 70,000 new government jobs we are definitely going the wrong way!
Spot on about the fed.
We need different people in elected office - and not with a background of being a politician - we need intelligent high moral character people to make tough decisions. The biggest is to cut federal spending and that leads to cutting federal employment. Now let’s get after it!!