U.S. Gov’t Gets Ready To Release The Kraken Of Deficit Spending…

A Pfennig For Your Thoughts

September 9, 2021

* Currencies & metals continue to get sold on Wed
* But in the overnight markets the currencies & metals rally!

Good Day… And a Tub Thumpin’ Thursday to you! I sure hope it’s a Tub Thumpin’ Thursday today because there’s a day game at Busch Stadium, the weather is absolutely Chamber of Commerce days, and well those two things combined should clear the way for a Tub Thumpin’ Thursday! I’m hosting a driveway happy hour tomorrow afternoon… Should be a good one… Everyone brings their own lawn chair, and cooler of their favorite beverages, and we socially distance the lawn chairs and then get to getting caught up with folks we haven’t seen in a while… I have to say, it’s tons better than a Zoom Happy Hour! And having told you that, I’m reminded that I need to tell my wife that we’ll have 20 people in the driveway tomorrow afternoon! The band, Lighthouse greets me this morning with their classic rock song: One Fine Morning… 

Well, I didn’t get any takers on my challenge for someone to prove me wrong yesterday, so that must mean you all agree with me regarding the price manipulation scheme… I did get a dear reader chastise me for talking about the ACLU and Civil Liberties… Oh well… the one thing that dear readers must remember, is this: This is my letter, and I can choose to talk about anything I want to…

OK… well, all the selling of the currencies and metals that went on Tuesday, was watered down a bit yesterday… The BBDXY rose from 1,145.45 to 1.146.57, and Gold lost another $5.50… As far as the Gov’t is concerned, the price manipulators did what they were supposed to do, and that is: Scare Gold holders into selling their positions… That way, they, the Gov’t, doesn’t have to worry about them going forward… So, the dollar was still being bought, for whatever reason there may be, it’s got to be trumped up anyway, because with the amount of dollars that are being printed these days, there’s only one thing that could happen to the dollar and that is for it to go down…

Of course that’s where the PPT (plunge protection team) steps in and buys dollars to protect it from a big fall… But if you’ve noticed whenever the dollar gets propped up by the PPT, and the currencies lose value, it only takes them a relatively short period of time to return to the levels they traded at before the propping up began… And that tells me this: The propping up of the dollar is meant to start a trend for people to buy dollars, but since no trend is evident, then…. The overall trade for the dollar is to be sold…

So… Gold lost $5.50 yesterday to close at $1,789.60, and Silver barely hung on to the $24 handle, after losing 39-cents on the day to close at $24.01… So, I would have to say that the price manipulators did achieve the Gov’t’s goal of scaring Gold investors into selling their positions… But not me! And probably not you… For we know that no matter what the price manipulators do, we’re not selling, period!

In the overnight markets last night… there’s been some recovery in the currencies and metals… The BBDXY, which closed yesterday at 1,146.87 is down this morning at 1,145.49. So, not a HUGE move, but a downward move nonetheless, which is something we hadn’t see this week so far. In the early morning trading in the metals, Gold is up $8.80 and Silver is up 27-cents. Of course yesterday morning these two metals were up in the early trading, but that didn’t stop the price manipulators and as I said above Gold lost $5.50 on the day… So, maybe, just maybe, cause you never know, Gold will be able to add to its early morning gains today! 

So, let’s go back in time… dodododododododo… Before the Pandemic or BP… And I was telling you things like a large percentage of Americans didn’t have enough in savings to pay a $500 bill… Well, now skip ahead to today, and we have, probably, most of those same Americans having been out of a job for some time, and now are faced with eviction from landlords that are strapped for money too… Thee was a question that was asked about this, and the person wanted to know what the folks that had been receiving sums of money from the gov’t for being unemployed, but didn’t have to pay rent or mortgage payments, did with their money? Well, I’m sure they would tell you that they still had to pay for groceries, medical bills, and what have you… But it’s still a good question to ask…

When you take out Gov’t spending from the GDP calculation, you don’t have much to speak of there… And most likely we would be at the same GDP rate that we had averaged for the last decade, which was 2.1%… The Gov’t is getting ready to release the Kraken of deficit spending on us folks, and that’s going to keep GDP looking stronger, but we all know that it isn’t really… Dave Gonigam had a great term for the upcoming deficit spending yesterday in his 5 Minute Forecast, when called it the “Spendapalooza”…  in my best Gomer Pyle voice, I’ll tell you what I think of this upcoming deficit spending… Shame, Shame, Shame…

And here’s where I’m going to let longtime friend, and publishing guru, and best selling author, take over with his thoughts on Freedom… Take it away Bill Bonner!

“Free people don’t “invest” their own, real money in unwinnable wars and jackass projects. They don’t bail out Wall Street. They don’t shut down a whole economy to fight a disease that poses a threat to relatively few. They don’t lend money to those who can’t afford to pay it back.

In theory, the freer the economy, the richer the people in it. They devote their entire energies to doing what they want… rather than to doing what others want them to do.

After all, that is what freedom is all about. Choices always need to be made. The question is: Who makes them?

In a free economy, people make the choices for themselves. They eschew the bad bakeries and go to the good ones. They drop losing investments, and put their savings into ones that pay a real return.”

Chuck again… yes, Bill always has a way to to explain things that everyone can understand… I took that from his Daily Diary that can be found at www.rogueeconomics.com  

You may recall me saying that about 8 years ago I wrote a Sunday Pfennig that was titled: Chuck’s Debt Solutions… And in my list of things that we as a country could do to stop the bleeding in deficit spending and get back to a balanced budge, I said that we should end all wars… the War in Afghanistan, the war on drugs, the war on poverty, and so on… So, once again Chuck and Bill are on the same page here… 

The U.S. Data Cupboard yesterday had the Job Openings, and they grew to 10.9 Million from 10.1 Million in June… So, like I said yesterday, there’s 10.9 Million job openings in the U.S. and 8.4 Million people unemployed… But apparently, a lot of potential workers that have been off of the job for sometime now, aren’t going to go back to the job they left… And apparently, a lot of potential workers have decided that they can live with one income in the house… And apparently a lot of potential workers have decided to open their own business… And there’s more reasons why these two numbers aren’t meshing…

Consumer Credit (read debt) declined in July from June… June’s debt figure for consumers was $38 Billion, and July’s figure was just $17 Billion… But that doesn’t make a dent in the overall indebtedness of the U.S., which is now at $86 Trillion, counting Gov’t, Corp, and personal debts… and that doesn’t take into consideration the Unfunded Liabilities that according to the Debt Clock are $156.3 Trillion… And that’s before the Spendapalooza gets its feet wet…

I recall one of the last times I was in Vancouver to speak it was about 5 years ago… I was sitting in the lounge area and talking to Jeff Clark and telling him that the total indebtedness of the U.S. had just reached $50 Trillion!  So, in 5 years, we’ve added $36 Trillion… Who’s going to pay for that?

Today’s Data Cupboard has the usual fare on Thursday, which is the Weekly Initial Jobless Claims, which have been dwindling every so slowly, but I would think that they probably have hit a bottom because the Variants of the virus are really starting to slow things down again…

To Recap… The dollar buying continued on Wednesday, but in a watered down version of what went on Tuesday… The euro lost more ground, as did Bonds, and the metals… Gold lost $5.50 on the day, and Silver lost 39-cents to barely remain above the $24 handle… Again today there’s not much in the way of data that could stop the dollar buying, so keep those hatches battened down! But in the overnight markets there has been some recovery in the currencies & metals, now let’s see if they continue to move higher VS the dollar today. 

For What It’s Worth… Since I was talking about GDP above this morning, I saw this article and thought, why not? As it plays well with the thought of GDP falling… Lola, or Goldman Sachs has reduced their forecast for 3rd QTR GDP a 3rd time! And that article can be found here: Goldman Cuts Its US GDP Forecast For The Third Time In The Past Month | ZeroHedge

Or, here’s your snippet: “It’s official: while Q2 was the best quarter for the economy in decades, in Q3 it is now widely accepted that as we wrote a month ago, the wheels came off as a result of a “sudden negative change.”

One doesn’t have to look too hard to find out why: between Friday’s catastrophic jobs report, the near record plunge in consumer confidence, the sharp contraction in retail sales where reports have missed expectations for 3 months in a row, whether it is due to the end of stimmies or the recent restrictions from the Delta variant, one bank after another took a machete, or in the case of Morgan Stanley, a nuke to their GDP Q3 forecast, with he bank on Thursday cutting its Q3 GDP to just 2.9% from 6.5% previously.

It got so bad that the NY Fed on Friday unexpectedly announced that it was suspending its GDP Nowcast tracker, as the underlying numbers had gotten so bad volatile, the central bank’s economists were ashamed to use them for analysis as the product would have been ugly for the Biden admin:

“The uncertainty around the pandemic and the consequent volatility in the data have posed a number of challenges to the Nowcast model. Therefore, we have decided to suspend the publication of the Nowcast while we continue to work on methodological improvements to better address these challenges.”

But while the U.S. central bank can pretend away bad numbers as if they simply don’t exist – or are “too volatile” – especially if their discussion would impair the fake recovery narrative said central bank is busy constructing, investment banks don’t have that luxury, and late on Monday – with the U.S. on holiday – Goldman did precisely what we said it would do last week, and in a note titled “A Harder Path Ahead” published by its economics team, cut its Q3 GDP forecast for the third time in the past month. As a reminder, this is how Goldman reached the “startling” conclusion that the U.S. economy was headed for a brick wall, which we first revealed to our readers back on August 13 when we said that “A Sudden Negative Change In The Economy”, something the big banks would then proceed to realize in the coming days…”

Chuck Again… nothing more to add here, I just keep telling you that the data prints continue to disappoint and not meet expectations, and when it all adds up… you get a slower economy than the powers that be will allow you to think about…

Market Prices 9/9/2001: American Style: A$ .7370, kiwi .7117, C$ .7881, euro 1.1830, sterling 1.3814, Swiss $1.0873, European Style: rand 14.1488, krone 8.6895, SEK 8.6100, forint 296.35, zloty 3.8312, koruna 21.4716, RUB 73.28, yen 109.93, sing 1.3447, HKD 7.7773, INR 73.49, China 6.4606, peso 19.90, BRL 5.2275, BBDXY 1,145.49, Dollar Index 92.55, Oil $69.82, 10-year 1.33%, Silver $24.28, Platinum $986.00, Palladium $2,335.00, Copper $4.23, and Gold… $1,798.40

That’s it for today… And this week of course, no worries there won’t be any real economic data dur to print tomorrow… It has been a tough week for the currencies & metals… Buying opportunities, remember buying opportunities… What would the Cardinals do, or where would they be in the standings this year without Adam Wainwright? Adam turned 40 last week, and he went out and pitched 8.1 Innings last night as the Cardinals stopped their losing streak at 4 games… And now Adam has announced that he’s going to comeback next year… He and his catcher Yadier Molina have started 301 games together… I doubt we’ll ever see that number reached by another duo ever! I sat outside to watch the game with neighbor Paul last night, he brought me some homemade cookies that I informed him I couldn’t eat… And that I hadn’t had a cookie for almost a year now… OK.. Day game at Busch today, and you know me… I love day baseball games! After watching the Dodgers lineup for 3 games now, I can see why they are 36 games over .500! They are relentless! Ok… The Doobie Brothers take us to the finish line today with one of my fave songs from thee: Another Park Another Sunday… Don’t know that one? Go to YOUTUBE and put that title in, I’m sure it will become one of your faves too! And with that, I hope you have a Tub Thumpin’ Thursday today… And please…. Be Good To Yourself!

Chuck Butler

Creator & Editor of:

A Pfennig For Your Thoughts