Before addressing the latest Fed scam, we should talk about the real economy. 

People are hoarding for winter. Whether we like it or not, there are specific products that are in high demand. We know that toilet paper and paper towels are at the top of the list and there are already purchase limits at the store. But food items are in demand, from beans to rice as well as frozen items. Spices and olive oil and peanut butter and jam are just a few of the products that we had to hunt for in spring.

Beyond those necessities, air purifiers and holiday gifts may be in short supply. There is an effort to increase inventory coming out of the recession as we see from GDP Now.

The goal of this hoarding is to avoid a worst case scenario regarding a resurgence of the Covid-19 virus. Mitigating factors could be vaccine availability. But winter comes fast, and delivery of vaccines appears to be after winter hits. The problem revolves around the collection of data. Moderna could have a vaccine ready by November or December, but without sufficient data collection, it may not be safe until data is collected through the middle of 2021.

I realize there are lots of pundits who are thinking that the economy will do fine from here on. But wait til people start coughing and sneezing. If the winter Covid numbers go up, there will be delays in economic growth accompanied by additional hoarding. And while Trump blinked and allowed TikTok to continue, what about Huawei? What about all the American companies doing business in China? Growth will hit a ceiling even if the virus is curtailed unless we can work something out with China. 

I believe we will get through the virus, but cooperation with China will be crucial to real prosperity.

Stock Market Greed

What if we are at the end stages of a bull market? Talkmarkets contributor Joseph Calhoun argued that we may be entering a final phase. He says that investors putting money into Robinhood and into blank check companies, while gambling on dubious ventures is not normal investment behavior: 

What has been going on in markets over the last two months is the most glorious episode of human greed I’ve seen since 1999. I know there will be plenty who pooh-pooh that comparison but the speculative trading and the ignorance of those doing it is exactly the same. There are silly things going on, new “traders” doing stupid things and getting away with it because that’s what happens in the end stages of a bull market that has been going on for a decade.

The New Normal

The Fed clearly is doing what it can to stimulate the economy. The question is, will it overshoot? If inflation makes its way to US shores, then will the Fed be able to continue to let inflation out of the bag without being forced to put the brakes on? Well, with interest rates so low, this inflationary scenario will be allowed to run but the Fed will be uncomfortable with it, because that is how the Fed is. But there is more to this story of Fed allowing inflation. 

The New Normal will somehow have to be preserved. All this easy money talk is for one reason, to help the tired banks. The Fed wants everyone to fear inflation, so that banks can sell protection to those companies. Without the fear of inflation, the banks languished. No one wanted protection from inflation when there was no hint of inflation.

But clearly this new inflation scare is a scam on the part of the Fed. Big inflation can't be allowed, so it is just the fear of it that the Fed wants out there. The Fed cares about the banks, and nobody else. Haven't we learned that yet? 

China Workers

I researched the world's work force. I saw that China was not included in the top ten of hard workers throughout the internet. However, if one focuses on Chinese workers alone, they emerge as the hardest working of all. China workers are averaging 43 hours per week while US workers average 34 hours per week. Does that really surprise anybody? It is why investors are so interested in China, the future of growth in the world.  

We cannot make the mistake of divorcing China because we are cutting our own economic prosperity if we do. But government is slow to change and China hating is just good politics, until somebody crosses the line. We cannot trust that the Fed would be able to overcome world economic obstacles without government cooperation. Eventually, Joseph Calhoun will be right, and the bull will become unsustainable.