The Boingggg That Fizzled (Again)

Morning Musings AKA Shallow Thoughts

Now that the US Government has delayed Tax Day for 3 months, the April tax windfall won’t happen. It will be spread out through the second quarter. The markets get a boost every year between now and mid May as the Treasury collects and processes tax payments into its cash account. It then uses that cash to temporarily pay down debt until mid to late May, when it starts net borrowing again.

That boost won’t happen this year, or if it does, it will be to a far smaller extent in late June.

Meanwhile, the Fed has boosted its Treasury purchases way beyond it said it would do. RIght now they’re buying more than the Treasury is issuing. The Treasury will catch up once it starts sending the stimulus checks.

But in the meantime the Fed is trying to stuff cash into the deflating bubble faster than the cash gets destroyed by margin calls.

It has been a losing battle so far, although overnight the US stock market fucutures showed signs of life. Those signs have quickly dissipated however.

Engaging in a little cosmic connection thinking, I sort of feel that between the massive money printing and the helicopter money that’s coming we could get a stupendous wave of CPI inflation.

A hyperinflationary depression. Wouldn’t that be special?

Over in today’s thread on the Stool Pigeons Wire, FXFox asked:

I simply can not imagine how they will stage inflation in such an economic environment. When everything breaks down, from what and how should inflation arise? We are talking about a complete breakdown of an economy, not a shift from one sector to another sector or something like that.

Those crazy moves in bonds, yields, fx and so on are due to market imbalances I guess. It is only my guess I have to say I have no further information what is really going on in the background.

Which gave me some more shallow thoughts.

What’s going on is that the capital of the dealer system and major banks has been destroyed because of overleverage.

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