Friday, January 22, 2021

Ponzi Schemes Of The Biden Era ๐Ÿ˜Ž⁴⁶ ⸻ A Tweet Essay

Below is a reformatted version of my Tweet Essay started on the morning of Joe Biden's ๐Ÿ˜Ž⁴⁶ Inauguaration (20 January 2021). Begun before dawn in Key West and continued as Biden was sworn in. See Index of All My Tweet Essays

Red  indicates later tweet inserts out of its original order. 

➤ ⦕  ๐“Ÿ๐“ธ๐“ท๐”ƒ๐“ฒ ๐“ข๐“ฌ๐“ฑ๐“ฎ๐“ถ๐“ฎ๐“ผ  ⦖ at the time of the Biden Inauguration - #de_ponzi

๐Ÿ†My new #dd_TweetEssay listing the ๐Ÿ˜ฑ economic crises #dd_Biden ๐Ÿ˜Ž⁴⁶ is facing.

➤  ๐Ÿ“† Today we’ll get a normal President, and soon—we hope—a normal post-pandemic world…

And then we’ll find that “normal” isn’t normal anymore. No economy, market or monetary system is sustainable. All the Ponzi schemes will start collapsing, and the bills will be coming due.๐Ÿงต⇩

➤ ๐Ÿ˜Ž This is a terrible time to be a responsible president. There are no “solutions” to anything, only costly no-win mechanisms to delay the inevitable. ๐Ÿ™

➤  ๐ŸŒŽ The world is now an interlocking system of #Ponzi schemes: stocks, gov't debt, etc.

A #PonziScheme ▲ is a false investment where early investors are paid off by later ones. All these schemes collapse eventually—but when?

In this ๐Ÿงต I will try to inventory some of them...

➤ ๐Ÿ”Š In my latest podcast #DDpc52, I discuss the general mechanism of "overpromises", or selling more chickens than you produce ๐Ÿ“

If you sell more future ๐Ÿ“s than you can deliver, eventually someone gets stiffed, and in this case "someone"="everyone". ✂️↓

▲ The Ponzi schemes and overpromises range far and wide in the current economy.

In fact, it's hard to find any corner of the economy that ๐™ž๐™จ๐™ฃ'๐™ฉ infected by a ▲ scheme. They're interrelated and one often ๐Ÿฉธs into another.

Here are the main ▲s I've identified. ๐Ÿงต⇩


A stock is the promise of a ๐Ÿ• of the future profits of a company. As of now, US markets are at ALL-TIME HIGHS despite a ๐Ÿฆ  that has devastated the real economy. Pure๐Ÿฆ‡๐Ÿ’ฉ๐Ÿคช!

Argue about "why" all you want. US stocks are in a massive ๐ŸŽˆ and have to ๐Ÿ’ฃ๐Ÿ’ฅ eventually.

▲№1.1⸻Stocks⸻Exhibit "A"

Can making money be as easy as this couple suggests? ๐Ÿ“บ⇩

Just buy low sell high. Reminds me of the advice every shoeshine boy had in 1929. Get in now or you're gonna miss out!  ๐ŸŽ‰๐Ÿฅณ๐Ÿ’ƒ

 Re ▲№1

๐ŸŽˆ One way to judge the relative #dd_Bubble of #dd_Stocks is #MarketCapToGDP. Today it’s a massive 190%. If stocks were overpriced when ๐Ÿคก⁴⁵ took office, they are 50% more overpriced now.

๐Ÿ•บ๐Ÿป #dd_sven #dd_e ๐ŸŒŽ #MktCapToGDP

▲№2⸻US Government Debt

In 2020, 2021 & maybe beyond, the US Gov't is spending ~2x what it collects in taxes. Even in pre-๐Ÿฆ  "good times" of 2019, it was ๐Ÿ’ฐ๐Ÿ“ค >25% more than ๐Ÿ’ฐ๐Ÿ“ฅ. The rest is borrowed and can never, ever, EVER be repaid or even paid down. It only GROWS. ๐Ÿ‘น


The US Gov't can ๐™ฃ๐™š๐™ซ๐™š๐™ง again balance its budget because—

① Demographics: Too many costly ๐Ÿ‘ด๐Ÿ‘ต. Not enough active ๐Ÿ‘ท๐Ÿ‘จ‍๐Ÿณ๐Ÿง‘‍๐Ÿš’๐Ÿง‘‍๐Ÿญ paying taxes. Few ๐Ÿ‘ถs in pipeline.

② Politics: Balancing the budget would mean cuts to "essential" programs that voters wouldn't accept.


The budget was balanced 1998-2001 only because the #BabyBoomers were at the peak of their earning power. Now they're ๐Ÿ‘ด๐Ÿ‘ต๐Ÿฆฝ and draining gov't resources.

The happy #DemographicDividend of many taxpaying ๐Ÿ‘ท️๐Ÿ‘จ‍๐Ÿณ๐Ÿง‘‍๐Ÿš’๐Ÿง‘‍๐Ÿญ and few taxdraining ๐Ÿ‘ด๐Ÿ‘ต will never again be repeated. 


Technically, the US Gov't can never "default" on its debt because it can print more ๐Ÿ’ตs, but that's not a real solution. It only screws up the rest of the economy—and the gov't itself—in ways we're only beginning to understand.

๐Ÿค”Inflation? Yes, but it's a twisted road.


Bottom Line เดง____

If you buy a 10-year Gov't bond today (at ~1%) it won't be worth what you think it will upon maturity. Either through inflation or default, this paper will not return full value. Once the market assimilates this, all hell will break loose.


All it would take to bring down the government would be a modest rise in bond rates to their historical norm of 5%. The gov't couldn't pay even the interest costs.

The #FederalReserve avoids this by holding rates low and printing new money to buy bonds—which leads to...

▲№3⸻Currency Bubble

In any ๐ŸŒ republic, printing as much ๐Ÿ’ตs as the Fed has would lead to rampant consumer inflation. The fact that it hasn't so far should not be reassuring.

Something will go bad. It has to. No government can print new money indefinitely to pay its bills.


I'm not gonna go down the ๐Ÿ‡๐Ÿ•ณ️ of #MMT. That's ๐Ÿคช-talk.

If unlimited ๐Ÿ’ต printing were possible, you have to ask, "Why pay taxes at all?"

⚙️⚡ There is ๐—ป๐—ผ ๐—ณ๐—ฟ๐—ฒ๐—ฒ ๐—ฒ๐—ป๐—ฒ๐—ฟ๐—ด๐˜†. Every #PerpetualMotionMachine has its fatal flaw, and it will be known soon enough.

▲№4⸻Residential Real Estate

As of this writing, commercial real estate is taking a bath but ๐Ÿ s, like stocks, are flying high.

Commercial ๐Ÿ“‰ reason: ๐Ÿ -bound workers during ๐Ÿฆ  don't need offices.

Residential ๐Ÿ“ˆ reason: ๐Ÿคท

Won't go on forever. Something has to break.

Re: ▲№4

Chart shows ๐Ÿคช surge in ๐Ÿ  prices since mid-2020.

▲№5⸻Infrastructure Bomb

Build it and they will come⸺
and come
and come,

until whatever you built wears out and needs to be repaired.

Lots of those projects are coming due, and if the work isn't done soon, stuff will start falling down. ๐ŸŒ‰s collapse. ๐Ÿ›ฃ️s turn to rubble.


Infrastructure is easy to skimp on because it can always be put off. Roads only ๐˜จ๐˜ณ๐˜ข๐˜ฅ๐˜ถ๐˜ข๐˜ญ๐˜ญ๐˜บ deteriorate until something really bad happens.

Local gov'ts don't have the ๐Ÿ’ฐ for repairs, so the Feds must step in, using—you guessed it—borrowed money. (See ▲№2)


The single-family suburbs are a special kind of infrastructure ๐Ÿ”ฅ๐–๐–Š๐–‘๐–‘๐Ÿ”ฅ because their streets and sewer lines are long relative to tax revenues.

New subdivisions <20 years old are all gravy. Older ones—like ๐Ÿ‘ด๐Ÿ‘ต—are a net drain on local government resources. 

▲№6⸻Urban Flight

Many workers who have been freed of a fixed office by the ๐Ÿฆ  are fleeing Big๐Ÿ’ฐ cities like NYC, LA, SFO, Chicago for lower cost ones, leaving them in dire straits.

Local gov'ts can't print ๐Ÿ’ต like the Fed, while raising taxes just ⇧s the ๐Ÿ›ซ. No way out!


Premiere cities are facing a #dd_DoomLoop: The more people move out, the worse life gets, encouraging more to flee. (This may not ๐Ÿ”ฒ with ▲№4 yet, but it will.)

These cities have huge debts, which will become unpayable as tax base shrinks. They'll need Fed bailouts...


…with borrowed money, of course, and the urban decline will be chronic.

Even if the ๐Ÿฆ ๐Ÿ˜ท ends tomorrow, the damage is done. Freed now to "phone it in", few knowledge workers need a Manhattan apartment anymore๐Ÿ™️

Or a California pad๐Ÿ–️ Who needs it? You can always visit.

▲№7⸻Wealth Inequality

More a ⏳๐Ÿ’ฃ than a ▲ scheme. In the computer era, efficiencies of scale have made the rich richer and poor poorer.

e.g. Once there were 1000s of inefficient but profitable ๐Ÿš–co's. Now there's hyperefficient Uber/Lyft. Only execs make money. ...


The ๐Ÿฆ  has widened the wealth gap. 1000s of small businesses have been wiped out while many big ones have thrived. Jobs are still available from the big guys, but they are mostly low-paying "fulfillment" positions—like Uber/Lyft drivers, fast food, etc—with few benefits.


As of now, jobs are available everywhere in USA! I see it as a traveler. ๐™€๐™ซ๐™š๐™ง๐™ฎ fast food restaurant, everywhere in ๐Ÿ‡บ๐Ÿ‡ธ, has Help Wanted signs—but these are unhappy jobs to those who have built their lives on a higher wage. A whole nation can't live like this. ๐Ÿ”๐Ÿคฎ


Unhappy workers are bad for society.
They get ๐Ÿคฌ.
They cause unrest.
They vote for populist charlatans.

Perilous to democracy is a populace whose personal lives are consistently getting worse.

Workers are another form of infrastructure we're not adequately maintaining.

➤ Also see my related Tweet Essay:

⦕  The Big One  ⦖

on the coming economic collapse.๐Ÿงต⇩

{This post backed up to email: 1/22/21}
{This post blacked up to Twitter as image: 1/22/21}