If you run over a pedestrian in Washington, DC, it might be wise to keep going.
Because the person under your bumper could be a swamp rat.
In fact, it could be Jerome Powell, whom President Trump just chose to replace Janet Yellen at the Fed.
Born in the swamp
If any further proof was needed that the president has been White House-broken by the Deep State, here we have it.
Mr Powell was born in the swamp. No kidding…he hatched in Washington, DC.
He’s never really left. He even got his law degree from Georgetown Law Center, about five blocks from the Capitol Building.
He must have been there — in the ‘70s — when we were there. But we have no recollection of him.
We spent three long years at Georgetown. It did not appeal to us. Because it was little more than a training mill for federal functionaries — the people who make the swamp what it is.
We recall a course on the philosophy of the law. In it, we argued that law and regulation were incompatible.
You can’t have a free society…with laws that apply to everyone…and have a bunch of unelected lobbyists, lawyers, and insiders telling people what they can and can’t do.
‘If we were to agree with your paper,’ said our professor gravely, ‘half this town would have to disappear.’
‘Yes,’ we replied. ‘That’s what we had in mind.’
Back and forth
Washington is rigged by the Deep State insiders.
The students and the professors at Georgetown Law Center all wanted in on the scam.
We decided not to practice law; Powell decided otherwise. He went into the kind of ‘administrative law’ (which, we argued, was oxymoronic) that Georgetown specialises in…and then began a long career, slithering around the swamp, in and out of government and finance.
He worked for the regulators…then he worked for the industry he was meant to be regulating.
And then, back to the regulators.
All of this back and forth seems to have been good for Mr Powell. He is reported to have a personal fortune of more than $100 million.
The important thing, from our point of view, is that he can be relied upon to do exactly as expected.
Like Ms Yellen, he will be in favour of shrinking the Fed’s balance sheet…and raising interesting rates…until the money supply tightens and all hell breaks loose.
Then, he will move heaven and earth to protect the Deep State from bankruptcy…with an aggressive program of QE Encore.
Then, most likely, we will have the financial chaos and ‘crack-up boom’ we wrote about last week.
Failure of tech
How come Amazon can make shopping cheaper and more efficient, but consumers don’t seem to get much advantage from it?
They don’t keep the savings. They don’t seem to spend them either. They just disappear.
Household discretionary spending has steadily eroded over the last 30 years.
Each year, households have less money to spend. First, they turned to the Everyday Low Prices at Walmart. More recently, Amazon has come to their aid.
Neither puts more money in their pockets.
But what’s going wrong?
Last week, we saw that thousands of people waited in line, some of them overnight, to buy a new model ‘smartphone’ from Apple.
What was wrong with the old one? Or, more broadly, what was wrong with the old rotary-dial landline?
We’ve been exploring new technology and the companies that bring it to market.
Amazon, for example, brought internet-based retailing to the world and made its founder and CEO, Jeff Bezos, its richest person.
We’ve noticed that this Internet Invasion did not seem to lift GDP, employment, productivity, or wage growth. Instead, all have fallen, as our dependence on this new tech has risen.
We’ve noticed, too, that Amazon was made possible by the almost infinite funding of the Fake-Money system.
And we wondered if it doesn’t represent a new thing for capitalism — industries that make life better, but that do not make profits or add to GDP.
Warning: This discussion will be a battle. It challenges ideas and assumptions we take for granted. So, we will attack from the flank. A head-on charge is too obvious and too easily rebuffed.
Just to let you know where we are going: We will show that progress is not inevitable…GDP is not everything…that the economy could go into a depression, but we could still be better off…and, if that happens, many of today’s ‘assets’ will disappear, along with the reputations of people such as Mr Powell.
For Markets & Money