Boomers’ Revenge

Retirement is the only time in your life when time no longer equals money. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ April 17, 2024 Boomers’ Revenge "Retirement is the only time in your life when time no longer equals money." — Anonymous Boomer [Reminder: In case you missed [our announcement]( The Essential Investor has merged with legacy contributors to Agora Financial. The new, larger, more inclusive project is called The Grey Swan Investment Fraternity. If you’re interested in the scope and benefits of our new endeavor, please see what prompted us to merge [here](. If you’ve been a member of The Essential Investor, keep an eye out for your new benefits.] Dear [Reader], April 17, 2024 – “While in business school 1971-1975,” writes John H. “there was nothing resembling an ‘inflation target.’ Of course, at that point the stock market was getting crushed and we were about to experience a period of stagnation and wildly damaging inflation.” Mr. H was picking up what we were laying down yesterday. He continues, quite articulately: Frankly, it took me years to figure out where the term ‘inflation target’ came from and when it was implemented. (It took me a while to find my Whip Inflation Now (WIN) button from the Gerry Ford campaign.) All that seems to have been forgotten within 25 years, and deflation became the new bogeyman. Can't have lower prices! Everyone would hold onto their money and not spend! Business, government and taxation would collapse! What followed was the financial crisis and more than a decade of ZIRP. In my view, this opened the door to actual implementation of Modern Monetary Theory during Covid. Printing endless amounts of dollars did not matter; the crisis should be met with a flood of newly minted cash. There was no downside, as we were the United States, the king of reserve currency status. Warren Mosler, with whom we published a series of interviews about a decade ago, could easily be the poster child for Modern Monetary Theory (MMT). In a nutshell, MMT justifies endless money printing. As long as tax receipts can be collected in the currency used for commerce, the theory goes, then the accounting merely needs to catch up with itself… eventually. Mosler has gotten another 15 minutes just this week. Yesterday, in Bloomberg, he was quoted as saying words to the effect of, “I ‘been sayin’ it all along!” You’ll recall, yesterday we were commenting on the 10-year treasury and S&P 500 dividend-yield spread? Mosler and adherents believe that spread is why higher interest rates are driving an economic boom rather than putting the kibosh on the economy and driving it into recession. David Einhorn, one of Wall Street’s noted value investors, agrees with Mosler to a point. Einhorn spoke to Bloomberg yesterday: Einhorn notes that US households receive income on more than $13 trillion of short-term interest-bearing assets, almost triple the $5 trillion in consumer debt, excluding mortgages, that they have to pay interest on. At today’s rates, that translates to a net gain for households of some $400 billion a year, he estimates. “When rates get below a certain amount, they actually slow down the economy,” Einhorn said on Bloomberg’s Masters in Business podcast in February. He calls the chatter that the Fed needs to start cutting rates to avoid a slowdown “really weird.” “Things are pretty good,” he said. “I don’t think that they’re really going to help anybody” by cutting rates. In effect, Boomers who have been saving for years are starting to retire and spend their savings. Higher rates mean they’re getting higher returns from short-term investments. Two-year treasuries have been paying a higher yield than the S&P since 2022.  Money markets, effectively risk-free, are paying upwards of 4.5 percent, and are also helping goose consumption. Millions of Americans also locked in low-interest mortgage rates during the “progressive era” of the Yellen Fed, as we looked at yesterday. Then again in a frenzy immediately following the March 2020 lockdowns when mortgage rates dipped below 3% for about a week. Millions of mortgage-holders have effectively been shielded from the Fed’s effort to slow down the economy and pinch off inflation... and get it back to the magical 2% mathematical level Yellen believed in. Bill Eigen, a bond-fund manager at JPMorgan Chase, also speaking to Bloomberg yesterday, says retirees, in particular, are the biggest beneficiaries of the higher rates. “All of a sudden, all of this disposable income accrues to these people,” he says. “And they’re spending it.” Which is where our critique of MMT begins. (You can read the story in progression from [Demise of the Dollar]( through [Financial Reckoning Day]( and on to [Empire of Debt]( — all three books are available in their third post-pandemic editions.) (Or… simply pre-order [Empire of Debt: We Came, We Saw, We Borrowed]( now available at[Amazon]( and[Barnes & Noble]( or if you prefer one of these sites:[Bookshop.org]( [Books-A-Million]( or [Target]( CONTINUED BELOW... >>ADVERTISEMENT<< 2024 – The Real Election Year Surprise In 2016, the October Election Surprise was Hillary Clinton’s email scandal… In 2020, the October Election Surprise was the suppression of all the dirty material on Hunter Biden’s “forgotten” laptop… Now, in 2024, we’re forecasting an October Election Surprise that almost no one sees coming — and this time it’ll be way more devastating than anything you’ve seen before. [Click here to learn about 2024’s real October Election Surprise »]( It’s not at all what you think. CONTINUED... One premise of Modern Modern Theory (MMT) is that economic growth is a function of consumption. Retirees and low-interest mortgage holders, in this case, are getting some revenge. They’ve saved their money. Now, by gum, they’re going to spend it! Not a lot of the money spent goes into production. Like chasing capital gains in the stock market, those investors are burning through the returns on their capital, rather than investing for the long-term. So-called “mainstream economists” are still concerned that higher rates choke off growth. So are we. In [Empire of Debt]( we’ve documented the rising debt levels across all strata of society since the 1980s. Now rising delinquencies on credit cards, auto loans, and adjustable home equity loans are evidence that not everyone in a debt-driven consumer economy is stomaching rising interest rates so well. We detailed retail debt levels causing heartburn for a record number of people last fall in our report, Shell Game. But who's worried? Not the government. Principal among the reasons given by proponents of MMT is crediting the impact of exploding U.S. budget deficits for economic expansion. Bloomberg: The government’s debt has ballooned to $35 trillion, double what it was just a decade ago. That means those higher interest rates it’s now paying on the debt translate into an additional $50 billion or so flowing into the pockets of American (and foreign) bond investors each month. Weehoo! If the government can do it… why can’t retirees and homeowners? “C’mon, Wiggin,” we can hear the walls in our office muttering, “let the debt binge orgy continue fer chrissakes… we deserve it!” Okay. Okay. Take a breath. We return to the sober analysis of our Grey Swan correspondent John H. “The difference between the Fed response in the 1970–80's [is that] we had not yet built the debt bomb. Back then, small problems could be cured by economic growth and deregulation of key industries.” Mr. H: Now we have built the bomb and it is an awesome thing. And of awesome and growing size.  I am trying to recall: if we reach the point where we are borrowing the world's money to make our interest payments, is that a bad thing? Reality, in my view, is that we have just experienced a 20% devaluation of the dollar. It is the direct result of the crazy monetary experiments condoned by not only the suspects you mentioned, but demanded by legislators who have lost their minds. Not only future generations will pay; we are paying now. The trick, then, is to accept it. Markets make opinions. Plan your own financial picture accordingly. So it goes, Addison Wiggin, The Wiggin Sessions P.S. And beware the “grey swan” events that rapidly change opinions. One we’re keeping an eye on may be closer than many in the mainstream believe. The following is from honorary fraternity member, [Bill Brocius]( yesterday. BRICS Urges Middle East To Stop Accepting the US Dollar For Oil Payments Tensions in the Middle East are escalating after Iran launched over 300 missile drone attacks against Israel on Sunday. The Iron Dome intercepted all the Iranian missiles but the situation remains grim with growing threats of war. Amid the Iran and Israel conflict, BRICS has called for the Middle East to ditch the US dollar for oil settlements. Russian President Vladimir Putin urged countries in the Middle East to teach Israel and the US a lesson. BRICS member Russia explained that ditching the US dollar for oil payments can bring America and Israel to a standstill. [Read here]( to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. The BRICS alliance strategically inducted oil-producing countries into the alliance this year in 2024. Oil-producing nations like the UAE, Egypt, Ethiopia, and Iran are now a part of the bloc. The alliance has also invited Saudi Arabia into the grouping but the Kingdom is yet to provide its decision. BRICS aims to topple the US dollar by making oil-exporting countries accept local currencies for oil and gas cross-border payments. If Saudi Arabia joins the bloc, the grouping will be stronger and can gain command of the global oil and energy sector. Putin stressed that the Middle East and its oil sector hold the power to diminish the US dollar’s global supremacy. “If oil producers in the Middle East stop using the US dollar, it will be the end of the dollar,” he said. However, Middle Eastern countries are yet to pay heed to the BRICS call to use local currencies for oil settlements. The US dollar is widely accepted as payment for oil and gas and local currencies only form a small part of all trade and transactions. For ideas on how to plan should the U.S. dollar lose its reserve status in earnest, please see our report: [The Real October Surprise](. Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com. The Daily Missive from The Wiggin Sessions is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to The Wiggn Sessions delivering daily email issues and advertisements. To end your The Daily Missive from The Wiggin Sessions e-mail subscription and associated external offers sent from The Daily Missive from The Wiggin Sessions, feel free to [click here.]( Please read our [Privacy Statement.]( For any further comments or concerns please email us at feedback@wigginsessions.com. If you are having trouble receiving your The Wiggin Sessions subscription, you can ensure its arrival in your mailbox by [whitelisting The Wiggin Sessions.]( © 2024 The Wiggin Sessions 1001 Cathedral Street, Baltimore MD 21201. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We expressly forbid our writers from having a financial interest in any security they personally recommend to our readers. All of our employees and agents must wait 24 hours after online publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Sent to: {EMAIL} [Unsubscribe]( Paradigm Press, LLC., 1001 Cathedral Street, Baltimore, MD 21201, United States