Perpetually Part-Time: The Abnormal Psychology of the New Normal
The risk flows whichever way the wind blows.
Remember back in July, 2006 when the yield curve inverted and I said it signaled a great recession? I wasn’t crazy was I!
Back then I wrote a piece and published it on whether we could have another Great Depression. I said the new normal is to prevent a depression, essentially because it calls the utility (the method yield) of capitalism into question.
When the yield curve inverted in ’06, economists said the long-term yield was high enough to provide liquidity, which was completely wrong. The new normal of Generation X wasn’t so abnormal after all.
Like the song says, “don’t need a weatherman to tell which way the wind blows”…not unless you have a PhD. in economics, anyway.
It’s hard to believe that economists really expected to resist deflation by supporting it a la Larry Summers, et. al., all the way through the Obama administration, up to now, with an ill wind.
Obama dumped Summers but his administration continues to support the abnormal psychology of resisting failure by supporting it.
How do I know that?
For two years after the first yield inversion in ’06, the Fed pushed (leveraged) the short yield to zero. (What’s the value of nothing?) Of course the value of nothing is maximum resistance!
We exist to resist, and in the case of economic development we resist nature to engineer success (positive yield) out of failure (negative yield) by means of inversion, which naturally yields to conversion of property. Equity values are at record levels aren’t they, and now, by no coincidence, you may be thinking about jumping in on a dip?
When equity values crashed in 08-09 I said to buy, not sell! (I wasn’t so crazy after all, was I.)
The game being played on Gen. X is a long-tail conversion scheme indicated by extreme leverage from the Fed to keep the treasury yield from inverting. The “trick” is to spread the risk. Instead of one big, punctuated event, like a Great Depression, that questions the utility of capitalist methods (consolidation of industry and markets in particular), conversion of property (what criminals do) is spread out over time.
Notice the tendency to a two-class, service economy, and the obsession with “natural” (class) “identity.” Keep in mind, for example, increasing the minimum wage is more a price support than an act of mercy. It “intends” to adjust incomes up so that prices meet command, literally making money (compliments of central banking) for the taking. This means that everybody is in service to financial interests, normally (“naturally”) servicing the debt required to demand the supply, continuously rolled over by the Fed to sustain part-time employment progressively perpetuated (becoming more “collectively common”) at zero marginal cost (at the margin of existence), but abnormally increasing, unlike slavery, below the level of subsistence.
Instead of yielding to an on-demand existence, we are yielding to an on-demand resistance.
The risk is going gamma.