Post-Election Thoughts

The opening segment of NFTRH 212 did what an unbiased financial writer probably should not do and discussed politics. Then 24 pages of straight analysis followed.

Financial writers far and wide are weighing in on the US Presidential election result and its implications. So jumping into the ring, here are mine.

For the third cycle in a row I cast a protest vote. After voting for George Bush in 2000 (actually it was more a vote against Al Gore) I wrote in Ron Paul in 2004 and 2008. This year I voted for Gary Johnson, although I do not consider myself a Libertarian. I consider myself an independent who has long since been alienated from a two party system that looks a lot like dangerously competitive cartoons from opposite ends of a narrowly constructed ideological spectrum.

When you write a newsletter, you learn about being a newsletter writer; just like when you become a plumber, you learn a lot about plumbing. I once made an unfavorable public blog post about what I considered to be a cartoon that went by the name of Sarah Palin and was summarily served with an indignant email and subscription cancelation from an otherwise satisfied NFTRH subscriber. Lesson learned: There is little place for political commentary in financial analysis. Besides, political ideologues make really biased financial commentators; and in the markets bias just kills you.

Disregarding this for a moment, my view is that the 16 years under Bill Clinton and George Bush resulted in a rigged system that did indeed help the rich get richer, the poor get poorer and the middle class get positioned right over a trap door.

If you depersonalize it, you may see that Barack Obama was simply the agent of redistribution that was always fated to come to power in the wake of a stacked game that just kept right on giving to certain well-placed interests that used, abused and benefited from the fruits of the system of ‘Inflation onDemand’. My public writing has been very consistent since 2004 with regard to this dynamic.

A system took hold that depended on outsourcing real and productive industries (and thus, jobs) in favor of the much easier path of leveraging the world’s reserve currency and the Treasury bond market to in essence print our way to perceived prosperity. Privileged entities in the financial world got to use the money – compliments of bogus interest rate policies of the Greenspan and later, Bernanke Federal Reserves – before it was sliced, diced, marked up and sold to the public.

A personal frustration throughout the 2003 to 2007 timeframe was that I felt nearly alone (along with a relative few other crazies) in my negative view of what the inflationary regime would bring to this society. My commentaries were filled with references to ‘McMansions’ and ‘60” Plasmas’ bought on credit. My harshest commentary was reserved for a hubris-addled society that refused to wake up to its oncoming plight, not for the stooges they elected to political office. You get the government you deserve.

Now we are here. People are waking up and getting pissed, but where was their indignation when they were blissfully living on a precipice in the pre-2008 crash inflationary bull market that seemed to lift all boats? Fat, dumb and happy is where many people were.

We are down the Rabbit Hole and the world has not ended my friends. It is changing. A rotten system is morphing, but is likely to use the same inflationary mechanics as its previous version. The would-be beneficiaries have changed to be sure. But it is the same system and frankly and speaking personally, I decided to play this system for all it is worth a long time ago. If you can’t beat ‘em…

There is no place for belly aching and ideology in financial market management. This newsletter is all about coldly managing what is, not what we want it to be. So with that said, we happily move on to our usual programming with the political environment only to be mentioned when it is relevant to the analysis from here on.

Gary Tanashian

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11 thoughts on “Post-Election Thoughts

  1. Here is a post-election thought . . . look at your latest headline:
    Fed minutes suggest new bond-buying plan is likely

    2 minutes ago

    AP Economics Writer

    (AP:WASHINGTON) The Federal Reserve is signaling that it will likely launch a new bond buying program in December to try to spur job growth.

    The purchases would be intended to lower long-term borrowing rates to encourage spending and strengthen the economy. The hope is that more hiring would follow.

    Minutes of its Oct. 23-24 policy meeting suggest that the Fed will unveil a Treasury-buying plan to replace a program that expires at year's end. Under the existing program, the Fed has been selling short-term Treasurys and using the proceeds to buy an equal amount of longer-term securities.

    When this program ends, the Fed will run out of short-term investments to sell. The minutes suggest that when they meet next month, officials will replace it with another program to buy long-term bonds.

    Note this important line, "When this program ends, the Fed will run out of short-term investments to sell."
    What this means is that the next round of purchases will be UNSTERILIZED, they will be done exclusively with PRINTED MONEY, or at least money created out of thin air onto the books. Can you say WEIMAR AMERICA?

  2. The US is rapidly becoming a Nanny State. Whoever seems to offer the most for free will get the votes. The electorate is led to believe that the top 1% will be taxed to pay for these freebies. But the truth of the matter is that the rich do not pay taxes, they simply pass on the perceived increase in taxation to the unwitting consumers.

    1. The US is already a nanny state and has been for at least 60 years. On another note, where are these people who are getting pissed with the system? Around 2% of the vote were for 3rd party candidates. While that number is up from previous years it still doesn't do much to correct the problem. We have exactly the same situation as we did before the election. It was by a narrow margin if you look at the popular vote. That's a lot of people who, apparently, like the way things are just fine or are stupid enough to think things will get better if we leave everything as it was.

  3. Adam Smith observed in " The Wealth of Nations," that businesses invariably collude to set prices when they can. Going a step further I would add that it means depositing profits offshore (1.5 trillion right now) avoiding taxation, eschewing regulation, polluting under dark of night, and all manner of obfuscation in reporting and advertising. All of which we are seeing in recent days if not decades. That is their modus operandi and it will never be different. It is built into the psyche of business and it is kindly called capitalism.
    We must have a government however to hound them into fair practices and honest behavior and sharing wealth via taxation. If some business must suffer under that regimen, they must decline and fade away. That too is capitalism.
    There must be a counter force agreed upon that is fair and balanced that protects workers, investors, elderly, the sick and disabled. The war veterans no less, who are presently treated so poorly as to be a disgrace to our country and our heritage.
    I truly hope that President Obama has the courage to press on with his agenda and bring back a sense of cooperation among all factions of our society that is so sorely needed.

    1. I sincerely hope president Obama never presses forward with his true and rarely spoken of agenda. The documentary "2016" clarifies and articulates it well.

  4. I have done a couple of protest votes (Perot and Andersen) but I am concerned not only in the poor choice of a 2 party system, I think the press is wholy owned by the Democratic Union party. Coverage of issues is so poor, that America looks stupid in the eyes of realists.

  5. time for a real change. from the bottom up as democracy requires. tired of the two party system. so am i. what to do about it. recognize the power that only the registered voter citizen has. act accordingly.

  6. I think of "protest voting" as childish. It says, ". . look at me . . . I'm important". Like a child it asks for attention.

    In a close election, only the top two have any chance of being elected. Therefore to vote for a third party candidate is throwing away your vote.

    Some men never mature beyond adolescence, and therefore don't take responsibility for their actions.

    Our country may not recover from selfishness. As the saying goes . . ." if you rob Peter to pay Paul, Paul will always vote for you".

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