WASHINGTON. All three major stock market averages closed down today in lackluster Tuesday trading action. It was a predictable follow-up to Monday’s bullish trade on positive US-China trade negotiation rumors. More interesting, however, were Fed Chair Jerome Powell’s sour comments to Congress on Modern Monetary Theory (MMT), the latest trip to Cloud Cuckoo Land by loony New York Congressperson Alexandria Ocasio-Cortez (S-NYC) and her jet-setting Socialist mentor, Vermont Senator Bernie Sanders (S-VT).
More on Modern Monetary Theory (MMT)
During his semi-annual testimony to Congress, Powell pointedly attacked Modern Monetary Theory, attempting to head off the Socialists’ latest attempt to kill President Trump’s economic revival and ruin the American economy. At least worse than former President Obama already ruined it.
A Tuesday article posted on CBNC’s website provides a reasonably good description of Modern Monetary Policy and Powell’s reaction to it. The article notes that MMT is
“An increasingly popular theory espoused by progressives that the government can continue to borrow to fund social programs such as Medicare for everyone, free college tuition and a conversion to renewable energy in the next decade is unworkable, Federal Reserve Chairman Jerome Powell said Tuesday.
“‘The idea that deficits don’t matter for countries that can borrow in their own currency I think is just wrong,’ Powell said during congressional testimony in the Senate.
“The notion behind what is called ‘Modern Monetary Theory,’ or MMT, is that as long as the Fed can keep interest rates low without sparking inflation, the national debt and budget deficit won’t be an issue. Politicians including Rep. Alexandria Ocasio-Cortez, D-N.Y., and Democratic presidential candidate Sen. Bernie Sanders of Vermont have espoused MMT.
“Powell… said he has heard some ‘pretty extreme claims’ about how it might be implemented.”
Socialist flights of fancy
America’s unfortunately rising class of boneheaded Socialistas typically regard the cost of their pet mini-utopian schemes as irrelevant, probably because they never learned math in public grammar schools. That’s likely why they preach to the masses that we should just “do” this or that goofball scheme, never bothering to research the costs or the consequences.
Details, numbers and logic always derail any political argument based on Marxism. So its adherents instead simply tout the alleged “benefits” of their ultimately costly schemes They figure the government can just print money to cover them.
Which the government can. After a fashion.
Exhibit A: Venezuela’s socialist workers’ paradise
Except that we’ve seen how this worked out once again, this time in Venezuela. Citizens there, courtesy of the late, great Hugo Chavez’ Bolivarian Democracy (i.e.,Communism), are currently enjoying abject poverty, starvation and zero medical care while enduring astronomical inflation. These facts are confirmed by data and commentary via Trading Economics.
“Venezuela’s annual inflation rate jumped to 2.69 million percent in January of 2019 from 1.70 million percent in December, according to estimates from Venezuela’s opposition-led congress. It is the highest inflation rate on record, amid severe shortages of food and medicines and political crisis escalating.”
Whether he knew it or not, Chavez, and his thuggish, cretinous successor, Nicolás Maduro embraced something like Modern Monetary Theory. And in so doing, they essentially eviscerated the economy of what was once South America’s most prosperous nation, reducing it to Fourth World status.
Back to AOC in Bernie Land
But as the CNBC article observes, no hugging, no learning for Bernie and AOC. Why let facts get in the way of perfectly good Marxist theory that’s never worked. Instead, let’s just do that Green New Deal. Americans will love it.
“Ocasio-Cortez and others have presented a “Green New Deal” resolution that would call for a government conversion away from fossil fuels over the next decade. Sanders and several of his fellow Democratic presidential hopefuls have called for a Medicare-for-all type of proposal that would overhaul the current system.”
All we’d have to do is tell the Department of the Treasury to just keep those printing presses rolling 24/7 for the indefinite future. Hey, why worry about numbers?
(BTW, how much Green could Amazon.com have created for AOC’s Queens constituents before she decided to give Jeff Bezos the hook? Just askin’.)
The blind literally lead the blind in much of urban America
It’s a dangerous world out there when bozos like AOC and Sanders are playing Pied Piper to a largely Democrat constituency in America’s inner cities who’ve been kept stupid for decades by being warehoused at taxpayer expense in rotting public schools whose so-called teachers have taught them nothing useful for at least that long. Except that they should always vote Democrat. This country is in real danger as more and more people – now including “college educated” millennials – buy into utter nonsense.
Time to wake up, America, before it’s too late. Which was pretty much Chairman Powell’s real message to Congress. Should Democrats and RINOS actually choose to listen.
Back to Wall Street
Not helpful to markets today was news of weak quarterly sales figures reported by consumer giant Home Depot (symbol: HD). They were off significantly. And the company gave disappointing forward guidance for the rest of their fiscal year. Added to increasing sales woes reported by HD’s fellow Dow Jones member Caterpillar (CAT), another home construction industry industrial giant, the resulting decline in both stocks killed further Tuesday bullishness in the DJIA.
Poor monthly home construction numbers seemed to put the nail in the coffin for this vital industry as a whole. However, we haven’t seen any commentaries yet that account for America’s increasingly severe winter weather. And housing news that includes the time many of us spent suffering through the recent Polar Vortex has yet to come. After all, who would have hired anyone to put on a new roof, or why would anyone have traipsed around town risking frostbite to look at new houses while that frigid result of global warming climate change was in town?
At any rate, what we ended up with was blowback in any shares that depend on the home construction and/or renovation business. This, in turn, largely squelched any reasonable follow-up on that all-too-fleeting bullishness we enjoyed Monday.
Who knows where we’ll end up tomorrow? Maybe the headline writers do. Fingers crossed. See you on the morrow.
— Headline image: Cartoon by Branco, reproduced with permission and by arrangement with Comically Incorrect.