Weird and Unnatural

NORMANDY, France – First, a quick look at the markets. The Dow bounced on Monday, recovering 239 points of the nearly 400 it lost on Friday. Why the comeback?


brainardFOMC member Lael Brainard: her comments on Monday were touted as the “reason” for the stock market recovering half of Friday’s losses. We suspect the real reason is the triple witching on Friday…

Photo via


The financial press has a ready answer: “Stocks gain with cautious Fed comments,” reads a headline. Yes, dear reader, the Fed is in charge now. At least, according to the press.

Prices are no longer discovered by willing buyers and sellers. They are imposed by a central bank that lives in fear – fear that investors will discover that the recovery is phony and stocks and bonds are not worth what they paid for them.

Janet Yellen and her fellow PhDs at the Fed built a fake world – a hothouse for stocks and bonds. Now, they can’t open the doors; the plants might die!


“The rift in the time-space continuum continues to widen,” reports our ace researcher, Nick Rokke.

“On Tuesday, German household-products giant Henkel and French pharmaceutical company Sanofi issued a total of €1.5 billion ($1.7 billion) of new bonds at yields of minus 0.05%.”

Nick might have added an exclamation point; never, in the last 5,000 years for which we have records has loaned money yielded less than nothing. And since money didn’t even exist before that, we can presume that it has never before happened in the history of the universe.


henkel-north-america-productsHenkel brands sold in the North-American market. If we give money to Henkel, we usually want something in return, such as the products shown above. Bond investors in Europe have decided that it is a good time to make donations to Henkel, by buying its bonds at negative yields-to-maturity in the primary market. The world has gone totally nuts in other words, but that is not Henkel’s fault. It is the fault of a handful of etatiste  central planning bureaucrats who are in the process of creating misery for billions of people on the basis of demonstrably false theories.


Of course, today never happened before either. But time is linear. Every day is a new day. Interest rates are cyclical. They go up and they go down. In each direction, there are limits.

Temperatures are cyclical, too. They go up in summer and down in winter. Occasionally, the media announces the “hottest day in 20 years” or “the deepest snow since 1957.” We get out the fans or rubber boots. We brace ourselves for something unusual, but not unheard of.

Records are broken from time to time. It’s part of the cyclical nature of things. But when the media announces “the hottest day in 5,000 years,” watch out. Something else may be going on… something weird and unnatural.

It is certainly more than passing strange that a private company should be paid to borrow money. Or that investors are willing to pay for the privilege of lending. It bespeaks more than a new record. It tells us that the feds have made a damned mess of things.


A First in 5,000 Years

We admit that our generation is the greatest, smartest, and most advanced in all history. The Fed has more than 1,000 PhD economists on the payroll. Compare that with the Bank of England under Sir Isaac Newton… or the central bank of Cuba under Che Guevara. Neither had a single PhD in its employ.

We now have computers that can beat grandmasters at chess and hook you up to a porn site at the speed of light. We have robots that can make automobiles and 3-D printers that can make robots. And we have large, shiny machines that lift up hundreds of people at a time and fly them across the oceans (it’s true; we’ve seen them ourselves).

Think of all the empires that rose and fell over the last 5,000 years: the Akkadians, the Hittites, the Egyptians, the Chaldeans, the Sumerians, the Assyrians, the Persians, the Babylonians, the Greeks, the Romans, the Sassanians, the Seljuqs, the Mongols…


hittite-leftoversWe weren’t sure what illustrations to add, so we threw a proverbial dart and decided to show you a few left-overs of the Hittite empire. If you had tried to borrow money from a Hittite at negative interest, he would have wondered if you were drunk or insane.

Photo credit: Bernard Gagnon


Think of the conquests and defeats: Attila, Genghis, and Tamerlane… stout Cortés on a hill in Darien… Pizarro and his room full of gold… William at Hastings… and poor Harold with an arrow in his eye… Bonaparte in Moscow and then the crossing of the Berezina… Hitler in his bunker… Nagasaki.

And the last ditch stands… the lost causes – the Charge of the Light Brigade… Pickett’s Charge… the Little Big Horn… Culloden… and Dien Bien Phu.

The great battles of Vienna, Waterloo, Huaihai, Cajamarca, Antietam, Leipzig, Stalingrad, Yorktown.  Alexander conquered the known world… Hannibal crossed the Alps… Caesar crossed the Rubicon… and Lord Byron swam the Hellespont.

And think of the lost languages – and the whole races of humans – that lived and died: the Neanderthal, the Denisova, Homo floresiensis… And the forgotten tribes – the Paiute, Shoshone, Omaha, Mandan, Hidatsa, Ojibwe, and Nermernuh – wiped out by disease.

The lost cities… the lost peoples. Hundreds of millions killed in wars… starved to death… burnt at the stake… tortured… murdered…

And the lovers: Cleopatra and Antony… Catherine the Great and Potemkin… Burton and Taylor… Gertrude Stein and Alice B. Toklas… Prince Edward and Wallis Simpson… Helen of Troy and Paris… Juan Perón and Eva Duarte…

Think of the great geniuses, too: Euclid… Aristotle… Pythagoras… Archimedes… Galileo… Da Vinci… Pauling… Wittgenstein… Einstein.


wittgensteinLudwig von Wittgenstein

Photo credit:SN / DPA


Philosopher Ludwig von Wittgenstein. In his famous Tractatus Logico-Philosophicus we read:

1 The world is everything that is the case.

1.1 The world is the totality of facts, not of things.

1.11 The world is determined by the facts, and by these being all the facts. 1.12 1.12 For the totality of facts determines both what is the case, and also all that is not the case.

1.13 The facts in logical space are the world.

1.2 The world divides into facts.

1.21 Any one can either be the case or not be the case, and everything else remain the same.

1.22 Any person lending money at negative interest is totally nuts.


And yet as far as we know, in not a single instance did anyone (not Nebuchadnezzar, nor King Solomon, nor even “The Bard” himself), driven by love, or money, or madness, ever have the idea of lending money to get back less money later on.


Image captions by PT


The above article originally appeared as “A Sure Sign the Economy Is Doomed” at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.




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