18 Feb Ask Cassandra

“Never invoke the gods unless you really want them to appear. It annoys them very much.” — Gilbert K. Chesterton

TLR over the last four years has repeatedly looked to Cassandra to provide insights into some of the more challenging issues facing America. For example, in 2020 and 2021, Cassandra explained why the stock market would soon weaken (despite a then-current belief that There Is No Alternative to investing in equities (TINA)), leading TLR in January 2022 to voice an accurate “R.I.P. TINA” conclusion. In October 2020, Cassandra correctly prophesied that President Trump would reject an election loss and, as a consequence, would take steps to reverse the outcome. Cassandra’s analysis of Federal Reserve policy led her in June 2022 to pronounce Jay Powell and America’s Federal Reserve “the world’s most capable economic captains,” making the accurate prediction that they would be successful in controlling inflation. Yet, even with these discerning prophecies, Cassandra asserts only an ability to foresee the outlines of the future – what will happen as a consequence of certain actions and historical confluences –, and not specific events or their dates. She views herself as an interpreter of portents, sifting the 21^st Century’s available data to discern the future. Her abilities rest on her knowledge of human psychology, economics and nature, combined with having lived through many centuries of economic, social and political cycles.

Cassandra’s predictions have generated intense feedback from TLR readers, several of whom recently raised questions intended for consideration by Cassandra. TLR has selected representative ones and relayed Cassandra’s responses below. TLR once again cautions that the opinions expressed in TLR should never, ever be treated as investment, legal or tax advice.

READERS ARE ENCOURAGED TO EMAIL THEIR CASSANDRA QUESTIONS TO TLR. TLR WILL CONTINUE TO REACH OUT TO CASSANDRA FOR RESPONSES.

QUESTION:         What does Cassandra think of the Chinese government’s floating of balloons over the U.S.?
CASSANDRA:      The floating by the Chinese of “weather balloons” are evidence of two dangerous trends. First is that China’s satellite surveillance capabilities are limited. China felt it necessary to use relatively unsophisticated balloon technology to surveil American defense and ICBM capabilities. Second, it shows that the Chinese military and intelligence services are willing to act aggressively towards America. China’s “wolf warrior” response to discovery of the balloons supports both conclusions.

QUESTION:         What is Cassandra’s opinion of President Biden’s State of the Union speech and the Republican response?
CASSANDRA:     President Biden has the best of intentions and his State of the Union speech was practiced and carefully prepared. However, to paraphrase Frank Bruni, while President Trump’s speeches required noise-canceling headphones, President’s Biden’s State of the Union speech required hearing aids. And, yet, despite being uninspired, the speech held out positive notes for fans – it was an optimistic portrayal of America. It was President Biden’s best performance and one that undoubtedly pleased liberals. However, a majority of Americans still disapprove of his job performance …, and by a substantial margin – seven points. His speech did little to change minds despite the President’s focus on falling inflation and historically low unemployment. Americans nevertheless continue to feel the sting of inflation, low labor-force participation, big layoffs in some industries, and excessive Federal debt.
The Republican Party’s response of Arkansas Governor Sarah Huckabee Sanders (President Trump’s former Press Secretary) was a model of polarizing political speech directed primarily at the MAGA right. “America is under attack,” she said, mischaracterizing the President as representing America’s “radical left,” her examples being by championing the indoctrination of school children and forcing woke culture on unwilling Americans. Her message failed to articulate a Republican Party policy other than by expressing disagreement with any and all actual and imagined Democratic Party policies.
Americans either already have chosen sides or are standing aside and awaiting the next election …, meaning that neither speech changed minds.

QUESTION:         When will the Federal government take action to reduce the budget deficit, reform the tax laws, and address educational reform?
CASSANDRA:      I endorse an observation attributed to Winston Churchill that “Americans can always be trusted to do the right thing once all other possibilities have been exhausted.” America is many years away from exhausting the possibilities.

QUESTION:         Is the current wave of inflation “transitory”?
CASSANDRA:      Yes. Much of the surge in the price of goods already has passed. That wave was caused by COVID-induced shortages and cooped-up consumers demanding goods because they could not spend their excess cash on services. Their spending, and the consequent inflation, was exacerbated by the spike in energy prices caused by Russia’s invasion of Ukraine. Disinflationary goods forces have taken control. However, services inflation continues unabated and will raise price pressures into 2024. The Fed, however, is in the optimal position to fine-tune America’s economy and achieve a Goldilocks landing – neither hard nor soft, which (as I predicted in 2022) it will succeed in doing (although, as I indicated last October, there are risks). By Q1 2024, America’s economy will be expanding, inflation will be continuing to fall (though not as far as the Fed hopes), and GDP growth will be returning to a stable level of ~2%/year. It is only then that the Fed will “pivot” and lower interest rates.

QUESTION:         Is the US Dollar in the process of losing its “exorbitant privilege” [as TLR has observed]?
CASSANDRA:      Yes. The Dollar’s status as the world’s reserve currency is eroding. Given the push-pull of global trade and national interests between the world’s two superpowers, Dollar hegemony will be replaced by a bifurcated (and to some extent, fragmented) currency regime. Demand for the Chinese Yuan will increase as it becomes more widely used. Non-aligned nations will find it necessary to diversify their currency holdings away from their currently predominant Dollar holdings. They will favor the Chinese Yuan as their Chinese trade and capital transactions increase and because U.S. sanctions have raised concerns over the Dollar’s use as a weapon. Moreover, to-date China has been winning the Trade War with America – the numbers speak for themselves.

QUESTION:         I bought a number of Nonfungible Tokens (NFTs) in 2020. Their value has tanked. When will I recover my investment costs?
CASSANDRA:      Never.

QUESTION:         With the bursting of the Crypto Bubble, is now a good time to re-invest in Cryptos?
CASSANDRA:      No. Where Crypto once was viewed as an alternative financial system free of government control with self-sustaining safeguards (that is, a series of decentralized ledgers maintained by thousands of independent participants), it’s now been proven substantially similar to the government-regulated one …, though riskier and less effective. Moreover, as the Wall Street Journal sees it, ““there’s crypto carpet bombing going on right now” by US regulators. Trust in Crypto has largely evaporated and, with it, sustaining value …, at least until an appropriate government regulatory regime is imposed.

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Finally (from a good friend)