Chicken Little stays true to form. Asset markets continue to climb. Chicken Little continues to fear the sky falling in the form of higher interest rates ahead.
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| Chicken Little sees nothing but clouds |
MMT is all that matters
MMT stands for Modern Monetary Theory. It means that governments can and should pay for expenditures by printing money. Forget about taxes and borrowing, simply electronically print money. (See my longer article on MMT).
Traditional economists politely call MMT "magical thinking." Privately they use harsher language. So far, MMT has won and traditional economists have been wrong.
What does MMT winning mean? It is that asset markets have responded positively to unprecedented monetary printing. In 2021, for example, the US federal deficit is projected by the CBO to exceed $2 Trillion dollars. The majority of this annual deficit will be paid for by the US Federal Reserve printing money.
As long as MMT works, the party continues. Chicken Little doesn't believe printing money is good. Thus, it is very hard for Chicken Little to own stocks and other risky assets while fearing collapse. This is true regardless of whether MMT collapses soon or never.
April 2021 performance
The Dow Jones Industrial Average added 2.68% in April 2021 while the Chicken Little portfolio lost 0.10%.
April 2021 saw modest gains for all major asset classes followed by Chicken Little. Bitcoin had its first losing month in 2021.
May 2021 portfolio positions.
Chicken Little is hiding in cash: 87% of the portfolio is in cash or short term US Treasuries. Chicken Little added to the crypto position (see "buying a little crypto for defense").
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