So Janet Yellen’s first hearing took place a few nights ago. It was fairly boring. She’s expected to sail through and become the next chairperson of the Federal Reserve. Given that the last few years of extraordinary monetary policy have achieved a miserable recovery, what’s she going to do differently?[Read more...]
A “wealth effect” is widely believed to be boosting the U.S. economy. Rising stocks and house prices are supposed to unleash a new age of prosperity. If that’s the case, why isn’t prosperity spreading broadly and uniformly across the entire economy?
The answer lies in the inflation-fueled booms. They transfer purchasing power from the economy’s savers to those with first access to the new money supply. That’s Wall Street and recipients of federal government spending. The Federal Reserve’s quantitative easing (QE) is the source of the inflationary boom.[Read more...]
I would like readers to consider carefully the fundamental difference between a “real economy” and a “financial economy.” In a real economy, the debt and equity markets as a percentage of GDP are small and are principally designed to channel savings into investments.
In a financial economy or “monetary-driven economy,” the capital market is far larger than GDP and channels savings not only into investments, but also continuously into colossal speculative bubbles. This isn’t to say that bubbles don’t occur in the real economy, but they are infrequent and are usually small compared with the size of the economy. So when these bubbles burst, they tend to inflict only limited damage on the economy.[Read more...]
Today, we take time out from our regularly scheduled programming to thank the people who rule us. To the TSA agents at airports… to the IRS agents who audit our tax returns… to the NSA agents who are reading our mail… and to zombies everywhere…
To all of you, we’d like to say a heartfelt, “Go f*** yours…”[Read more...]
For his U.S. economic history class at UNLV, Murray Rothbard gave us the assignment to write a 10-page paper. The paper could be on anything we wanted it to be. However, we had to clear the topic with him.
When I proposed writing about the Great Depression, Murray was thrilled and rattled off a number of sources. Near the top of his list was a book he described as “fantastic, except it has a terrible title.”[Read more...]
Marc Faber was characteristically pessimistic during his interview with Sprott Money late last month.
“I don’t think they will end QE. I rather think they will have to increase it, because as you print money or as you purchase assets, from a central banking point of view, it loses its impact over time. In order to keep the impact going, you have to essentially increase it. I believe that the dovish members of the Fed will print more money. Especially after the resignation of Mr. Bernanke early next year, when he will be replaced, there will be even more dovish members.”[Read more...]
Markets continued their summer trading behavior last week. Up a little, down a little… meandering… strolling… not in a hurry to get anywhere. The end of the week found the Dow about where it began… and gold a bit lower.
But here, we make tracks. We are using these lazy, hazy days of summer to steal a march on our fellow investors. And our fellow humans![Read more...]
My dad called three times yesterday to see if I got his email.
“Did you see the video?” he asked.
Finally, at 11:30pm I had a few minutes to check my email. Here’s what the hoopla was all about…
Turns out my dad wanted me to see a video my mom took of him, swinging his golf club on the 7th hole (conveniently located just steps from his back porch.)[Read more...]
A new meme is spreading in financial markets: The Fed is about to turn off the monetary spigot. U.S. Printmaster General Ben Bernanke announced that he might start reducing the monthly debt monetization program called “quantitative easing” (QE) as early as autumn 2013, and maybe stop it entirely by the middle of next year.[Read more...]