There is a great deal of uncertainty among investors about what the future of the US economy may look like – so I decided to take a stab at what’s likely to happen over the next 20 years. That’s enough time for a child to grow up and mature, and it’s long enough for major trends to develop and make themselves felt.
[Read more...]Dice Have No Memory: An Introduction
April 4, 2011 By Leave a Comment
It was 10 years ago, or a bit more, that I began writing the Internet series called The Daily Reckoning. The collection of essays and short notes you have in your hands developed over the course of the years that followed.
When I began, I was ahead of the innovation curve. I was blogging before blogs had been invented. Day after day, I watched what happened in the world of finance, economics, and politics. And day after day, I found myself entertained. I merely described what I saw happening.
[Read more...]Why an Empire that Borrows from its Rivals is Doomed to Fail
July 16, 2010 By Leave a Comment
Wall Street suffered its first reversal in eight days yesterday. The Dow dropped a modest 7 points.
For its part, gold rose $1.30 and the dollar fell.
More importantly, the latest news is that inflation rates continue to fall. Producer prices went down 0.8% in the last two months – and the rate of decline is accelerating. It won't be long before the US is in outright deflation – just like Japan.
[Read more...]Honohan, Meet Havenstain
June 4, 2010 By Leave a Comment
One of the most puzzling questions from history is why smart people do such moronic things. Bonaparte was warned; it seemed obvious to anyone who knew the lay of the land that the Russian campaign was foolhardy. In WWI, both sides should have called it quits by 1917. And what was Rudolf von Havenstain thinking? The president of the Reichsbank printed up billion-mark notes; surely he must have known they would cause trouble.
[Read more...]Seeds of War
February 28, 2010 By Leave a Comment
A while back, our colleague, Chris Mayer, employed a wonderful analogy to illustrate the passage of time from the roaring twenties through to the dustbowl thirties. The former decade, Chris explained, was captured in essence by F. Scott Fitzgerald’s The Great Gatsby. It was a period ripe with wild speculation, fueled by an explosion in EZ money, and of reckless excesses in general. (If any of this sounds familiar, you can probably already guess the point at which Chris was driving.)
[Read more...]History to Fukayama: The Show Must Go On
February 19, 2010 By Leave a Comment
Poor Francis Fukayama.
In 1992, he looked at what communism had wrought and proclaimed “the end of history.” The commies had capitulated. The Berlin Wall had come down. Even the ‘red’ Chinese had turned a shade of maroon or mauve.
It seemed like history had come to an end…with the indisputable triumph of US-style democracy.
[Read more...]Go Tell it to the Spartans: Drop Dead
February 12, 2010 By Leave a Comment
Gerald Ford had the right idea.
The year was 1975. New York City was in financial trouble. It had to borrow to pay its operating expenses. And lenders were getting tough. So Mayor Abe Beame turned to Washington, begging for a bailout. But America still had a vestigial sense of financial integrity back then. The Big Apple was lucky; America’s president told Beame to “drop dead.” With no other option available, New York’s politicians had to do the right thing – they cut expenses and the city flourished.
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Back Up, Empire!
What’s Bill doing in Cyprus…?
We’ll get to that. First, what happened in the markets? On Friday, the Dow rose 267 points. Gold went up too — $23.
A big move to the upside. And why? No apparent reason. Gaddafi bit the dust, almost literally. And the Europeans seemed to be stumbling to yet another solution…in which they borrow more money to help fund the troubles created by borrowing money in the past.
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