Even before the Richter needle began to quiver and the pots began to fall, Japan’s finances were already shaky. The country began running huge budget deficits following the stock market sell-off of 1990. Economists called this “fiscal stimulus” back then. Two decades later, the deficits are bigger than ever – 7.5% of GDP this year – and they stimulate nothing.
[Read more...]US Unemployment Another Counterfeit Figure from the Fed
March 23, 2011 By Leave a Comment
What were we talking about yesterday? Oh yes…something about a big, nasty bird…and Japan.
First, let’s report the news from yesterday…then we’ll come back to this subject. To give you a preview, Japan is using quantitative easing – money printing – to cover the holes in its budget. With the need to rebuild its economy and its infrastructure, our guess is that it’s going to do a lot more of it.
[Read more...]The Quantifiable Problem With Private Sector Salaries
March 16, 2011 By Leave a Comment
I was particularly interested in this week’s ubiquitous newspaper insert, Parade magazine, as its cover featured the interesting article “What People Earn. Our Annual Salary Survey.”
Knowing that the average government worker makes an astounding twice as much in wages and benefits as the average private-sector worker, I was hoping that I could use something in the article to take to my boss, as part of my new Mogambo Income Enhancement Plan (MIEP), and say, “Hey! Look at all the money these people make! I deserve more money to work at this crappy job! And I deserve more because I am probably as good an employee as at least one of these guys! I want a raise! Big fat one!”
[Read more...]A Look at Empty Store Shelves in America
July 13, 2010 By Leave a Comment
The National Inflation Association has produced a new video looking at how hyperinflation can lead to a run on stores. They paint the kind of picture where people are trampling one another to stock up on basic goods, like water, before their dollars lose purchasing power.
Using a recent real-life example from Massachusetts in May of 2010, the clip below shows what empty retail store shelves look like in the US, and also people so desperate for supplies that the National Guard has to be called in to keep the peace. Despite the over-the-top tone of the cautionary tale and the survivalist advice it’s an interesting video.
[Read more...]Solving Debt and Moral Hazard With More Debt and Bailouts
June 4, 2010 By Leave a Comment
The Feds response has been adolescent in the sense that it has permitted major damage by allowing the credit boom to happen. Right under its nose, the broad money supply (M3) doubled in the last eight years, from $7 trillion to $14 trillion, but it is trying to fool the market into thinking this statistic is irrelevant because it was vigilant and never allowed inflation to surface.
[Read more...]Sovereign Debt Default: Learning from Argentine Mistakes
April 12, 2010 By Leave a Comment
Argentina is for economists with a sense of humor, if there are any left. Its for anyone who likes a good drink and a good laugh. And for anyone who wants a peek at the future.
What do defaults look like? Look at Argentina. The Argentines pulled off the biggest default on sovereign debt in history. In 2001, they defaulted on $132 billion in loans. Later, they negotiated a settlement that left lenders with their worst haircut ever.
[Read more...]Ballad of a Heartbreaking Money Supply
March 29, 2010 By Leave a Comment
As much as I scream in Loud Mogambo Outrage (LMO) about the sheer amount of money that is being created that will create horrendous inflation in prices, using whatever data that I can easily get my hands on or, better yet, falling into my lap, or, as a last resort, just making up facts and figures to prove my point, I may, for once in my over-the-top, obnoxious and irritating life (The Way Of The Mogambo (TWOTM)), be understating the case! Understating it!
[Read more...]
Government Spending and the Path to Money Printing
Stocks down yesterday. Gold down. Oil down. Everything was down. The beginning of the end? Beats us. The Fed is still pumping in money. But investors are beginning to look beyond QE2.
If the economy really is recovering, they say to themselves, the Fed will be able to back off from money printing. Stocks, gold, commodities – everything should go down.
[Read more...]