Last month, I wrote about the current debate over the 2010 paper by Ken Rogoff and Carmen Reinhart (hereinafter referred to as RR) on the correlation between debt and GDP growth. I said that the most important part of their work, which is the construction of an enormous database on debt and financial crises over the last few hundred years, was to be found in their book This Time Is Different and elsewhere. And their fundamental conclusion: Debt is not a problem until it becomes one. And then it reaches a critical mass and you have what they call the Bang! moment.
[Read more...]Record Highs from the Kamikaze Rally
May 3, 2013 by Leave a Comment
The deflationists continue to run rampant with glee as stocks, gold and commodities in general get hammered. Is this the market giving a big “thumbs down” to quantitative easing (QE)? Have central banks started to lose the final battle in their war to reflate asset prices? Or is this just the big dump before the insiders buy at the bottom and start the next pump?
[Read more...]On the Value of Information
April 30, 2013 by Leave a Comment
It has become tradition at La Estancia de Cafayate for Casey Research to host an intimate conference in conjunction with the Harvest Celebration. In the most recent of the series, Bill Bonner, co-founder of The Daily Reckoning, kicked the program off with a thought-provoking discussion about the nature of information.
[Read more...]Nothing “Hyper” About US Inflation
March 29, 2013 by Leave a Comment
While inflation seems to be on everyone’s mind these days, misconceptions abound. Indeed, few concepts in economics are as misunderstood as inflation. This month I take a look at some common questions about inflation, and a few that I wish more people were asking.
Is hyperinflation coming to the U.S.?
[Read more...]Bernanke-Savant Syndrome
February 28, 2013 by Leave a Comment
Stocks are on the rise. Gold is on the rise. Bitcoin is on the rise. Everything is up…up…and, away!
The Dow has been on a tear this week, up 300+ points since Tuesday’s low. What’s causing the rally? Is the economy fixed? Have Bernanke’s magic money elixirs finally done their job? Or is collective delusion on the march once again?
[Read more...]Witches, Warlocks and Federal Reserve Chairmen
February 27, 2013 by Leave a Comment
A few months ago, the insightful and engaging financial market observer, James Grant, drew a comparison between “witchcraft, on the one hand, and modern central banking, on the other.”
Grant presented this novel comparison in an address to the “Investment Decisions and Behavioral Finance” meeting at the Harvard Kennedy School.
[Read more...]Bubble Trouble: Is There an End to Endless Quantitative Easing?
February 27, 2013 by Leave a Comment
The publication earlier this week of the Federal Reserve’s Federal Open Market Committee minutes of Jan. 29-30 seemed to have a similar effect on equity markets as a call from room service to a Las Vegas hotel suite, informing the partying high rollers that the hotel might be running out of Cristal Champagne. Around the world, stocks sold off, and so did gold.
[Read more...]The Future: Averting Disaster
January 5, 2011 by Leave a Comment
The future – the happiness and prosperity of mankind – will be determined by how global supply and global demand are brought back into balance. If the means are found to expand aggregate demand sufficiently and sustainably, then the global excess supply will be absorbed and the global economy will begin to grow again. If, on the other hand, equilibrium is restored by a collapse in supply – back to a point at which there is real demand, a point determined by the current income and purchasing power of the individuals who comprise the world’s population – then globalization will collapse and the world economy will plunge into depression. Should that occur, millions of people around the world could starve before the decade is out. The geopolitical repercussions of such a scenario would be beyond dire.
[Read more...]US Dollar Rallies as FOMC Sounds the “All Clear Horn�
January 5, 2011 by Leave a Comment
Well… The rally for the euro (EUR) didn’t have strong legs yesterday. Seems that a strong Factory Orders number here in the US got everyone thinking once again that the all-clear horn has been sounded for the US… The dollar rallied, commodities sold off, and gold lost $34 (as I left for the day). I’ll just say this about the all-clear horn being sounded… If things were so rosy, would the Fed/Cartel/Bernank, be leaving interest rates near zero? Why would the same crew be carrying out their implementation of quantitative easing?
[Read more...]
A Grotesque Economic Experiment
The newspapers and TV channels reported the Dow 15,000 story last week as though it were just a stepping stone on the way to 16,000… or 20,000… or 30,000.
Heck, the sky’s the limit!
Investors have reached a new level of bullishness. They’re borrowing again to buy stocks, confident that prices go in only one direction.
[Read more...]Click for detailed story