Category Archive: 6b.) Debt and the Fallacies of Paper Money

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Russell 2000: The Dangerous Season Begins Now

2017-07-21

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2017-07-21

Readers are surely aware of the saying “sell in May and go away”. It is one of the best-known and oldest stock market truisms. And the saying is justified. In my article “Sell in May and Go Away – in 9 out of 11 Countries it Makes Sense to Do So” in the May 01 2017 issue of Seasonal Insights I examined the so-called Halloween effect in great detail.

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Adventures in Quantitative Tightening

2017-07-18

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2017-07-18

Dow Jones Industrial Average, 1929
All remaining doubts concerning the place the U.S. economy and its tangled web of international credits and debts is headed were clarified this week. On Monday, Mark Yusko, CIO of Morgan Creek Capital Management, told CNBC that:

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How Dumb Is the Fed?

2017-07-15

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2017-07-15

Crash
Bent and Distorted. POITOU, FRANCE – This morning, we are wondering: How dumb is the Fed? The question was prompted by this comment by former Fed insider Chris Whalen at The Institutional Risk Analyst blog.

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No “Trump Bump” for the Economy

2017-07-14

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2017-07-14

Consumer Confidence Cartoon
POITOU, FRANCE – “Nothing really changes.” Sitting next to us at breakfast, a companion was reading an article written by the No. 2 man in France, Édouard Philippe, in Le Monde. The headline promised to tell us how the country was going to “deblock” itself.

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Tales from the FOMC Underground

2017-07-11

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2017-07-11

Fed Cartoon
Many of today’s economic troubles are due to a fantastic guess. That the wealth effect of inflated asset prices would stimulate demand in the economy. The premise, as we understand it, was that as stock portfolios bubbled up investors would feel better about their lot in life.

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Nikki Haley – Warmonger Extraordinaire

2017-07-07

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2017-07-07

Haley
Beating the War Drums at the UN. It must now be a prerequisite of those who become an American ambassador to the UN to possess certain characteristics and traits, the most important of which are rabid warmonger, child killer, and outright liar.

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The Money Velocity Myth

2017-07-04

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2017-07-04

For most financial commentators an important factor that either reinforces or weakens the effect of changes in the money supply on economic activity and prices is the “velocity of money”.

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Work is for Idiots

2017-07-01

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2017-07-01

Supping with the IMF
Disproportionate Rewards. The International Monetary Fund reported an unpleasant outlook for the U.S. economy on Wednesday.  The IMF, as part of its annual review, believes the U.S. economic model isn’t working as well as it could to generate shared income growth.

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The Ultimate Regulatory Reform: Abolish Fractional Reserve Banking!

2017-06-29

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2017-06-29

Fractional Reserve Ending
The Trump Administration has presented the first part of its plan to overhaul a number of Wall Street financial regulations, many of which were enacted in the wake of the 2008 financial crisis. The report is in response to Executive Order 13772 in which the US Treasury Department is to provide findings “examining the United States’ financial regulatory system and detailing executive actions and regulatory changes that can be immediately undertaken...

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Dudley in a Good Place

2017-06-27

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2017-06-27

Unemployment Versus Participation Rate, 1970 - 2017
Dear Mr. Dudley, Your recent remarks in the wake of last week’s FOMC statement were notably unhelpful. In particular, your explanation that further rate hikes are needed to prevent crashing unemployment and rising inflation stunk of rotten eggs.

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Pope Francis and Angela Merkel: Enemies of European Civilization

2017-06-21

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2017-06-21

Merkel and Pope
Two of Europe’s greatest contemporary enemies recently got together to compare notes and discuss how they were going to further undermine and destabilize what remains of the Continent’s civilization. Pope Francis and German Chancellor Angela Merkel met on June 17, in the Vatican’s Apostolic Palace to discuss the issues which will be raised at a Group of 20 summit meeting in Hamburg, from July 7-8.

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Jayant Bhandari on Gold, Submerging Markets and Arbitrage

2017-06-17

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2017-06-17

We are happy to present another interview conducted by Maurice Jackson of Proven and Probable with our friend and frequent contributor Jayant Bhandari, a specialist on gold mining investment, the world’s most outspoken emerging market contrarian, host of the highly regarded annual Capitalism and Morality conference in London and consultant to institutional investors.

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Parabolic Coin

2017-06-16

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2017-06-16

Bitcoin
When writing an article about the recent move in bitcoin, one should probably not begin by preparing the chart images. Chances are one will have to do it all over again. It is a bit like ordering a cup of coffee in Weimar Germany in early November 1923. One had to pay for it right away, as a cup costing one wheelbarrow of Reichsmark may well end up costing two wheelbarrows of Reichsmark half an hour later.

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Quantitative Easing Explained

2017-06-14

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2017-06-14

Printing
We have noticed that lately, numerous attempts have been made to explain the mechanics of quantitative easing. They range from the truly funny as in this by now ‘viral’ You Tube video with two robotic teddy-bears discussing the Fed chairman’s qualifications (‘my plumber has a beard too’), to outright obfuscation such as the propagation of this ‘Bernanke explains he’s not printing money, it’s just an asset swap‘ notion.

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The Three Headed Debt Monster That’s Going to Ravage the Economy

2017-06-11

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2017-06-11

Mass Infusions of New Credit. “The bank is something more than men, I tell you.  It’s the monster.  Men made it, but they can’t control it.” – John Steinbeck, The Grapes of Wrath. Something strange and somewhat senseless happened this week. On Tuesday, the price of gold jumped over $13 per ounce. This, in itself, is nothing too remarkable. However, at precisely the same time gold was jumping, the yield on the 10-Year Treasury note was slip sliding...

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Recession Watch Fall 2017

2017-06-10

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2017-06-10

National Debt
One Ear to the Ground, One Eye to the Future Treasury yields are attempting to say something. But what it is exactly is open to interpretation. What’s more, only the most curious care to ponder it. Like Southern California’s obligatory June Gloom, what Treasury yields may appear to be foreshadowing can be somewhat misleading.

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The Gold Conundrum

2017-06-02

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2017-06-02

The deepest spot on earth
We recently (on Thursday last week to be precise) put together a few gold-related charts based on the “keep it simple” principle. The annual Incrementum “In Gold We Trust” report is going to be published shortly and contains a quite thorough technical analysis section, so we will keep this brief and just discuss a few things that have caught our eye.

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The Attack on Workers, Phase II

2017-05-31

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2017-05-31

Farmer's Ranch
It’s been a long row to hoe for most workers during the first 17 years of the new millennium. The soil’s been hard and rocky. The rewards for one’s toils have been bleak.For many, laboriously dragging a push plow’s dull blade across the land has hardly scratched enough of a rut in the ground to plant a pitiful row of string beans. What’s more, any bean sprouts that broke through the stony earth were quickly strangled out by seasonal weeds....

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Moving Closer to the Precipice

2017-05-27

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2017-05-27

The decline in the growth rate of the broad US money supply measure TMS-2 that started last November continues, but the momentum of the decline has slowed last month (TMS = “true money supply”). The data were recently updated to the end of April, as of which the year-on-year growth rate of TMS-2 is clocking in at 6.05%, a slight decrease from the 6.12% growth rate recorded at the end of March.

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India: Why its Attempt to Go Digital Will Fail

2017-05-25

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2017-05-25

Modi Hero of Hatred
Over the three years in which Narendra Modi has been in power, his support base has continued to increase. Indian institutions — including the courts and the media — now toe his line. The President, otherwise a ceremonial rubber-stamp post, but the last obstacle keeping Modi from implementing a police state, comes up for re-election by a vote of the legislative houses in July 2017.

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