Category Archive: 6b) Austrian Economics

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

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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Necessity is the Mother of Invention – Retirees Desperate Reach for Yield

2017-06-10

by Eugen von Böhm Bawerk

2017-06-10

Ben Bernanke’s creativity inspired a generation of economists and central bankers. QE, ZIRP and NIRP established a new class of economics that is mathematically sound but practically disastrous. Billions of dollars were transferred from savers to investors to boost the economy, but the wizards of quant forgot that something has to give. In this case, it was the formation of a pension crisis that threatens the golden years of millions of retirees...

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Recession Watch Fall 2017

2017-06-10

by MN Gordon

2017-06-10

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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Negative Rates: The New Gold Rush… For Gold Vaults

2017-06-09

by Tyler Durden

2017-06-09

Negative interest rates and the populist uprising that spurred the UK to vote for Brexit and Americans to elect Trump has helped reignite a rush into physical safe haven assets like gold and silver, which however has led to a shortage of safe venues where to store the precious metals (unlike bitcoin, gold actually has a physical dimension).

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The Gold Conundrum

2017-06-02

by Pater Tenebrarum

2017-06-02

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

by MN Gordon

2017-05-31

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

by Pater Tenebrarum

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

by Jayant Bhandari

2017-05-25

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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“Sell in May”: Good Advice – But Is There a Better Way?

2017-05-21

by Dimitri Speck

2017-05-21

If you “sell in May and go away”, you are definitely on the right side of the trend from a statistical perspective: While gains were achieved in the summer months in three of the eleven largest stock markets in the world, they amounted to less than one percent on average. In six countries stocks even exhibited losses!

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How to Stick It to Your Banker, the Federal Reserve, and the Whole Doggone Fiat Money System

2017-05-18

by MN Gordon

2017-05-18

Somehow, former Federal Reserve Chairman Ben Bernanke found time from his busy hedge fund advisory duties last week to tell his ex-employer how to do its job. Namely, he recommended to his former cohorts at the Fed how much they should reduce the Fed’s balance sheet by. In other words, he told them how to go about cleaning up his mess.

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Rising Oil Prices Don’t Cause Inflation

2017-05-17

by Frank Shostak

2017-05-17

A very good visual correlation between the yearly percentage change in the consumer price index (CPI) and the yearly percentage change in the price of oil seems to provide support to the popular thinking that future changes in price inflation in the US are likely to be set by the yearly growth rate in the price of oil (see first chart below).

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A Cloud Hangs Over the Oil Sector

2017-05-14

by Pater Tenebrarum

2017-05-14

As we noted in a recent corporate debt update on occasion of the troubles Neiman-Marcus finds itself in (see “Cracks in Ponzi Finance Land”), problems are set to emerge among high-yield borrowers in the US retail sector this year. This happens just as similar problems among low-rated borrowers in the oil sector were mitigated by the rally in oil prices since early 2016.

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The Triumph of Hope over Experience

2017-05-12

by Pater Tenebrarum

2017-05-12

On Wednesday the socialist central planning agency that has bedeviled the market economy for more than a century held one of its regular meetings. Thereafter it informed us about its reading of the bird entrails via statement (one could call this a verbose form of groping in the dark).

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“Sell in May and Go Away” – in 9 out of 11 Countries it Makes Sense to Do So

2017-05-10

by Dimitri Speck

2017-05-10

An Old Seasonal Truism Most people are probably aware of the saying “sell in May and go away”. This popular seasonal Wall Street truism implies that the market’s performance is far worse in the six summer months than in the six winter months.

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Central Banks’ Obsession with Price Stability Leads to Economic Instability

2017-05-05

by Frank Shostak

2017-05-05

For most economists the key factor that sets the foundation for healthy economic fundamentals is a stable price level as depicted by the consumer price index. According to this way of thinking, a stable price level doesn’t obscure the visibility of the relative changes in the prices of goods and services, and enables businesses to see clearly market signals that are conveyed by the relative changes in the prices of goods and services.

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The Fed Will Blink

2017-05-02

by Bill Bonner

2017-05-02

Dow Jones Industrial Average Index, Daily, Sep 2016 - May 2017

GUALFIN, ARGENTINA – The Dow rose 174 points on Thursday. And Treasury Secretary Steve Mnuchin said we’d have a new tax system by the end of the year. Animal spirits were restless. But which animals? Dumb oxes? Or wily foxes? Probably both.

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Cracks in Ponzi-Finance Land

2017-04-27

by Pater Tenebrarum

2017-04-27

Retail Debt Debacles The retail sector has replaced the oil sector in a sense, and not in a good way. It is the sector that is most likely to see a large surge in bankruptcies this year. Junk bonds issued by retailers are performing dismally, and within the group the bonds of companies that were subject to leveraged buyouts by private equity firms seem to be doing the worst (a function of their outsized debt loads).

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French Selection Ritual, Round Two

2017-04-26

by Pater Tenebrarum

2017-04-26

The nightmare of nightmares of the globalist elites and France’s political establishment has been avoided: as the polls had indicated, Emmanuel Macron and Marine Le Pen are moving on to the run-off election; Jean-Luc Mélenchon’s late surge in popularity did not suffice to make him a contender – it did however push the established Socialist Party deeper into the dustbin of history.

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Central Banks Have a $13 Trillion Problem

2017-04-24

by Bill Bonner

2017-04-24

Dow Jones Industrial Average Index, September 2016 - May 2017

GUALFIN, ARGENTINA – The Dow was down 118 points on Wednesday. It should have been down a lot more. Of course, markets know more than we do. And maybe this market knows something that makes sense of these high prices. What we see are reasons to sell, not reasons to buy.

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Simple Math of Bank Horse-Puckey

2017-04-23

by MN Gordon

2017-04-23

We stepped out on our front stoop Wednesday morning and paused to take it all in. The sky was at its darkest hour just before dawn. The air was crisp. There was a soft coastal fog. The faint light of several stars that likely burned out millennia ago danced just above the glow of the street lights.

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