Category Archive: 6b) Austrian Economics

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Celebrating this Land of Absurdity

2016-11-27

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2016-11-27

“Myths and legends die hard in America,” remarked Hunter S. Thompson in The Great Shark Hunt, nearly 40-years ago. These great myths and legends of America died long ago. Freedom. Liberty. Independence. Limited representative government. Sound money. Private property rights. All getting more and more replaced by regulation.

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The Problem with Corporate Debt

2016-11-26

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2016-11-26

There are actually two problems with corporate debt. One is that there is too much of it… the other is that a lot of it appears to be going sour. As a brief report at Marketwatch last week (widely ignored as far as we are aware) informs us.

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Good Money and Bad Money

2016-11-26

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2016-11-26

Stock Market Cartoons
OUZILLY, France – Last week’s U.S. jobs report came in better than expected. Stocks rose to new records. As we laid out recently, a better jobs picture should lead the Fed to raise rates. This should cause canny investors to dump stocks.

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Love him or Hate him: Trump is the Revolution Against the Establishment

2016-11-24

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2016-11-24

The 2016 U.S. presidential elections are unprecedented: I don’t believe we have ever witnessed before a campaign year so toxic, so dangerously divisive and full of ad hominem attacks. Both camps have vilified the opposition and their followers, creating a schism in society. There has been no rational dialogue on the issues that truly concern the American public.

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Too Early for “Inflation Bets”?

2016-11-23

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2016-11-23

Bonds Long Term
After 35 years of waiting… so many false signals… so often deceived… so often disappointed… bond bears gathered on rooftops as though awaiting the Second Coming. Many times, investors have said to themselves, “This is it! This is the end of the Great Bull Market in Bonds!”

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Gold Bull Market Remains Intact – Long Term Fundamentals Outweigh Short Term Market Gyrations

2016-11-22

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2016-11-22

Kool-AID
In early 2016 gold had a big bull run. The precious metal rose close to 25% this year, pushed higher in a summer rally that peaked on July 10th. Gold experienced a bumpy ride over the remainder of the summer though, as investors became increasingly concerned about a potential rate hike by the Federal Reserve. Uncertainty returned to gold market and has intensified further since then.

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Putting an End to the Regulatory Industry

2016-11-22

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2016-11-22

Get Ready
Corporate life in America these days is fraught with tedium. First the MBAs imposed their silly six sigma processes and reduced workers to mere widgets. Then the regulators went through and squashed out any fun that remained.

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Canadian Bank Starts Charging Negative 0.75percent Rate On Most Foreign Cash Balances

2016-11-22

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2016-11-22

BMO Nesbitt Burns
Despite speculation over the past year that Canada may join Japan and Europe in the NIRP club and launch negative interest rates, so far the BOC has stood its ground. However, starting on December 22, for the broker dealer clients of one of Canada's most reputable financial institutions, BMO Nesbitt Burns, it will be as if the Canadian bank has cut its deposit rate on most currencies, to match the deposit rate of Switzerland.

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Two Types of Credit — One Leads to Booms and Busts

2016-11-19

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2016-11-19

Factory Shop
In the slump of a cycle, businesses that were thriving begin to experience difficulties or go under. They do so not because of firm-specific entrepreneurial errors but rather in tandem with whole sectors of the economy. People who were wealthy yesterday have become poor today. Factories that were busy yesterday are shut down today, and workers are out of jobs.

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About that Economic Inequality

2016-11-19

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2016-11-19

I address this essay to two groups. One group is those among the liberty movement, who believe that there’s nothing wrong with inequality. These are often Objectivists, who unknowingly defend a regime that artificially suppresses working people.

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Inflation Expectations Rise Sharply

2016-11-16

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2016-11-16

WIN
We have witnessed truly astonishing short term market conniptions following the Donald Trump’s election victory. In this post we want to focus on one aspect that seems to be exercising people quite a bit at present, namely the recent surge in inflation expectations reflected in the markets. Will we have to get those WIN buttons out again?

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The Fed’s “Hothouse” Is in Danger

2016-11-14

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2016-11-14

Federal Funds Rate
RHINEBECK, New York – It is a beautiful autumnal day here in upstate New York. The trees are red, brown, and yellow. Squirrels hop across the lawn, collecting their nuts. Unseasonably warm the last few days, rain showers are moving in from across the Hudson, driven by a chilly wind.

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Dissection of the Long-Term Asset Bubble

2016-11-12

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2016-11-12

The Long Term Outlook for the Asset Bubble Due to strong internals, John Hussman has given the stock market rally since the February low the benefit of the doubt for a while. Lately he has returned to issuing warnings about the market’s potential to deliver a big negative surprise once it runs out of greater fools.

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Toward a New World Order, Part II

2016-11-12

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2016-11-12

One of the most widespread misconceptions in the realm of politics is the notion of a left-right axis. This has been used over and over to explain political outcomes and paint the various factions as polar opposites. For example, in the US the two main parties, the Republicans (right) and Democrats (left), are often portrayed as a fight between good and evil.

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Toward a New World Order?

2016-11-11

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2016-11-11

A Brave New World is coming? Perhaps. We had a recent discussion with a group of people in the hopeless business of doing long term forecasting. This made us think about what the world will look like over the next 20 to 40 years. A pretty thankless task, but the bottom line is without a damn good war, Asia will be the way of the future.

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The One Thing that Will Change Everything

2016-11-06

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2016-11-06

Branco Trump and Hillary
The American populace counts down to Election Day with impatient intent. Will their party man occupy the White House come January 21, 2017? Or will their party woman occupy a federal prison cell? These are questions that only the good wisdom of time can answer. Here at the Economic Prism we watch with indifferent curiosity. We don’t think either candidate’s worthy of high office. But we’re eager to know the election outcome, nevertheless.

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Is there a Savings Glut?

2016-11-06

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2016-11-06

Bakers and Work
In his speech at the New York Federal Reserve of New York on October 5, 2016, the Federal Reserve Vice Chairman Stanley Fischer has suggested that a visible decline in the natural interest rate in the US could be on account of the world glut of saving. According to Fischer, both increased saving and reduced investments have potentially significantly lowered the natural rate of interest.

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Incrementum Advisory Board Meeting Q3 2016

2016-11-06

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2016-11-06

Is Stagflation a Potential Threat? The Incrementum Fund held its quarterly advisory board meeting on October 3 (the transcript can be downloaded below). Our regular participants – the two fund managers Ronald Stoeferle and Mark Valek, advisory board members Jim Rickards, Frank Shostak and yours truly – were joined by special guest Grant Williams this time.

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Crude Oil Has Entered a Seasonal Downtrend

2016-11-06

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2016-11-06

Many market observers are probably expecting crude oil prices to enter a seasonal uptrend due the beginning heating season. After all, the heating season in the Northern hemisphere means that energy consumption will rise. The effect of the heating season on demand is however offset by other factors, such as the use of alternative energy sources and fixed prices agreements made in advance. The question is: what is the actual seasonal trend in crude...

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D-day for Australia’s Real Estate Bubble?

2016-11-04

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2016-11-04

Shack
Unknowable Degrees of Bubble Insanity Back in February, we brought you an update on the truly insane real estate bubble in Australia (see: “Australia’s Housing Bubble – In the Grip of Insanity” for details) in the wake of Jonathan Tepper of Variant Perception reporting on an eye-opening fact-finding tour in Sydney.

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