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

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Vive la Revolution! Brexit and a Dying Order

2016-06-28

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2016-06-28

A Dying Order Last Thursday, the Brits said auf Wiedersehen and au revoir to the European Union. On Friday, the Dow sold off 611 points – a roughly 3.5% slump. What’s going on?

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The Fed Doomsday Device

2016-06-21

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2016-06-21

Debt is just the flip side of credit. As debt goes bad, credit disappears. And then the system that created so much credit-money will go into reverse, destroying the nation’s money supply. The money supply (actually, the supply of ready credit) will shrink – suddenly and dramatically. And what should have been a minor, routine pullback in the economy will become a catastrophic panic.

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Janet Yellen’s $200-Trillion Debt Problem

2016-06-21

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2016-06-21

More than $10 trillion of government bonds now trade at negative yields. And another $10 trillion or so worth of U.S. stocks trade well above their long-term average valuations. And there’s more than $200 trillion of debt in the world. All of this sits on the Fed’s financial applecart. Does Janet Yellen dare upset it?

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Gold and Brexit

2016-06-20

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2016-06-20

The pain of negative yields and social chaos will be very long lasting and very good for gold. So, gold must go up, but Brexit is not one of the reasons why it should. This tells me that in the short term there will likely be a correction in the gold price, creating an opportunity to trade

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A Market Ready to Blow and the Flag of the Conquerors

2016-06-20

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2016-06-20

The U.S. is too big, too varied, too much of everything. You can’t fix a single view of it, even in your mind. But now our problems, challenges, and discontents are big. They are national and international. We cannot see them. We cannot understand them. Instead, we draw their measure from the news media – based on a flag that flutters and sags, depending on which way the wind is blowing.

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How the Welfare State Dies

2016-06-19

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2016-06-19

People have become used to the idea that the State is their sugar daddy. Many apparently believe that it has some undisclosed, infinite stash of resources at its disposal which it can shower them with at will. The reality is unfortunately different.

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Down Go the Hopes and Dreams of Three Generations

2016-06-19

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2016-06-19

On Wednesday, Janet Yellen pressed on the broken buttons again. After the two day FOMC meeting, the Fed Chair announced they’d continue pressing the federal funds rate down to just a ¼ to ½ percent – effectively zero. What type of insanity is this? If she keeps it up, and whole thing doesn’t implode, the yield on the 10-Year Treasury note could also slip below zero…along with the hopes and dreams of three generations of retirees.

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The VIX Breaks Out – Market Risk Continues to Surge

2016-06-14

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2016-06-14

  The Sharp Move in the VIX Accelerates In Monday’s trading session, the upward move in the volatility index VIX (which measures the implied volatility of SPX options) continued unabated, vastly out of proportion with the move in the underlying stock...

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Stocks Set Another Valuation Record

2016-06-14

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2016-06-14

Believe It Or Not… There Actually Is Some Downside Risk BALTIMORE – Not much action in the stock market last week. A few little steps ahead to over the 18,000 line for the Dow. Then a few little steps back. Currently  the index sits at 17,732.   Th...

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Brexit Paranoia Creeps Into the Markets

2016-06-13

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2016-06-13

European Stocks Look Really Bad… Late last week stock markets around the world weakened and it seemed as though recent “Brexit” polls showing that the “leave” campaign has obtained a slight lead provided the trigger. The idea was supported by a not...

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Is It Our Duty to Fight When the Deep State Asks?

2016-06-13

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2016-06-13

  Hero or Traitor?   And it’s one, two, three, What are we fighting for? Don’t ask me, I don’t give a damn, Next stop is Vietnam; And it’s five, six, seven, Open up the pearly gates, Well there ain’t no time to wonder why, Whoopee! We’re all gonna di...

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What Congress Really Thinks of Voters

2016-06-13

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2016-06-13

  Battle of Wits  BALTIMORE – On Wednesday, the Dow rose over 18,000, for the first time since April. Hillary is riding high, too. She is a pro. She has the entire Deep State behind her – including almost every crony and zombie in the country – and a...

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A Darwin Award for Capital Allocation

2016-06-10

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2016-06-10

  Beyond Human Capacity Distilling down and projecting out the economy’s limitless spectrum of interrelationships is near impossible to do with any regular accuracy.  The inputs are too vast.  The relationships are too erratic.   The economy – comple...

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Wealth Management Products: What Could Possibly Go Wrong?

2016-06-10

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2016-06-10

Wealh Management Products issuance equaled $1.1 trillion in 2015, a nearly 75% jump on the prior year and equaling 40% of the total growth in credit. Almost one-third of the WMP were bought by credit institutions for inclusion in other WMP – WMP Squared!

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The Trump Risk: Will President Trump Trigger a Recession?

2016-06-10

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2016-06-10

“The economic consequences of a Trump win would be severe,” claims Mr. Summers in the headline. But he has no way of knowing what the consequences would be, let alone if they would be severe. Would they be worse than if Ms. Clinton were elected? No one knows.

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Free Speech Under Attack

2016-06-08

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2016-06-08

  Offending People Left and Right Bill Bonner, whose Diaries we republish here, is well-known for being an equal opportunity offender  – meaning that political affiliation, gender, age, or any other defining characteristics won’t save worthy targets ...

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Janet Yellen – Backtracking Again

2016-06-08

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2016-06-08

  Muhammad Ali Could Take a Punch BALTIMORE – You had to admit. Muhammad Ali could take a punch. Unlike Donald Trump, Dick Cheney, George W. Bush, and Bill Clinton, he was a real war hero. He stood up and faced his enemies on the draft board, rather ...

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The Real Reason We Have a Welfare State

2016-06-07

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2016-06-07

  From Subject to Citizen BALTIMORE – June 5th, the Swiss cast their votes and registered their opinions: “No,” they said. We left off yesterday wondering why something for nothing never works. Not as monetary policy. Not as welfare or foreign aid. N...

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Moving Closer to BREXIT

2016-06-07

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2016-06-07

  Polls Show Growing Support for a Break with the EU In the UK as elsewhere, the political elites may have underestimated the strength of the trend change in social mood across Europe. The most recent “You-Gov” and ICM pools show a widening lead in f...

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Free Money Leaves Everyone Poorer

2016-06-07

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2016-06-07

  Destroying Lives BALTIMORE – A dear reader reminded us of the comment, supposedly made by Groucho Marx: “A free lunch? You can’t afford a free lunch.”   Groucho dispensing valuable advice Photo via imdb.com   He was responding to last week’s Diary ...

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