$1.4 trillion of Chinese stocks have stopped trading. Greece is finally imploding. The US trade deficit is widening on falling exports.Copper just fell back to 2009 levels. And safe-haven capital flows are revving up again, with Swiss 10-year bonds once again trading with negative yields. Yet somehow a majority of economists and money managers continue […]
Mediocre Is The New Perfect
Three things happened this morning: The Labor Department reported a big jump in employment; the financial markets responded like kids on Christmas morning; and — with a few hours lag — level-headed analysts deconstructed the jobs report and found it to be mediocre at best. To take just a few of the high (or low) […]
Lessons of History, Part 1: Not a Mention of Money
I’m listening to the audio version of George, Nicholas and Wilhelm: Three Royal Cousins and the Road to World War I, written by Miranda Carter and brilliantly narrated by Rosalyn Landor. It’s the story of some almost supernaturally dysfunctional governments blundering into a war that seems more rather than less crazy with the passage of […]
What Comes After Paper Money, Part 1: Fiat’s Obvious Failure
Business Insider just posted a Deutsche Bank chart that illustrates the difference between life under the Classical Gold Standard and today’s “modern” forms of money. It’s for the UK only but is a pretty good representation of the world in general: For the first four hundred years depicted here, money was gold and silver — […]
Wow, They Really Are Tapering
In the sound-money community there is universal skepticism about the Fed’s plan to stop monetizing the world’s debt. Hardly anyone thinks they’ll go through with it and absolutely no one thinks they’ll succeed if they do. But the Fed is acting like it’s serious. Take a look at the monetary base, which is the amount […]
US Now Importing the World’s Deflation
With US QE about to end, the rest of the world faced the prospect of another “taper tantrum” financial crisis, one that this time around could suck the major economies into a deflationary vortex. So it should come as no surprise that the end of QE was countered with a series of offsetting treats for […]
Europe’s Turn Again
Europe has been pretty quiet lately. But apparently that was an illusion. The Eurozone’s slide down the slippery slope continues, but because the current stage involves colorless bureaucrats debating the terms of debt swaps rather than street riots and air strikes, it has been overshadowed by the chaos in the Middle East. That’s about to […]
Fed Critics Go Mainstream
It’s suddenly fashionable in the mainstream media not just to criticize the Federal Reserve but to question its reason for existing. Watch Bloomberg’s clearly sympathetic take on the ascendancy of Congressman Ron Paul, whose most recent book is End the Fed: And here’s an excerpt from a Wall Street Journal editorial by Cato Institute senior […]
Competitive Devaluation, Stage One: Friends Bickering
This is what the early stage of a currency war looks like: Japan’s Leader Bemoans Impact of U.S. Economic Policy TOKYO—Prime Minister Naoto Kan joined the growing chorus of world leaders complaining about the side effects of American economic policy, tying the Japanese yen’s strength to Washington’s aggressive stimulus efforts—and implying that the U.S. should […]
Will Bailing Out the States Tank the Dollar?
Back in 2006 Meredith Whitney was an obscure Wall Street analyst who bit the hand that fed her by declaring housing a bubble and the big banks a disaster. This took guts, both because analysts who dis their research universe tend to lose access and/or their job, and because the overwhelming consensus, from Alan Greenspan […]
QE Questions
It’s been a while since US monetary policy was run with anything approaching a long-term strategy. For the past decade especially the goal has been to get through the week without a global financial collapse. So it’s probably asking too much to expect the Fed to have thought through the implications of another round of […]
Euro Crisis, Part II
Remember the euro-zone crisis? Front page news for weeks, and then…nothing. Could they have found the secret formula for eliminating an overwhelming debt load without hyperinflation or depression? Nah. They were just taking a break, and now they’re back. Greece’s economy is contracting and Spain’s regional governments are being shut out of the debt markets. […]
A Sign of Things to Come?
This isn’t how it normally goes. For the past couple of decades — that is, during the parabolic phase of the global credit bubble — the financial markets have responded to US Fed announcements of easier money like kids whose daddy has promised them a trip to Disneyland. The euphoria doesn’t always last, but the […]
China and Germany: The Perils of Vendor Financing
In response to Why Would Anyone Buy a Spanish Bond?, reader RAID 3000 pointed out that the U.S. has far more serious problems than Europe (no argument there!) and included a link to LEAP2020, a European site doing great work on this subject. One of its articles contained the following chart: This got me to […]
Irony: Andrew Jackson On a Federal Reserve Note
Karl Golovin, a retired customs agent and security director for Ron Paul’s presidential campaign, just forwarded a transcript of Andrew Jackson’s farewell address. It’s pretty amazing. Here’s Karl’s intro, followed by an excerpt: “During his presidency, Andrew Jackson viewed as his crowning achievement that he “Killed the Bank,” the 2nd Bank of the U.S. Our […]
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