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MN Gordon

MN Gordon

Making sense of the latest economic policy touted by the Federal Reserve or the U.S. Treasury is an exercise in befuddlement. No doubt about it, the economics trade is overcome with an abundance of nonsense these days. This is no coincidence. M.G. Gordon of Economic Prism looks to bring clarity to the muddy waters of economic policy.

Articles by MN Gordon

US Debt: To Hell In A Bucket

4 days ago

No-one Cares…
“No one really cares about the U.S. federal debt,” remarked a colleague and Economic Prism reader earlier in the week. “You keep writing about it as if anyone gives a lick.”
We could tell he was just warming up. So, we settled back into our chair and made ourselves comfortable.
“The voters certainly don’t care about the federal debt,” he continued. “They keep electing the same spendthrifts to office. And the politicians know the voters don’t care. They also know that making more and more promises is the formula for getting reelected.
“Deep down, the aging masses know they need massive amounts of government debt to pay their social security, medicare, and disability checks.  On top of that, many of the

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The Government Debt Paradox: Pick Your Poison

12 days ago

Lasting Debt
“Rule one: Never allow a crisis to go to waste,” said President Obama’s Chief of Staff Rahm Emanuel in November of 2008. “They are opportunities to do big things.”
At the time of his remark, Emanuel was eager to exploit the 2008 financial crisis to raid the public treasury. With the passage of the American Recovery and Reinvestment Act in February 2009, Emanuel’s wish was granted. The Obama administration had the opportunity to do big things.
Politically, the passage of the Recovery Act was a huge success. Washington was able to dole out funds to their preferred projects like never before. What could be better for a Congressman than to direct massive amounts of funds to infrastructure, healthcare,

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How to Make the Financial System Radically Safer

17 days ago

Preventing the Last Crisis
Clear thinking and discerning rigor when it comes to the twisted state of present economic policy matters brings with it many physical ailments. A permanent state of disbelief, for instance, manifests in dry eyes and droopy shoulders. So, too, a curious skepticism produces etched forehead lines and nighttime bruxism.

The terrible scourge of bruxism and its potentially terrifying consequences. Curious skepticism can lead to the darnedest things, which is why Big Brother strongly recommends that citizens remain in a medication and cable TV-induced apathetic stupor. – Click to enlarge
To make this happy outcome easier to achieve, stagnation in real wages was successfully introduced a

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Why There Will Be No 11th Hour Debt Ceiling Deal

August 22, 2017

Milestones in the Pursuit of Insolvency
A new milestone on the American populaces’ collective pursuit of insolvency was reached this week. According to a report published on Tuesday by the Federal Reserve Bank of New York, total U.S. household debt jumped to a new record high of $12.84 trillion during the second quarter. This included an increase of $552 billion from a year ago.

United States Consumer DebtUS consumer debt is making new all time highs – while this post GFC surge is actually relatively tame, corporate and government debt have in the meantime exploded into the blue yonder. Nevertheless, this means consumers are also highly vulnerable to the coming crisis (which will look different from the last one,

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Yanking the Bank of Japan’s Chain

August 13, 2017

Mathematical Certainties
Based on the simple reflection that arithmetic is more than just an abstraction, we offer a modest observation. The social safety nets of industrialized economies, including the United States, have frayed at the edges. Soon the safety net’s fabric will snap. This recognition is not an opinion. Rather, it’s a matter of basic arithmetic. The economy cannot sustain the government obligations that have been piled up upon it over the last 70 years.
Growing wrinkle coefficient… as the global population increasingly ages, the “pay-as-you-go” social security and pension Ponzi schemes of developed welfare states are inexorably careening toward insolvency. [PT]
In other words, the post-World War II

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Prepare for Another Market Face Pounding

August 12, 2017

“Better than Goldilocks”
“Markets make opinions,” goes the old Wall Street adage.  Indeed, this sounds like a nifty thing to say.  But what does it really mean?
The bears discover Mrs. Locks in their bed and it seems they are less than happy. [PT]
Perhaps this means that after a long period of rising stocks prices otherwise intelligent people conceive of clever explanations for why the good times will carry on.  Moreover, if the market goes up for long enough, the opinions become so engrained they seek to explain why stock prices will go up forever.
After nine years of near uninterrupted stock market gains, new opinions are being offered to explain why the stock market will be bathed in sunshine indefinitely.  For

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Views From the Top of the Skyscraper Index

August 3, 2017

Views From the Top of the Skyscraper Index
On a warm Friday Los Angeles morning in spring of 2016, we found ourselves standing at the busy corner of Wilshire Boulevard and South Figueroa Street.  We were walking back to our office following a client wire brushing for events beyond our control.  But we had other thoughts on our mind.
Standing amid a mob of pedestrians, we gazed up at the skeleton frame of what would become the Wilshire Grand Center.  For the first time in several years the buzz and hum of diligent building activity was replaced by an eery silence.  In fact, construction work was shut down for the day.
Sadly, less than 24 hours earlier a distraught electrician had taken a swan dive off the 53rd

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Congress’s Radical Plan to End Illegal Money

July 23, 2017

What Constitution?
One of the many downfalls of being the United States Secretary of the Treasury is the requirement to place one’s autograph on the face of the Federal Reserve’s legal tender notes. There, on public display, is an overt record of a critical defect.  A signature endorsement of a Federal Reserve note by the Treasury Secretary represents their personal ratification of unconstitutional money.
If you recall, Article I, Section 8, of the U.S. Constitution empowers Congress – not the Federal Reserve – to coin money and regulate its value.  What’s more, Article I, Section 10, specifies that money be coined of gold and silver and cannot consist of bills of credit – such as paper legal tender notes.
As far as

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Adventures in Quantitative Tightening

July 18, 2017

Flowing Toward the Great Depression
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:

“…we’re flowing toward the path of 1928-29 when Hoover was president. Now Trump is president. Both were presidents with no experience who come in with a Congress that is all Republican, lots of big promises, lots of things that don’t happen and the fall is when people realize, ‘Wait, it hasn’t played out the way we thought.’ [By the fall], we’ll have a lot more evidence of declining growth. Growth has been slipping.”

Dow Jones Industrial Average,

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

June 11, 2017

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 down to 2.15 percent.

It looks hungry… once it is finished with this little Godzilla snack, it will probably come for the rest of us. Illustration by Larry T Quach
In short, investors were simultaneously anticipating inflation and deflation.  Naturally, this is a gross

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Recession Watch Fall 2017

June 10, 2017

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.

Behold, the risk-free tide… – Click to enlarge
Are investors anticipating deflation or inflation?  Are yields adjusting to some other market or external phenomenon, perhaps central bank intervention?
So far this year, and in the face of the much-ballyhooed prospect of Trumpflation, the yield on the 10-Year note has gone down.  Not up.  On January 1st, the 10-Year note yielded 2.44 percent.

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The Attack on Workers, Phase II

May 31, 2017

Labors with No Fruits
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.  Those ‘green shoots’ that persisted bore pods that dried out on the vine before maturity.
This has been the common experience of the typical 21st century American worker, thus far. Countless, stories of labors with no fruits have been shared at bowling

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

May 18, 2017

Bernanke Redux
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.

Praise the Lord! The Hero is back to tell us what to do! Why, oh why have you ever left, oh greatest central planner of all time. We are not worthy. – Click to enlarge
We couldn’t recall the last time we’d seen or heard from Bernanke.  But soon it all came back to us.  There he was, in the flesh, babbling on Bloomberg and Squawk Box, pushing the new paperback version of his mis-titled memoir “The Courage to Act.”  Incidentally, the last time we’d heard much out of the guy was when the hard copy was released in late 2015.
With respect to the Fed’s balance sheet, Bernanke remarked that the Fed should cut it from $4.5 trillion to “something in the vicinity of $2.3 to $2.8 trillion.”  What exactly this would achieve Bernanke didn’t say.  As far as we can tell, a balance sheet of $2.8 trillion would still be about 300 percent higher than it was prior to the 2008 financial crisis.
Bernanke, by all measures, is an absolute lunatic.

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Simple Math of Bank Horse-Puckey

April 23, 2017

The Raw Deal
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.
After a brief moment, we locked the door behind us and got into our car.  Springtime southern California mornings are exquisitely pleasant.  The early morning drive to downtown Los Angeles, on the other hand, is exquisitely painful.
Nonetheless, we make the best of it like we make the best of a trip to the dentist – or a visit with our accountant.  If anything, it affords us the opportunity to do something most people rarely do.  In particular, it gives us time to think.  Before we knew it we’d reached our destination.  But not before uncovering half dozen unrectified incongruities.  The sorts of things that are futile to piece together.
One thing that stuck in our craw like a broken chicken bone is the raw deal main street depositors and lenders get from credit unions and commercial banks.  In short, the credit system is tilted against them.  The rules of the game favor the bankers.

And this is what they saw watching the sky from Mt.

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Hell To Pay

April 18, 2017

Behind the Curve
Economic nonsense comes a dime a dozen.  For example, Federal Reserve Chair Janet Yellen “think(s) we have a healthy economy now.”  She even told the University of Michigan’s Ford School of Public Policy so earlier this week.  Does she know what she’s talking about?

Somehow, this cartoon never gets old… – Click to enlarge
If you go by a partial subset of the ‘official’ government statistics, perhaps, it appears she does.  The unemployment rate is at 4.5 percent, which is considered full employment.  What’s more, inflation is ‘reasonably close’ to the Fed’s 2-percent inflation target.  But what does this mean, really?
According to Fed Chair Yellen, it means that now’s the time to tighten up the nation’s monetary policy.
By now you’ve likely seen this upcoming – choice – quote from Yellen.  Nonetheless, we can’t resist repeating its remarkable idiocy.  For Yellen, who was in the greater Detroit metropolitan area, was kind enough to humor us all with a nifty automotive analogy to explain how to go about normalizing monetary policy.

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March to Default

March 25, 2017

Style Over Substance
“May you live in interesting times,” says the ancient Chinese curse.  No doubt about it, we live in interesting times.  Hardly a day goes by that we’re not aghast and astounded by a series of grotesque caricatures of the world as at devolves towards vulgarity. Just this week, for instance, U.S. Representative Maxine Waters tweeted, “Get ready for impeachment.”

[embedded content]
Well, Maxine Waters is obviously right – impeaching the president is an urgent task of the utmost importance. As everybody knows, he is best friends with Vladimir Putin, the shirtless barbarian who rules the Evil Russian Empire (they were seen drinking kompromat together in Moscow, a vile Russian liquor that reportedly tastes a bit like urine. Senator McCain has the details on that story). And as Maxine Waters has just disclosed, Putin’s armies are recently advancing into Korea! We cannot let this stand, or he’ll invade Kekistan next (note that he already controls Limpopo and Gabon). Who knows where it will end?

We assume this was directed at President Trump.  But what Waters meant by this was sufficiently vague.  There was no guidance as to how President Trump should be getting ready.

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The Long Run Economics of Debt Based Stimulus

March 18, 2017

Onward vs. Upward
Something both unwanted and unexpected has tormented western economies in the 21st century.  Gross domestic product (GDP) has moderated onward while government debt has spiked upward.  Orthodox economists continue to be flummoxed by what has transpired.

What happened to the miracle? The Keynesian wet dream of an unfettered fiat debt money system has been realized, and debt has been duly expanded at every opportunity. Although the fat lady has so far only cleared her throat (if quite audibly, in 2008) and hasn’t really sung yet, it is already clear that calling this system careening toward a catastrophic failure. – Click to enlarge
Here is the United States, since the turn of the new millennium (starting January 1, 2001) real GDP has increased from roughly $10.5 trillion to $18.6 trillion, or 77 percent.  Over this same time government debt has spiked nearly 250 percent from about $5.7 trillion to $19.9 trillion.  Obviously, some sort of reckoning’s in order to bring the books back into balance.
Throughout this extended episode of economic and financial discontinuity, the government’s solution to jump-starting the economy has been to borrow money and spend it.  Thus far, these efforts have succeeded in digging a massive hole that the economy will somehow have to climb out of.

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When Trumponomics Meets Abenomics

February 11, 2017

Thirty Year Retread
What will President Trump and Japanese Prime Minister Shinzo Abe talk about when they meet later today? Will they gab about what fishing holes the big belly bass are biting at? Will they share insider secrets on what watering holes are serving up the stiffest drinks? [ed. note: when we edited this article for Acting Man, the meeting was already underway]
Indeed, these topics are unlikely. Rather, what they’ll be discussing is cooperative trade, growth, and employment policies between their respective national economies. They’ll also talk about currency debasement opportunities.
Soon enough, perhaps by the time you read this, you’ll be able to peruse the headlines and garner soundbites of their discussions. Maybe a new partnership will be announced. Anything’s possible.
Regardless, what follows is a brief review – a thirty year retread – that’s intended to put the meeting within its proper context. This is the back story you won’t hear anywhere else…
To begin, it was precisely the wrong thing to do at precisely the wrong time. But that didn’t stop the best and the brightest from attempting to improve upon the natural order of things.

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Don’t Blame Trump When the World Ends

February 4, 2017

Alien Economics
There was, indeed, a time when clear thinking and lucid communication via the written word were held in high regard. As far as we can tell, this wonderful epoch concluded in 1936. Everything since has been tortured with varying degrees of gobbledygook.
One should probably not be overly surprised that the abominable statist rag Time Magazine is fulsomely praising Keynes’ nigh unreadable tome. We too suspect that this book has actually lowered the planet-wide IQ – in fact, similar to Marx’ Das Kapital, it has done permanent damage. We have to admit that we have read it ourselves (and what a slog it was!) – contrary to Keynes himself, who once published a scathing critique of Mises’ Theory of Money and Credit without reading even one word of it, we prefer to actually read what those we criticize have published. In the first German edition of the book, Keynes freely admitted that his policy recommendations were probably more useful for a totalitarian State than a free society (i.e., it would be easier to implement them, because of their coercive nature). The biggest problem is though that most of the book is a rehash of hoary inflationist ideas that were already long refuted by the time of its publication.

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Adventures in Currency Debasement

January 30, 2017

Rekindling the Dollar Debasement Strategy
The U.S. dollar, as measured by the dollar index, has generally gone up since mid-2014. The dollar index goes up when the U.S. dollar gains strength (value) against a basket of currencies, including the euro, yen, pound, and several others. Conversely, the dollar index goes down when the U.S. dollar loses value.
Between July 30, 2014 and December 28, 2016, the dollar’s value, as measured by the dollar index, increased from 79.78 to 103.30 – or 29 percent. Since then, the dollar index has dropped to about 100. In addition, President Trump has said that the dollar is “too strong” and Treasury Secretary Steven Mnuchin has called the dollar “excessively strong.”
President Trump wants a weaker dollar to help with his program of bringing manufacturing jobs back to the U.S. The rationale is simple enough. A weaker dollar should make U.S. exports more attractive on international markets. Similarly, a weaker dollar should make foreign imports more expensive for U.S. consumers so they’ll buy products Made in USA.
Unfortunately, the unintended consequences of currency debasement – such as price inflation, currency wars, moral decay and others – are more destructive to a nation’s wealth than any trade advantage that can be garnered.

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With Trump Optimism of Small Business Soars

January 28, 2017

Pledges for Trump
“You boys know what makes this bird go up?  Funding makes this bird go up.  That’s right.  No bucks, no Buck Rogers.”
– Gordon Cooper and Gus Grissom, The Right Stuff (film)

Things are looking up for the United States economy in 2017.  You can just feel it.  Something great is about to happen.

Sam Sheppard in “The Right Stuff” – a 1983 docudrama about the Mercury 7 program and “the seats-of-the-pants approach of the people involved in the space program” (according to IMDB).

Photo credit: Ladd Company – Click to enlarge
Earlier this week, for example, after meeting with the incoming President, Bayer and Monsanto announced they will spend at least half of their agriculture research and development budget – approximately $8 billion – in the U.S. over the next six years.  It’s estimated the combined efforts of these two companies will add 3,000 new U.S. high-tech jobs.
Wal-Mart and General Motors also made job and investment pledges for Trump.  Wal-Mart said they’ll add 10,000 jobs this year.  General Motors announced $1 billion in investment, which would generate 1,500 U.S. jobs. Following these pledges, Trump tweeted:
“Thank you to General Motors and Walmart for starting the big jobs push back into the U.S.

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Trump’s Plan to Close the Trade Deficit with China

January 14, 2017

Rags to Riches
Jack Ma is an amiable fellow.  Back in 1994, while visiting the United States he decided to give that newfangled internet thing a whirl.  At a moment of peak inspiration, he executed his first search engine request by typing in the word beer.
The search results had such a profound impact on Ma that he returned home to China and immediately started his first internet business.  After several tries he hit it big with Alibaba.  So much so that he’s accumulated a net worth of $27.1 billion USD – over 7.3 times more than President-elect Trump.  Not a bad rags to riches story for a poor Chinese school teacher.
Indeed, Ma takes a shrewd, yet casual, approach to business.  Back in 2014, he got a little sozzled up and bought China’s most popular soccer team from fellow Chinese billionaire Hui Ka Yan.  All in all, the soccer team purchase only cost Ma $192 million. As Yan recounted  of how the deal with Ma went down:
“By accident I got him drunk.  I told him my Evergrande soccer team is planning to issue shares and raise money to support strategic development, will you join?  He said I will. We finished it in 15 minutes.”
One of the great marvels of life is the direction in which money flows.

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Global Recession and Other Visions for 2017

January 2, 2017

Conjuring Up Visions
Today’s a day for considering new hopes, new dreams, and new hallucinations.  The New Year is here, after all.  Now is the time to turn over a new leaf and start afresh. Naturally, 2017 will be the year you get exactly what’s coming to you. Both good and bad.  But what else will happen?
Here we begin by closing our eyes and slowing our breath.  We let our mind role back into the gray matter of our brain.  We wait patiently for new neurological connections to open up.  Then, ever so subtly, visions of the year ahead come into focus.
Will stocks go up or down?  What about gold and Treasury bonds?  Will the economy expand or contract?  Are we fated for World War III?  Who will win the Super Bowl? These are the questions – and more – we intend to answer.
Obviously, conjuring up visions is more art than science.  But so is Fed monetary policy. Nonetheless, before we get to it we must first lean upon ancient Chinese Philosopher Lao Tzu for a full disclaimer:
“Those who have knowledge, don’t predict.  Those who predict, don’t have knowledge.”
Hence, what follows comes from a place of zero knowledge.  We know nothing.  Still we sharpen our pencils and face our limitations.

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Why the Fed Destroyed the Market Economy

January 1, 2017

What Have You Done for Me Lately?
Swing voters are a fickle bunch.  One election they vote Democrat.  The next they vote Republican. For they have no particular ideology or political philosophy to base their judgment upon.

Swing VotersSwing Voters – Click to enlarge

Humphrey-Hawkins Act: Fed’s Dual Mandate
The Humphrey-Hawkins Act of 1978 expanded the Fed’s job, charging it with maintaining full employment, too. The Fed shouldered this new responsibility with the lusty enthusThey don’t give a rip about questions of small government or big government.  Nor do they have any druthers about the welfare or warfare state.
In effect, they really don’t care.  What’s important to the swing voter is much simpler.  In fact, it can be boiled down to the following essential question.  What have you done for me lately?
The answer to this question, of course, comes back to money.  As far as the swing voter’s concerned, if their brokerage account’s growing they vote the incumbent party.  If it’s shrinking, they vote the challenger party.
It doesn’t matter if the source of the stock market inflation is a fraud.  Nor does it matter that a stock market correction will help reestablish financial markets on a firmer foundation.

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Wreck the Halls

December 30, 2016

Arrested Development
Despite the best efforts of the bulls to make history happen, they’ve been unable to ‘git-r-done.’  At the time of this writing, the Dow is facing another bout of arrested development; it has yet to notch 20,000 for the very first time.
What a feat it will be when this remarkable, but trivial, event comes to pass.  After a near eight year run, the Dow will likely eclipse this exquisitely round numeric threshold in the very near future.  Shouldn’t such an achievement – and the associated wealth effect – have made us all rich?
Apparently not.  For on the other side of the ledger a distinct, yet somehow related milestone is imminently approaching.  The U.S. National Debt is at $19.9 trillion.  Soon it will surpass a round and rotund $20 trillion.
The reality, however, is that the national debt exceeded $20 trillion a long time ago.  In fact, it’s really over 600 percent higher.  Remember, unfunded liabilities, including Social Security and Medicare, currently total over $104.5 trillion.
Added together the national debt and current unfunded liabilities total $124.4 trillion.  Verily, this number is so large it’s nigh impossible to comprehend.  Thus, for simplicity and for the sake of numerological harmony, today’s reflections are limited in breadth and scope to Dow 20,000 and U.S.

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Has the Fed Turned “Hawkish?”

December 18, 2016

Juiced
Stimulus, in a general sense, is something that causes an action or response.  A ringing alarm clock may prompt someone to exit their slumber.  Or a fist to the gut may force someone to gasp for breath.
Stimulus can come in many forms and varieties.  It can come in the form of a stick; do this and you won’t get whacked over the head.  So, too, it can come in the form of a carrot; do that and you’ll get a reward.

A classic case of gut-punch stimulus application. Now, all you have to do is imagine that the big person being stimulated is the economy. What should be your next question? Right! Will it achieve escape velocity? – Click to enlarge
Other forms of stimulus can produce a short, burst like, reaction. The caffeine in a cup of coffee, for instance, will temporarily reduce drowsiness.  Yet once the caffeine wears off, more coffee is needed to sustain the effect.
Former professional baseball player, and all around dirt bag, Jose Canseco knows a thing or two about stimulus.  Not from what someone has taught him.  But from what he learned through real world experience.  He literally wrote the book on it.

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Smart Programs of Capital Destruction

December 12, 2016

Too Smart to Think
These days everything must be smart.  There are smart cities, smart grids, smart policies, smart TVs, smart cars, smart phones, smart watches, smart shoes, and smart glasses.  There’s even something called smart underwear.
Before long everything around us will be so smart we’ll no longer have to do one critically important thing.  We’ll no longer have to think; smart algorithms will think for us.  What’s more, the possibilities for not thinking are seemingly limitless.
Just this week, for instance, in an effort to sound smart, Chicago Fed President Charles Evans indirectly advised President elect Donald Trump that fiscal policy must be “smart.”  Presumably, what Evans means by this is that fiscal policy must not be “stoopid.”

Modern-day wedgie-proof thinking drawers. How was life even possible before them? An area of the body not usually known for its thinking prowess is suddenly smarting up! – Click to enlarge
Fortunately, New York Fed President William Dudley clarified how smart fiscal policy would work.  According to Dudley, smart fiscal policy would include spending programs that are automatically triggered by a recession.  Specifically, Dudley said
“Extensions of unemployment compensation and cuts in payroll taxes could be triggered by a downturn.

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Smart Programs of Capital Destruction

December 12, 2016

Too Smart to Think
These days everything must be smart.  There are smart cities, smart grids, smart policies, smart TVs, smart cars, smart phones, smart watches, smart shoes, and smart glasses.  There’s even something called smart underwear.
Before long everything around us will be so smart we’ll no longer have to do one critically important thing.  We’ll no longer have to think; smart algorithms will think for us.  What’s more, the possibilities for not thinking are seemingly limitless.
Just this week, for instance, in an effort to sound smart, Chicago Fed President Charles Evans indirectly advised President elect Donald Trump that fiscal policy must be “smart.”  Presumably, what Evans means by this is that fiscal policy must not be “stoopid.”

Modern-day wedgie-proof thinking drawers. How was life even possible before them? An area of the body not usually known for its thinking prowess is suddenly smarting up! – Click to enlarge
Fortunately, New York Fed President William Dudley clarified how smart fiscal policy would work.  According to Dudley, smart fiscal policy would include spending programs that are automatically triggered by a recession.  Specifically, Dudley said
“Extensions of unemployment compensation and cuts in payroll taxes could be triggered by a downturn.

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Attaining Self-Destruct Velocity

December 3, 2016

Bad Monday
Some Monday mornings are better than others.  Others are worse than some.  For one Amazon employee, this past Monday morning was particularly bad.
No doubt, the poor fellow would have been better off he’d called in sick to work.  Such a simple decision would have saved him from extreme agony.  But, unfortunately, he showed up at Amazon’s Seattle headquarters and put on a public and painful display of madness.
From what we gather, upon arrival, he blasted out an email to hundreds of coworkers, including Chief Executive Officer Jeff Bezos, outlining several reservations he had with the terms of his “Performance Improvement Plan”.
After that, he executed a flawless swan dive off Amazon’s 12-story Apollo building, presumably to his death. Yet, somehow, he didn’t die.  He lived.  What now?
Quite frankly, we don’t quite know what this has to do with the economy by and large.  But we have an inkling there may be some relevance.  Perhaps it has something to do with an economy that is approaching self-destruct velocity, where every action has a far more negative reaction.

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Celebrating this Land of Absurdity

November 26, 2016

Myths and Legends
“Myths and legends die hard in America,” remarked Hunter S. Thompson in The Great Shark Hunt, nearly 40-years ago.
Uncompromising independence, rugged individualism, and unbounded personal freedom were once ideals essential to the American character. According to popular American folklore, they still are. We have some reservations.
In practice, the principles that gave rise to the great myths and legends of America died long ago. Freedom. Liberty. Independence. Limited representative government. Sound money. Private property rights. A humble and esteemable populace. Avoidance of foreign entanglements. Rafting down the Mississippi River.

Money Sucking Vortex
These concepts, in reality, faded away from daily life over the last century like stars in the morning. Over the last 100 years Washington has become a sort of money sucking vortex. At the Capitol Building sits a cadre of legislatures and an army of staffers working up new laws to take your money.
New rules, proposed rules, and notices are published daily in the Federal Register. A quick read of the daily publication – presently about 80,000 pages – will enlighten and alarm you to the vast array of agencies, departments, and commissions and their vast array of daily nonsense.

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