Tag Archives: Debt and the Fallacies of Paper Money

Cartoon by Bob Rich No Surprises BALTIMORE – We were not surprised by the big news last week. We saw it coming. Figures from the Conference Board research group revealed productivity sinking for the first time in three decades. We promised to explain why it was such a big deal. Rate hike fantasies have been a recurring theme since 2009. Given that the market for federal funds is dead as a doornail (banks continue to hold huge excess reserves with the Fed and therefore have no need to...

Steel factory Photo credit: Laurentiu Iordache Victims of the Boom-Bust Cycle The world is drowning in steel – there is huge overcapacity in steel production worldwide. This is a direct result of the massive global credit expansion that has taken place over the past 15 years. Much of this capacity is located in China, but while the times were good, iron ore and steel production (and associated lines of production) was expanded everywhere else in the world as well. Heavy industries like...

  Two of many symptoms of the much-bewailed “populist backlash”… Image via economyincrisis.org Rolling Back 200 Years of Growth BALTIMORE, Maryland – The press reported mixed financial news on Thursday. House sales, oil, unemployment figures… up, down… the news left investors puzzled. Stocks went mostly nowhere. But amid the confusing noise was the sound of an alarm: “Fall in U.S. productivity sparks fears of populist backlash as wages stagnate,” says a lumbering headline in the...

Several months ago, as Venezuela’s hyperinflating, imploding economy was spinning in freefall, leading to the dramatic episodes of total social collapse such as those profiled in “Scenes From The Venezuela Apocalypse: “Countless Wounded” After 5,000 Loot Supermarket Looking For Food“, we wrote that the country which recently had “run out of money to print its own money” was preparing to liquidate its remaining gold holdings to pay coming debt maturities. Then, courtesy of an analysis by...

Image credit: Tesla Motors Tesla Goes Fishing Tesla Motors is up to something remarkable.  But what it is, exactly, is unclear.  According to the Tesla Motors website, the company’s mission is: to accelerate the world’s transition to sustainable transport. Tesla Model 3: the company’s first “mass market” entry so to speak, which is supposed to help the world to reach the nirvana of  “sustainable” transport. On the side, it is helping a number of Wall Street firms to increase their...

Geniuses in Charge BALTIMORE, Maryland – Is there any smarter group of homo sapiens on the planet? Or in all of history? We’re talking about Fed economists, of course. Not only did they avoid another Great Depression by bold absurdity…giving the economy more of the one thing of which it clearly had too much – debt. They also carefully monitored the economy’s progress so as to avoid any backsliding into normalcy. And where do we get this penetrating appraisal? From the Fed economists...

Look at him! How can one not love him! Below the modestly sized image of dear leader Emomali Rahmon, the citizens of Dushanbe are partying to express their joy at the outcome of the recent referendum. Photo credit: AFP Capo for Life! The people of Tajikistan love their president Emomali Rahmon deeply. And as we now know, nearly all of them do. The last time a leader of similarly exalted stature enjoyed such unconditional and unshakable support from the entire citizenry was when comrade...

Not Just Wrong, but Monumentally Wrong Massive flaws at SUNE (Sun Edison) + VRX (Valeant) were somehow missed by both of these high profile/ well resourced hedge funds. Photo credit: Brendan McDermid, Eduardo Munoz / Reuters David Einhorn (Greenlight Capital) and Bill Ackman (Pershing Square) – both fund managers had a terrible year 2015 (down about 20% each), but while Mr. Einhorn has changed his way and righted his ship so far in 2016, Mr. Ackman stubbornly stuck (and at one point...

  It’s all in your head…and that’s where it shall remain! Illustration via thesurvivalchannel.com Who Cares What Voters Want? BALTIMORE, Maryland –  There were two newsworthy developments last week, neither of them really important – the first because it won’t happen, the second because it won’t matter. First, the Fed let it be known that it has “normalcy” once again in its sights. “Prospect of rate rise grows as U.S. moves closer to passing Fed tests,” reported the Financial Times on...

Is the Economy a Machine? A Science Goes Astray Human beings have a strong tendency to look for patterns. The natural sciences have shown that the universe is governed by laws, the effects of which are observable and measurable in an objective manner. Mostly, anyway — there is, after all, the interesting fact that observers are influencing measurements at the quantum level by the act of observation. (For our lives in the “macro” world, however, this is not relevant. An engineer does not...