Tag Archives: Featured

I have written previously about the interest rate, which is falling under the planning of the Federal Reserve. The flip side of falling interest rates is the rising price of bonds. Bonds are in an endless, ferocious bull market. Why do I call it ferocious? Perhaps voracious is a better word, as it is gobbling up capital like the Cookie Monster jamming tollhouses into his maw. There are several mechanisms by which this occurs, let’s look at one here. Artificially low interest makes it...

In last week’s article, we explained how the yield curve could cause GDP to contract in The Yield Curve and GDP – a causal relationship. Some of our readers suggested the analysis was wrong on back of an outdated view of modern money creation. The critics claim modern banks are not dependent on central bank reserves to create additional money; citing a Bank of England article from 2014 (which we have been well aware of) [A] common misconception is that the central bank determines the...

Many people agree that it’s important to move to a free market in money (i.e. the gold standard). They also say that it’s just as important to fight bad taxes and regulation. In their view, government interference in the economy is like friction in a car. The more friction you add, the slower the car goes. One source of friction is much the same as any other. Let me explain why it doesn’t quite work that way, using a few examples. Suppose the government imposes an expensive tax on employers...

According to John Henry Smith, fund managers are too much focused on bench-marking their performance to a market index, over-emphasizing the importance of “alpha”. But asset managers should abstract from alpha and construct portfolios that have lower risk and higher return than the market. Impossible? This post is the second part of The Fallacies of Portfolio Volatility Measurements. The Market Return For reasons of consistency, fund managers are primarily focused on benchmarking their...

Keith Weiner, chairman of the Gold Standard Institute United States, will be presenting in Zurich, this Wednesday, October 14 at 18.30. Title: Our Monetary System is Failing, and what we can do against it We hope that the Swiss National Bank will remain safe, during the collapse of the monetary system. We fear the collapse because money flows will direct towards Switzerland again and threaten the solvability of our central bank. Some background in English on the letter to Tsipras, in...

First week of February: Speculators are closing down their short positions on the euro– both against the dollar and against CHF. The carry trade is breaking down into a reverse carry trade. This leads to a strengthening of the euro versus CHF. Given that US data was better than expected, the speculative USD against CHF position should further augment. It was at 4600 contracts versus CHF.No SNB interventions: Sight deposits decreased slightly by 0.2 billion CHF, this implies that the SNB is...

Sehr geehrter Premierminister Alexis Tsipras, Zunächst herzlichen Glückwunsch zur neu gebildeten Regierung.Leider hat sich damit nicht viel geändert. Der Euro bietet seit langem Griechenland einen perversen Anreiz Geld zu leihen. Nun ist Ihr Land in der Schuldenfalle. Durch herkömmliche Mittel kann Griechenland nicht zurückzahlen. Je früher man diese einfache Tatsache anerkennt, desto besser. Die Troika droht die Kosten des Ausscheidens aus dem Euro zu maximieren. Sie kann den Zugang zu...

We’re going to be introducing some new formats. One of them is quick article links, with the good ones labelled Pure Gold and the bad ones labelled Soggy Dollars. Pure Gold When a Fed-induced boom turns to bust: “In the lynch-mob atmosphere that inevitably follows the bust cycle of Fed-induced business cycles, it was not hard to convince Americans that the corporate bankruptcies and the subsequent recession were the handiwork of criminal executives.” Of course, this sentiment prevails...

Standard deviation (sigma σ) measures volatility or the dispersion of random values around the mean of a variable such as a portfolio or individual stock prices, but does not measure the direction of a trend. Standard Deviation as volatility measure What has become the bedrock of finance is an out-of-date almost universally accepted finance theory, which uses the statistical normal distribution (the Gaussian bell curve) as the measure of risk per se. In reality stocks are found not to be...

In the famous Sherlock Holmes Story, the detective identified the perpetrator from the fact that a dog didn’t bark. The dog didn’t bark because it knew the perpetrator. This story makes a good analogy to what happened on Thursday, Sep 17. Perhaps I should say what did not happen. The Fed did not raise the interest rate. In fact, the Fed would bankrupt itself if it tried to raise rates significantly. However, it had set everyone’s expectations that it would hike interest. It risks losing...