Archive for the ‘Economy / Markets’ Category

Nothing About this Economy Is Surprising

Nothing About this Economy Is Surprising“Insanity: doing the same thing over and over again and expecting different results.” — Albert Einstein

This Einstein platitude is so overused that I’m somewhat embarrassed to be planting it at the beginning of this article. But then I think about how utterly applicable it is to this piteous disaster we still call the global economy, and its presence becomes profoundly justifiable. Read On…

When the Dollar Collapses, Where Will You Put Your Money?

When the Dollar Collapses, Where Will You Put Your Money?Over the last several years, I have written a multitude of articles about my conviction that the global economy is destined to collapse on a scale humanity has never experienced before. But contrary to some insinuations, my primary objective with these articles is not to create fear and panic. My goal has always been to disseminate these theories to an audience capable of returning debate and criticism. If I am correct, I would hope to prepare at least some small contingency of readers; as a species, I am convinced human beings must find a new way of doing things — because the consequences of the old ways are descending upon us like a maelstrom. So I ask: when the dollar collapses, where will you put your money? Read On…

Bitcoin Adoption and Name-Brand Recognition

Bitcoin Adoption and Name-brand RecognitionSince the advent of Bitcoin in 2009 — and the subsequent rise of thousands of ancillary imitators using the same algorithm — there hasn’t been much interest in the technology from big corporations around the globe. This isn’t surprising; the instruments are new, risky, and their collective goal is to decentralize and reduce the costs of global capital transfers. This presents huge potential threats to existing payment systems, and it stands to reason that any firm with a considerable market capitalization might want to take a wait-and-see approach.

For companies with sufficient capital and patience, however, there are opportunities developing that have gone unnoticed so far. The cryptocurrency market is maturing quickly. I believe the entire world is about to seriously consider the implications and potential of Bitcoin adoption and name-brand recognition. Read On…

Bitcoin Can Save Publishing

Bitcoin Can Save PublishingJust as the advent of the personal computer heralded the end of the era of the typewriter, so too did the adoption of a global internet spell doom for print media. Of course, tablets and ebooks did their fair share of damage to paper-based information, as well. But regardless, the paradigm shift is in process: newspapers are closing around the globe, and media companies are struggling to find revenue models that work. With the advent of cryptcurrencies, however, micropayments have become a reality — and it’s starting to become clear that Bitcoin can save publishing. Read On…

The Treasury Bubble Blows On

The Treasury Bubble Blows On“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.” — Alan Greenspan

Before he sold his soul and renounced free market economics, Alan Greenspan was one of my heroes, and the above quote exemplifies why. Read On…

Still, the Dollar is Doomed

the dollar is doomedI get a lot of inquiries about my continued position on the dollar and U.S. debt — mainly because I have so steadfastly and consistently proclaimed that the economy cannot sustain the sort of growth western nations have enjoyed for the last century. And yet stock markets continue to climb, and debt yields remain low. Things seem to be going well, but I maintain that still, the dollar is doomed. My detractors clamor for me to finally and unequivocally admit defeat — to concede that I have been wrong in all my economic prognoses. Read On…

Japan, the U.S., and Quantitative Easing

Japan, The U.S., and Quantitative Easing“When future historians look back on our way of curing inflation, they’ll probably compare it to bloodletting in the Middle Ages.” – Lee Iacocca

Japan, the U.S., and Quantiative Easing…

For those of you who aren’t familiar with quantitative easing: it is the important-sounding way central banks manage the economy through monetary policy. The most common way is by manipulating the rate at which they loan to other banks; when the economy is running too hot, the central bank will raise the rate at which it loans money — thereby discouraging borrowing and capital investment. Likewise, if the economy is in the tank a central bank can lower the rate at which it lends to other banks, thereby encouraging borrowing and capital investment in the economy. Read On…

The Imminence of Economic Catastrophe

The Imminence of Economic Catastrophe“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.’ There has never been any attempt to abandon the credit expansion. Indeed any crisis was simply an excuse to open the monetary spigots. This, then, is the beginning of the total catastrophe of the American dollar, indeed the entire world monetary and financial structure.” – Ludwig von Mises

The more I read, the more appalled I become. I am terrified by the imminence of economic catastrophe; it may take years, but as I look around at the general level of ignorance and hubris in the United States today, I can’t help but thinking — yet again — that we deserve what’s coming. Read On…

Fighting the Recession: An Ill Wind Indeed

Fighting the Recession: An Ill Wind Indeed“[It is an] ill wind which blows no man good.” – William Shakespeare

Fighting the recession: an ill wind indeed!

I don’t know what I did before YouTube. With just a few mouse clicks, I can pull up literally hundreds of interviews, editorials, and broadcasts about anything that suits my fancy. And lately, my fancy consists of interviews with some of the most vocal and compelling philosophical, and financial minds daring to speak out against the atrocious fiscal policies the U.S. is employing to battle this economic crisis. Read On…

The Death of the Dollar

The Death of the Dollar“We have experienced asset bubbles, and we now have an economy that is more highly leveraged than it ever has been in the post-World-War II period. Greenspan has been instrumental in bringing about this high leverage.” – Paul Kasriel

“A dollar saved is a quarter earned.” – John Ciardi

I have been an analyst, a portfolio manager, and a financial writer for more than 18 years, and until early last year my focus was almost exclusively on individual stocks and value investing. In my book Discipline, however — which I completed in 2001 and published in 2007 – I took a more macro stance, predicting an economic collapse resulting in the death of the dollar and a Soviet-style break up of the country. Read On…

Gold is Safer Than Treasuries as a Hedge Against Inflation

Gold is Safer Than Treasuries as Hedge Against Inflation“Truth, like gold, is to be obtained not by its growth, but by washing away from it all that is not gold.”  — Leo Nikolaevich Tolstoy

Any time an asset increases in dollar terms, you have to ask yourself two questions:

1. Is the asset rising alone, relative to the rest of the economy?

2. Or is the asset rising in value along with everything else in the economy?

These two questions have led me to believe that gold is safer than Treasuries as a hedge against inflation. Read On…

We Are Not Experiencing Consumer-driven Deflation

We Are Not Experiencing Consumer-driven Deflation“Inflation is the senility of democracies” – Sylvia Townsend Warner

If you ask the average person to define inflation, you invariably get this response: “Rising prices.” Similarly, the same person would likely define deflation as “falling prices.” But both answers are incorrect; in fact they are gross misrepresentations of the words. And this simple but popular misconception is the root of every single economic problem we face today: we are not experiencing consumer-driven deflation. Read On…

An Artificial Economy

An Artificial Economy“Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. . . . To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection — a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end. . . . It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression. We must not forget that, for the last six or eight years, monetary policy all over the world has followed the advice of the stabilizers. It is high time that their influence, which has already done harm enough, should be overthrown.” –Friedrich August von Hayek (1932)

Your government is creating bubbles all around you, in an artificial economy.  Read On…

Outpacing Inflation

Outpacing Inflation“Excess capacity is temporarily suppressing global prices. But I see inflation as the greater future challenge.” – Alan Greenspan, June 25, 2009

“The US economy may witness double-digit inflation in a few years unless the central bank tightens up its monetary policy… Unless we roll in this whole degree of expansion, we will be in trouble… I am not talking 3-5 per cent inflation, I am talking double-digit inflation in the US.” – Alan Greenspan, September 9, 2009

Alan Greenspan was, in his prime, an economist nonpareil. Recently, however, he shocked many of us by submitting to a political machine that needed to find a scapegoat for the recent economic nightmare. Read On…

Short the USA

Short the USA“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” – John Maynard Keynes

I am lucky to have friends. But it’s not merely the number of people I can count among their ranks that makes me lucky — it is the sheer magnitude of their knowledge and experience. And yet at the same time, my friends — in the aggregate — exhibit a remarkably wide array of beliefs and perspectives. I endure a lot of criticism from them for my theories — most notably my belief in the imminent failure of our current economic system, and the fact that (at least financially), I am short the USA. Read On…