Many of my detractors insist that hyper-inflationary price increases are impossible in the current global economic environment because asset-classes are falling in value, and therefore price pressure is deflationary. Further, these critics claim that the only way to get to a hyper-inflationary scenario is for currency to get into the economy through the fractional reserve banking system. They contend that, since the velocity of money is extremely low, no currency is getting into the economy through banks, and therefore we cannot have hyperinflation.
When you’ve made a stack 67 miles high, you will have used one-trillion dollars. That should give you some perspective.
Here’s a little more perspective: the United States Government has borrowed $55 trillion. Want to see it another way? $55,000,000,000,000. Read More…
“Inflation can be pursued only so long as the public still does not believe it will continue. Once the people generally realize that the inflation will be continued on and on and that the value of the monetary unit will decline more and more, then the fate of the money is sealed. Only the belief, that the inflation will come to a stop, maintains the value of the notes.”
– Ludwig von Mises
Somebody print this and stick it somewhere safe: this recession / depression will be the metric for all future crashes, economic collapses, and currency failures. It will create global unrest on a level never before seen, and the world order is going to transform as though the whole thing had been thrown in a blender. I predict that, within ten years, Austrian theory will be the basis of all economic and financial curricula in the world. And I believe Keynesian theory will be taught as an obscure history course. Read More…
Welcome to Hamilton’s legacy: the Federalist nightmare.
The clamp is tightening. Your social freedoms are almost gone. Call me a conservative. Call me a liberal. Such labels are misleading, childish, and rigid, and you’ll be wrong either way. I am merely a member of the last bastion of rational thought left in a golden age of knowledge and reason — an age that is slipping away. Read More…
This is an excerpt from Paul Krugman’s latest (February 18) op-ed piece at the New York Times:
Sky-high rate increases make a powerful case for action. And they show, in particular, that we need comprehensive, guaranteed coverage — which is exactly what Democrats are trying to accomplish.
What’s with this guy? How do these people become Nobel Laureates? Of course now I’m going to answer my own question: if it’s politically expedient — and everything Krugman says is — then even the most foolish theoretician will rise through the ranks.
So the next question is this: is Krugman really stupid? Does he really believe this nonsense? Or is he so smart that he recognizes pumping out this drivel is good for his career? I think it’s the latter.
Dear Paul Krugman: Read More…
How many times in the last year have I said Bernanke and his pack of hyenas would need to time time a reversal of Fed policy with the atomic precision? Too many times. So here we are. And the only precise aspect of yesterday’s quarter-point rate hike is the antithetical degree to which it affected markets today; the results couldn’t have been more diametrically contradictory to the Fed’s objective.
First, ask yourself why the Fed would raise rates at all — especially in the middle of the worst economy since the 1930s? There’s no clear indication that investment has been (or is likely to be) reignited. There’s no obvious metric that suggests unemployment intends to do anything but go higher. The velocity of money is near zero and the printing presses are smoking. Housing prices continue to fall, America manufactures almost nothing, and consumers have decided to forgo mall-crawling in favor of huddling and shivering in the living room as the economic universe implodes around them. Read More…
Dear Mr. Robert Kessler. Apparently you are high.
I submit to you, Sir: Treasuries are not safe. And because I question your judgment and your well-being, I’m going to offer this list of other things that are not safe:
- Ford Pintos.
- Veering into oncoming traffic.
- Untreated syphilis. Read More…
Massive U.S. Debt, No Consumer Spending, Government Near Bankruptcy. How Could Treasuries Go Higher?
People say they’re more excited about dying than reading my next article. Hey, don’t kill the messenger. The United States consumer has maxed-out his credit cards, student loans, and HELOCs. He’s not borrowing anymore money.
He’s foreclosing, begging his friends for money, trying to sell his Sea-Doo, his motorcycle, his double-wide, his children, and his Corvette. He’s spending way too much time with his drug dealer, and his wife hates him — mainly because she’s broke too.
Meanwhile, Ben Bernanke and Barack Obama continue to cultivate their new passionate relationship — taxing, spending, printing, and easing as fast as their little engines will perform. But they still haven’t got the message: nobody wants to borrow. Read More…
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 capitalism, Alan Greenspan was one of my heroes, and the above quote exemplifies why. I’m still in shock; the man spent his entire life championing free markets, only to throw it all away near the end. I don’t see how he sleeps at night, knowing history will see him as a sycophantic coward and a political lackey. But that’s a discussion for another day, because right now, guess what I want to talk about? That’s right. Treasuries.
First, Goldman Sach’s chief interest rate strategist in London, Francesco Garzarelli, believes we are not in a Treasury bubble. Do you know how he reached that conclusion? He did it by “mapping one-year ahead macro expectations to long-dated government yields through [Goldman's] Sudoku framework.”
Work with me here. Goldman is predicting bond prices and yields by employing a popular number-puzzle found in daily newspapers? Am I missing something? Look, being short Treasuries is a no-lose trade; no matter what happens, rates are going higher. Read More…
A foolish consistency is the hobgoblin of little minds.
– Ralph Waldo Emerson
I’ve been waiting a long time to use that Emerson quote in one of my articles. Alas, it looks like I’ve finally found my chance.
In case you think your eyes are deceiving you, let me assure you they are not. That is a jacked up smart car. In the midst of an economic depression, imminent inflation, more government spending and excess than ever in history, a so-called healthcare crisis, and a weakening U.S. dollar, it’s good to know that our society can still come up with something like the creation above. And we’re going to talk about that more in a little while. Read More…
I continue to be stupefied by the number of people who actually defend the notion that the United States has its debt under control. This graph doesn’t denote any sort of control whatsoever — unless you believe “control” and “incomprehensibly stupid and irresponsible” are somehow related in meaning. Read More…
Here’s the problem: in 2007 and 2008, mortgage rate-adjustments caused massive foreclosures. But remember, relatively speaking, rates were historically low already. Read More…