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Recent Posts

Disasters Can Happen

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Is A Crash Imminent? -MN Gordon

Destination Mars

by MN Gordon

Economic Prism

Asset Price Levitation

One of the more preposterous deeds of modern central banking involves creating digital monetary credits from nothing and then using the faux money to purchase stocks.  If you’re unfamiliar with this erudite form of monetary policy this may sound rather fantastical.  But, in certain economies, this is now standard operating procedure.

For example, in Japan this explicit intervention into the stock market is being performed with the composed tedium of a dairy farmer milking his cows.  The activity is more art than science.  Similarly, if you stop – even for a day – pain swells in certain sensitive areas.

In late April, a (Read More....)

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Larry Summers Wants to Give You a Free Lunch

by MN Gordon

Economic Prism

Consequences of Central Bankers

The existing capital stock continues to be frittered away at the expense of savers and retirees.  Nonetheless, central bankers don’t give a doggone about it.  This, after all, is one consequence of roughly eight years of near zero interest rate policy.

Another related consequence is that the pricing equilibrium of capital markets has broken down.  In particular, bond yields no longer reflect a market determined price of money established by the economy’s demand for credit.  Hence, previously unfathomable interest rate movements are now happening with regular occurrence.

Presently, the yield on the 10-Year U.S. Treasury note is sliding into the abyss.  On Wednesday a new record low yield of 1.34 percent was reached.  This is the lowest historical (Read More....)

. . . → Read More: Larry Summers Wants to Give You a Free Lunch

Celebrating this Land of Absurdity

Celebrating this Land of Absurdity

by MN Gordon

Economic Prism

Myths and Legends

“Myths and legends die hard in America,” remarked Hunter S. Thompson in The Great Shark Hunt, nearly 40-years ago.  Thompson didn’t likely have U.S. Treasury bonds in mind when he made this observation.  Though, if he were still alive, he may find the present state of the great Treasury bond bubble to be an amusing anecdote.

On Monday the yield on the 10-Year Treasury note touched down at 1.45 percent.  This is but a scant distance from the 1.39 percent yield reached in July 2012.  What compels someone of sound mind and honest convictions to give their hard earned money to the government for 10-years for just a 1.45 percent yield?

Is it the myth that U.S. Treasuries are the safest – default-free – investment in the world?  Is it the legend of (Read More....)

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Quitting the Cucumber Affair

Brexitby MN Gordon

Economic Prism

Vince Lombardi, the famous American football coach, once said, “Winners never quit and quitters never win.”  Maybe he meant that winners overcome obstacles to reach their goals while quitters give up and fall short…or something to that effect.

Certainly, this makes for a good bumper sticker.  Perhaps it’s a helpful quote for the first time marathon runner to repeat come mile 20.  Saying it aloud may somehow will them across the finish line.

But what about those who never quit, yet still never win?  By default does that make them losers?  Or are they just stubborn pack mules?

And what about those who never quit despite not knowing what it is they are after to start with?  What does that make them?  Are they lost, confused, or something else?

We suspect there’s no one right answer to these questions.  They are a matter of opinion.  Each (Read More....)

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Down Goes the Hopes and Dreams of Three Generations

Economic Collapse Picture Credit Pixabayby MN Gordon

Economic Prism

A Sucker’s Deal

The yield on the 10-Year Treasury note’s accelerating its descent toward zero.  The last we checked the yield was at about 1.56 percent.  But in every practical sense, for income investors, a yield of 1.56 percent may as well be zero.

For example, at that rate, if you gave the government $1,000, you’d earn $156 over the next 10 years.  That comes out to just $15.60 per year.  As far as we can tell, that’s a sucker’s deal.

What’s more, it’s likely inflation will significantly erode the buying power of the initial principle.  Using the government’s own highly understated (Read More....)

. . . → Read More: Down Goes the Hopes and Dreams of Three Generations

How to Maximize Economic Potential

Investmentsby MN Gordon

Economic Prism

Scratching the Surface

Problems, as people commonly perceive them, require solutions.  Broken shoelaces must get fixed.  Regrettably, in today’s democracy this means the candidate who offers the most fixes – in the form of goodies – to the most people wins the election.

The Gallop poll reported earlier this week that 18 percent of U.S. adults believe the “economy in general” is the most important problem facing the country.  This was followed by 13 percent who believe “dissatisfaction with government” is the top (Read More....)

. . . → Read More: How to Maximize Economic Potential

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