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Disasters Can Happen

Why The US Federal Debt Isn’t Sexy Enough To Carry Interest With The Voter, And The Politicians Know It

by MN Gordon

Economic Prism

Best Case Scenario

“No one really cares about the U.S. federal debt,” remarked a colleague and Economic Prism reader earlier in the week.  “You keep writing about it as if anyone gives a lick.”

We could tell he was just warming up.  So, we settled back into our chair and made ourselves comfortable.

“The voters certainly don’t care about the federal debt,” he continued.  “They keep electing the same spendthrifts to office.

“And the politicians know the voters don’t care.  They also know that making more and more promises is the formula for getting reelected.

“Deep down, the aging masses know they need massive amounts of government debt to pay their social security, medicare, and disability checks.  On top of that, many of the so-called gainfully employed are really on corporate (Read More....)

. . . → Read More: Why The US Federal Debt Isn’t Sexy Enough To Carry Interest With The Voter, And The Politicians Know It

Janet Yellen’s 78-Month Plan for the National Monetary Policy of the United States

by MN Gordon

Economic Prism

Past the Point of No Return

Adventures in depravity are nearly always confronted with the unpleasant reality that stopping the degeneracy is much more difficult than starting it.  This realization, and the unsettling feeling that comes with it, usually surfaces just after passing the point of no return.  That’s when the cucumber has pickled over and the prospect of turning back is no longer an option.

In late November 2008, Federal Reserve Chairman Ben Bernanke committed a fait accompli.  But he didn’t recognize it at the time.  For he was blinded by his myopic prejudices.

Bernanke, a self-fancied Great Depression history buff with the highest academic credentials, gazed back 80-years, observed several credit market parallels, and then made a preconceived diagnosis.  After that, he picked up his desktop copy of (Read More....)

. . . → Read More: Janet Yellen’s 78-Month Plan for the National Monetary Policy of the United States

Fed Quack Treatments are Causing the Stagnation

by MN Gordon

Economic Prism

Bleeding the Patient to Health

There’s something alluring about cure-alls and quick fixes.  Who doesn’t want a magic panacea to make every illness or discomfort disappear?  Such a yearning once compelled the best and the brightest minds to believe the impossible for over two thousand years.

For example, from antiquity until the late-19th century, bloodletting was used to treat nearly every disease.  Reputable medical references recommended bloodletting as a cure for acne, asthma, cancer, epilepsy, gout, indigestion, insanity, leprosy, pneumonia, scurvy, tuberculosis, and everything in between.  Bloodletting was even used to treat hemorrhaging.

The practice was simple enough.  A surgeon, often a barber, would open a vein and drain blood from the patient.  Somehow, this was supposed to cure them of (Read More....)

. . . → Read More: Fed Quack Treatments are Causing the Stagnation

How to Prepare for Another Market Face Pounding

by MN Gordon

Economic Prism

‘Better than Goldilocks’

“Markets make opinions,” goes the old Wall Street adage.  Indeed, this sounds like a nifty thing to say.  But what does it really mean?

Perhaps this means that after a long period of rising stocks prices otherwise intelligent people conceive of clever explanations for why the good times will carry on.  Moreover, if the market goes up for long enough, the opinions become so engrained they seek to explain why stock prices will go up forever.

After nine years of near uninterrupted stock market gains, new opinions are being offered to explain why the stock market will be bathed in sunshine indefinitely.  For example, the late-1990s term Goldilocks is again being used to describe why the slow growth, low unemployment, economy is good for stocks.  Apparently, if an economy is not-too-cold, but (Read More....)

. . . → Read More: How to Prepare for Another Market Face Pounding

Yanking the Bank of Japan’s Chain

by MN Gordon

Based on the simple reflection that arithmetic is more than just an abstraction, we offer a modest observation.  The social safety nets of industrialized economies, including the United States, have frayed at the edges.  Soon the safety net’s fabric will snap.

This recognition is not an opinion.  Rather, it’s a matter of basic arithmetic.  The economy cannot sustain the government obligations that have been piled up upon it over the last 70 years.

In other words, the post-World War II boom is nearly over and the bills are coming due.  What’s more, greater and greater amounts of future growth (Read More....)

. . . → Read More: Yanking the Bank of Japan’s Chain

Views from a Top of the Skyscraper Index

Views from a Top of the Skyscraper Index

by MN Gordon

Economic Prism

Rude Realizations

On a warm Friday Los Angeles morning in spring of 2016, we found ourselves standing at the busy corner of Wilshire Boulevard and South Figueroa Street.  We were walking back to our office following a client wire brushing for events beyond our control.  But we had other thoughts on our mind.

Amongst a mob of pedestrians, we gazed up at the skeleton frame of what would become the Wilshire Grand Center.  For the first time in several years the buzz and hum of diligent building activity was eerily silent.  In fact, construction efforts were shut down for the day.

Sadly, less than 24 hours earlier a distraught electrician had taken a swan dive off the 53rd floor.  The man’s death prompted an immediate work stoppage and evacuation of the (Read More....)

. . . → Read More: Views from a Top of the Skyscraper Index

Congress’s Radical Plan to End Illegal Money

by MN Gordon

Economic Prism

Illegal Money

One of the many downfalls of being the United States Secretary of the Treasury is the requirement to place one’s autograph on the face of the Federal Reserve’s legal tender notes.  There, on public display, is an overt record of a critical defect.  A signature endorsement of a Federal Reserve note by the Treasury Secretary represents their personal ratification of unconstitutional money.

If you recall, Article I, Section 8, of the U.S. Constitution empowers Congress – not the Federal Reserve – to coin money and regulate its value.  What’s more, Article I, Section 10, specifies that money be coined of gold and silver and cannot be bills of credit – such as paper legal tender notes.

As far as we can tell, paper dollars are illegal money on two counts.  First, they’re issued by the Federal Reserve.  (Read More....)

. . . → Read More: Congress’s Radical Plan to End Illegal Money

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