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Recent Posts

Disasters Can Happen

Prepare for the Unthinkable

by MN Gordon

Economic Prism

Red Ink

Growth and profits mask a variety of problems.  They hide business inefficiencies and the money suck of corporate administrivia.  They also conceal unproductive staff.

But most of all growth and profits obscure the extreme value subtracting forces of bloated management teams.  During good times it is unclear what these smug fellows do.  During bad times it is lucidly clear that most of them ain’t worth a darn.

When the profits inevitably recede, the senior executives, with their silly 24 point project reviews and cumbersome project execution requirements, appear lost.  They’re left exposed, with their pants down, and without a clue in the world as to what business it is they’re actually in.  What the heck have they been doing all this time?

Where does the money come from?  How is it spent?  Over (Read More....)

. . . → Read More: Prepare for the Unthinkable

Mass Money Debauchery

by MN Gordon

Economic Prism

Debauchery

The present day offers the opportunity for many incredible experiences.  Perhaps one of the most rewarding of all is bearing witness to the final days before the greatest economic crackup the world’s ever known.  Not since Nero clipped coins in 64 A.D. and fiddled as Rome burned has there been such an intolerable collection of dingleberries in imperial office.

John Maynard Keynes, the godfather of modern day economic planning, in his 1919 work, The Economic Consequences of the Peace, wrote: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.”

Incidentally, Keynes attributed this acute insight to another innovative central planner, one Vladimir Lenin.  Regrettably, these two visionaries predicted today’s present state of affairs with remarkable (Read More....)

. . . → Read More: Mass Money Debauchery

Should we buy an extra bag of rice and an additional roll of toilet paper to stock in the pantry?

Emergency FoodYarns, Mysteries, and the CPI

by MN Gordon

Economic Prism

No CPI Change

Several ill-defined economic waypoints were unveiled this week.  Namely, the Labor Department’s July consumer price index report.  According to the government data, on (Read More....)

. . . → Read More: Should we buy an extra bag of rice and an additional roll of toilet paper to stock in the pantry?

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 (Read More....)

. . . → Read More: Celebrating this Land of Absurdity

Earthquake Economics

United-States-Helpby MN Gordon

Economic Prism

“The United States of America, right now, has the strongest, most durable economy in the world,” said President Obama, in his State of the Union address, on Tuesday night.  What performance metrics he based his assertion on is unclear.  But we’ll give him the benefit of the doubt.

Maybe this is so…right now.  But it isn’t eternal.  For at grade, hidden in plain sight, a braid of positive and negative surface flowers indicate an economic strike-slip fault extends below.  What’s more, the economy’s foundation dangerously straddles across it.

Something must slip.  A massive vertical rupture is coming that will collapse everything within a wide-ranging (Read More....)

. . . → Read More: Earthquake Economics

Life After ZIRP

Pixabay Bailouts, USA Debt, by MN Gordon

Economic Prism

Federal Reserve Chair Janet Yellen finally made good on her promise.  On Wednesday she raised the federal funds rate to a target range of 0.25 to 0.5 percent.  Can you believe it?

After nearly a decade since the last rate hike, and seven years of zero interest rate policy (ZIRP), Yellen stiffened up her spine and did the dirty deed.  But, of course, she also placed a hedge.  She assured Wall Street she was in no hurry to cut off their liquidity.  Here’s a brief excerpt from the FOMC statement

“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.  However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming (Read More....)

. . . → Read More: Life After ZIRP

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