Bernanke’s Legacy

You know when they start talking about a politician’s legacy that he is toast. I think that’s what happens when you think you can run the economy and fail. The lesson being that you can’t successfully “run” the economy from the top down. Ben Bernanke has still not learned that.

Bernanke will probably be fired [...]


Bloomberg Accentuates the Positive and Then the Negative the Same Morning

Over the past several years, as the U.S. economy has generally underperformed mainstream expectations, it’s been my observation that when Fedwatchers start looking for tightening or (the modern equivalent) a withdrawal of extreme ease, it’s been a perilous time to be long stocks or short bonds for more than a brief period.  We may be [...]


The Fed’s New ‘Wink-Wink-Nudge-Nudge’ Communications Policy

“gleaning clues about the thinking of Fed officials during private talks can be … valuable to investors making bets on the direction of the economy … making snippets of information as subtle as head nods and body language extremely valuable”


The Wall Street Journal just broke this story about how big [...]


Trouble Ahead: Employment, Inflation, And The Fed

We are at a critical point in the economy as the worlds’ economies continue to decline. Continued high unemployment and a stagnant economy will put pressure on the Administration and the Fed to do something. The implications are not good.

Today the Bureau of Labor Statistics told us that unemployment was [...]


Winners And Losers: The New Economy

There was a wonderful article in the Wall Street Journal this weekend on the ultra (über, hyper, 1%) rich. The article (“The Wild Ride of the 1%“) discusses the volatility of wealth of the top 1% income earners in America. The author, Robert Frank, reveals that these people’s income and wealth have become much more unstable [...]


More David Stockman

Chris Martenson interviews our David Stockman. You can hear it here. It is a good overview of our problems. He refers to the “Keynesian end-game.” Here is a sample of what he says:

I blame it on the Fed. I blame it on the 1971 decision by Nixon to close the gold window and let [...]


Bernanke Hints At QE3

Fed Chairman Ben Bernanke said today the very thing I hoped he would not say:

Federal Reserve Chairman Ben Bernanke on Wednesday signaled he is prepared to take more unconventional policy steps if the weak U.S. economy worsens too much.

Mr. Bernanke stressed the Fed is watching price trends very closely. “If inflation itself falls [...]


The Fed: “Whatever It Takes”

This came out this morning from David Kotok of Cumberland Advisors and I thought it was an excellent analysis of monetary policy by Bob Eisenbeis. I thought his comment on de facto QE3 was quite good. I would disagree on price and wage controls, though. If inflation reaches ridiculous heights, then I [...]


The Fed’s Latest Tool: Jaw-Jaw Clarity

The Federal Reserve released the minutes of yesterday’s FOMC meeting . The big news is that they unveiled their long-threatened and powerful new tool to spur economic growth, reduce unemployment, and keep inflation low. That bold new tool is what they refer to as “greater clarity” in Fed policy. What that means is they will keep [...]


Falling Interest Rates and Duration Mismatch

Since 1982, US Treasurys have been in a bull market.  This is Exhibit A: the yield on the 10-year Treasury bond (the yield and the market price of the bond are inversely related, like a teeter-totter).

This statement should not be controversial.  But outside Austrian circles, most people don’t understand that this structural decline [...]


Fractional Reserve is Not the Problem

In the United States, there are once again TV commercials advertising Adjustable Rate Mortgages (ARMs) for residential real estate.  Today, I saw one from Quicken Loans promoted with the tagline “why pay more in interest charges now just to know what rate you will have in 2018?” (they are offering a 7-year “teaser” rate and then [...]