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Michael Maharrey

Articles by Michael Maharrey

US Government Runs Biggest December Deficit in History

5 days ago

The US government ran the biggest December budget deficit in history last month.The December budget shortfall came in at $143.6 billion. That compares with a $13.3 billion deficit in December 2019, according to the Monthly Treasury Statement. Spending continues to drive the ballooning budget deficits. Receipts were actually up 3% year-on-year in December, but outlays exploded by 40% year-on-year. Uncle Sam spent $490 billion in a single month. Just three months into fiscal 2021, the federal government has already blown through over $1.3 trillion.In the first quarter of fiscal 2021, the US government ran a deficit of over half-a-trillion dollars ($572.9 billion). In other words, in a mere three months, Uncle Sam has pushed the deficit over halfway to $1 trillion. Before last year, the

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Fun on Friday: Try Harder

11 days ago

The last time I wrote about gold smuggling, I was impressed by the pain a man was willing to endure in order to hide gold from authorities. He literally stuck gold bars up his rear — two pounds of gold.Ouch.But today I have a different kind of smuggling story. It is impressive not because of the smugglers’ dedication and ingenuity, but their sheer laziness.Generally, gold smugglers go to great lengths to hide their contraband – like sticking in their rectum.  There  less uncomfortable ways to smuggle gold. Officials say travelers returning to India often hide gold in chocolate boxes, purses, umbrellas and pens in an attempt to evade taxes.But three smugglers nabbed in O.R. Tambo International Airport in Johannesburg, South Africa, weren’t about to go to the trouble of hiding gold. They

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Three Records Broken in 2020 That Were Less Than Ideal

14 days ago

With the coronavirus pandemic serving as a backdrop, 2020 was a record-breaking year in many ways. And some of the economic records that fell were, shall we say, less than ideal. In fact, the impacts of these records will almost certainly ripple through the economy as we move into 2021.Here are three records that fell last year that didn’t get nearly as much attention as they should have.To begin with, the money supply grew at a record pace in 2020.As measured by the True Money Supply Measure (TMS), a formula developed by economists Murray Rothbard and Joseph Salerno, money supply growth broke records eight straight months leading into October and was just a hair away from record growth in October and November. Based on the more traditional M2 measure, money supply growth set a record

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Fun on Friday: Have You Made Your Pet’s New Year Resolution?

18 days ago

It’s time to bid a fond farewell to 2020. Good riddance and don’t let the door hit you in the butt on the way out!Of course, the New Year also means it’s time for — resolutions.Confession: I’ve never been good at resolutions. In fact, I refuse to make them. Why set yourself up for failure? But get this; now I’m not only supposed to make resolutions for myself. I have to make them for my pets!Ummm – no.The city of Jacksonville, Florida’s, Animal Care and Protective Services offered a list of resolutions you can make for your pet. They sound a lot like the resolutions I’m supposed to make for myself. They include regular exercise, a healthy diet, regular trips to the vet (for your pet, not for you) and learning new skills.You will note that most of these resolutions are for dogs. No

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The World Is Awash In Negative Yielding Debt

20 days ago

So far, the US has escaped negative interest rates as a matter of central bank policy. Back in May, many thought a Fed move to negative rates was a real possibility. Of course, much of the world has operated under negative rates as a matter of policy for years. The European Central Bank (ECB) launched negative rates in June 2014. The Bank of Japan (BOJ) introduced negative rates in January 2016. Both are still maintaining a negative rate policy today.While the Fed has resisted the temptation of a negative rate policy so far, that doesn’t mean Americans have escaped the reality of below-zero real rates. In fact, the world is awash in negative-yielding debt.Financial analyst Jim Grant’s newsletter, Almost Daily Grant (ADG), called it “a new benchmark in financial repression” noting that a

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Stimulus for Everybody! (Just Not You)

28 days ago

The US government is stimulating everybody. Just not you.Congress finally pulled together a stimulus deal. Both houses of Congress passed the $900 billion measure. It ranks as the second-largest “stimulus” bill in history, only behind the CARES Act passed earlier this year. The headline provisions include $600 stimulus checks to individuals earning under $75,000 per year, a $300 per week unemployment supplement, more money for Paycheck Protection Program loans and funding for coronavirus vaccine distribution to the tune of over $8 billion. The bill extends the federal eviction moratorium through Jan. 31 and sets aside $25 billion in rental assistance.Of course, there is a lot more in the 5,500-plus page bill that includes the CORONAVIRUS RESPONSE AND RELIEF SUPPLEMENTAL APPROPRIATIONS

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Fun on Friday: How Many Years Would You Spend in Prison for Millions in Gold?

December 18, 2020

Have you heard about the guy who’s spent five years in federal prison because he won’t give up the location of about 500 gold coins he found in a historic shipwreck?Yes. Five years.How many years would you spend in prison for millions in gold?Tommy Thompson was a diver and treasure hunter. The saga started when he discovered the wreckage of the S.S. Central America back in 1988. The vessel, known as “the ship of gold,” sank in 157 carrying thousands of pounds of gold.Much of the gold was sold to a marketing group for about $50 million in 2000. But 161 investors who put up nearly $13 million to find the ship never saw a dime. Thompson’s people say he didn’t cheat anybody. They claim all of the money was spent on legal fees and paying off bank loans.But there is some evidence that might

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Fun on Friday: Economics in One Song

December 11, 2020

I love music. A good song can comfort, inspire or motivate.  There are a lot of really good songs out there. I found one the other day. I’ll get to that in a minute. But first, I have to say there are also some real duds.I’m not just talking about boring bubble gum pop or bro-country. That’s a matter of style, and I guess some people like that stuff.  I don’t understand why, but who am I to criticize? After all, music taste is subjective.But there are some lyrics that are objectively bad.How about this brilliance from Des’ree?I don’t want to see a ghost, it’s a sight that I fear most, rather have a piece of toast, watch the evening news. Life. Oh life. Oh life. Oh life. Doo doo doo doo.”I confess; I don’t really want to see a ghost. But I don’t really want to see doo-doo either.How

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Fun on Friday: Yukon Cornelious’ Misguide Quest

December 4, 2020

Now it’s time to talk Christmas!I know. A lot of people started with Christmas the day after Halloween. This absolutely drives me crazy. Why do we just skip over Thanksgiving? Thanksgiving is a magnificent holiday! I mean, it’s important to give thanks. And who doesn’t want to eat large amounts of delicious food and watch football? But in this day and age, Thanksgiving gets completely run over by Christmas.Well, not at the Maharrey house. You won’t hear the first note of Christmas music before Thanksgiving. You won’t see the first twinkle of Christmas lights. You won’t spot the first strand of tinsel.But now that we’re polishing off the last of the Thanksgiving leftovers, the tree is going up, the lights are getting strung and the Christmas music is blaring!My objection to

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Fun on Friday: Why Is It Called Black Friday?

November 27, 2020

Well, it’s another Black Friday and I didn’t go shopping.That’s my tradition.I know a lot of people who have Black Friday traditions. My grandmother always got up and went out at the crack of dawn with one of her friends. I know some people who like to get up at like 3 a.m., eat breakfast at Waffle House, and then hit the stores.No thanks.I have never gotten up to join the Black Friday hordes. There isn’t a Walmart deal ever conceived that can entice me to go shopping at 5 a.m. I like to sleep more than I like saving a few bucks.My Black Friday tradition is to stay in my house as far away as possible from the mall and the mass of angry shoppers.  I have zero desire go out at the butt-crack of dawn, fight traffic, elbow through a smelly mass of humanity to get into a retail store, risk a

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Money Is Not Wealth

November 23, 2020

When governments started locking down the economy in response to coronavirus, the Federal Reserve sprung into action. First, it slashed interest rates to zero. Then it quickly launched what we’ve dubbed QE infinity. In effect, that meant printing trillions of dollars out of thin air and pumping them into the economy.Meanwhile, the US government did its part, passing a massive stimulus bill – pumping trillions of dollars of borrowed money into the economy. Of course, the Fed monetized a big chunk of that debt via QE infinity. So, in effect, the federal government joined forces with the central bank to pump trillions of dollars out of thin air into the economy.To sum up, the primary response to effectively shutting down the economy was to simply create new money and hand it out. Viola!

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Fun on Friday: Finding Real Money

November 20, 2020

I had a friend in high school who was always finding money. He’d frequently be walking along, look down, and spot a quarter or a dime at his feet. And it wasn’t just pocket change. He’d frequently find paper money too. I was with him when he picked up a $100 bill lying on the ground in the mall parking lot.I’ve never really had that kind of luck. At best, I spot pennies. But I’m more likely to step on chewed bubble gum than find a monetary windfall at my feet.Well, a guy in Jerusalem has my friend beat. He recently found an ancient “piggy bank” holding four gold coins.Now, I can’t chalk up Yevgenia Kapil’s find to pure luck. After all, he’s a professional finder. He works as the Israel Antiquities Authority (IAA) inspector. That’s a fancy term for archeologist.Kapil unearthed the clay

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The Tragedy of Savings

November 17, 2020

Low interest rates are a boon to borrowers. Thus the Federal Reserve’s quest to hold interest rates artificially low during the current economic crisis. We’re told easy money will bolster the economy as consumers and businesses take advantage of low rates and spend.But if you’re trying to save money, this anything but a boon. In fact, it’s nearly impossible to save for retirement in the current interest rate environment. Today, your average Joe is forced to invest in increasingly riskier assets in order to generate enough money to retire on.This isn’t only a problem for people hoping to save enough money to live comfortably in their golden years. It also bodes poorly for the broader economy. Savings provide resources for capital investment and future economic growth. Lack of saving now

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Fun on Friday: Friday the 13th — In 2020

November 13, 2020

So… It’s Friday the 13th — 2020.Should we really be tempting fate like this?While we’re at it, why don’t we just break a mirror? Or maybe spill some salt? How about walking through a gaggle of black cats.As if 2020 needed any help.Luckily (see what I did there?) I’m not superstitious. At all. If there was a ladder in the room, I’d walk under it – just to tease fate.Yes.Even in 2020.But I bet a lot of people a really nervous today.  I’ve honest to goodness known people who go through every Friday the 13th with a sense of abject dread.Nope. Not me. I figure a day is what you make of it. I’m not going to ruin a perfectly good Friday worried about 13. I mean – it’s Friday. We’re already a step ahead on the luck-o-meter.But if you think I’m nuts poo-pooing the notion of unlucky 13, you’re

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Fun on Friday: Muh Feelz Trumps Economics

November 6, 2020

I get really frustrated by people arguing vociferously about things they don’t know anything about. And on no subject is this more prevalent than the debate over the minimum wage. Bring up the “fight for $15” and you will suddenly get high school dropouts who can’t do basic multiplication yelling at you emphatically about the benefits of government-imposed wage floors. Because, you know, they feel like it should work.I live in Florida and voters here just approved a measure to hike the minimum wage to $15 an hour. It got over 60 percent of the vote. Now, this isn’t exactly a blue state. In fact, Trump carried Florida. So, there’s a pretty conservative streak here. But we just overwhelmingly did the progressive $15 per hour thing. How does that work?Well,  I’m pretty sure most people

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How Will the Next President Impact Gold?

November 4, 2020

How will the outcome of the US election impact the price of gold moving forward?Of course, there is no way to know for sure. US politics is just one of the myriad factors that influence the gold market and you never know how things will play out. But there are reasons to believe the future will remain bullish for the yellow metal no matter who ends up sitting in the Oval Office.As of Wednesday morning, the election was still up in the air. But one thing is clear. It’s not going to be the Biden landslide many expected.US stock markets rallied Monday and Tuesday before the election on the expectation of a Biden victory and Democrat control of both houses of Congress. This seems counter-intuitive. After all, Biden has promised higher corporate taxes. We know Democrats tend to favor tighter

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The Fed Balance Sheet Keeps Growing and There Is No Exit

November 3, 2020

The Federal Reserve balance sheet could be heading to $40-50 trillion or higher as the central bank continues to monetize US debt.To borrow a phrase from the movie “Pretty Woman,” this is the fork they know. If the economy turns sour, the government borrows money and the Fed backstops it by buying Treasuries. The problem is there is no conceivable exit strategy.At the end of 2007, the Fed’s balance sheet stood at around $880,000. Today, the central bank’s balance sheet has ballooned to more than $7 trillion.The first big increase happened in the fall of 2008 when the Fed launched its first round of quantitative easing. Within a few months, the Fed’s balance sheet ballooned to over $2 trillion. By the time the central bank had wrapped three rounds of QE in 2015, the balance sheet stood

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Fun on Friday: The Haunted Gold Mine

October 30, 2020

Halloween tomorrow. Seems like a good time for a spooky gold story.In 1799, Conrad Reed discovered a 17 pound, yellow rock in a creek on his father’s farm in North Carolina. Not realizing that they had 17 pounds of gold, the Reed family used the rock as a doorstop for about three years until a Fayetteville jeweler offered them $3.50 for it. They accepted, not realizing the market value for the gold was $3,500.But all was not lost. Reed’s rock was the first documented gold find in the US. And as it turns out, there was plenty more gold where that came from.Conrad’s father, John, developed a partnership with three other men to mine on the property. The two partners supplied labor and equipment to dig for gold in the creek bed. Reed provided the land.  During the first year of operation, a

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Is It March All Over Again?

October 29, 2020

It looks like March all over again.Pretty much everything except dollars sold off yesterday. The Dow Jones was down 943 points. The S&P 500 dropped by 3.53%. The Nasdaq plummeted by 426 points.  It was panic selling as markets fretted about the rise in COVID-19 cases, new lockdowns in Europe, and the lack of progress on a stimulus deal in the US. Given the worries and the uncertainty surrounding the presidential election, you would think gold would catch a strong safe-haven bid.It didn’t.The yellow metal dropped by over $40, falling well below the $1,900. Silver also took a plunge and is below $23 an ounce.So where did panicked investors go?The dollar. Bond prices jumped and the dollar index rose.We’ve witnessed this song and dance before. In the early days of the coronavirus pandemic,

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The Stock Market Is Completely Untethered From Economic Reality

October 27, 2020

We’ve been saying for months that the stock market has completely disconnected from economic reality. The markets have hit record highs despite the economic chaos caused by the government response to COVID-19. As Peter Schiff put it in a podcast back in May, the markets are on a Fed-induced sugar high.In a recent article, David Stockman put the stock market bubble into perspective and asked a poignant question: how could the S&P 500 be trading at its highest multiple in 70 years when the growth rate of corporate earnings has been sinking for more than two decades?Here are a few market extremes Stockman notes.Amazon is now 43% of the S&P 500 consumer discretionary index;Nearly two-thirds of the market is underperforming so far this year;Year-to-date, only one in three stocks is actually

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Fun on Friday: He Put 2 Pounds of Gold Where?

October 23, 2020

People will do just about anything to avoid paying taxes. Case in point – a man from Dubai shoved about 2 pounds of gold — where the sun don’t shine —  in order to avoid paying customs taxes in India.Yes. I said two pounds.Up his butt.Ouch.The man caught the attention of authorities’ at Kerala’s Kannur airport because he was “walking funny.”Well, yes. I imagine he was. You’ve heard the old saying, “He walks like he has a corncob up his butt?” Well, imagine more than two pounds of gold rammed up there.They caught a second man on the same flight carrying nearly three pounds of gold, but officials didn’t say whether he concealed the metal in the same manner.According to the report from The National, a UAE news site, “Officials at the Air Intelligence Unit extracted the gold from the

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Why Do We Put So Much Faith in Central Bankers?

October 20, 2020

Well-known management consultant Peter Drucker perfectly described the predicament faced by central bankers.You can’t manage what you can’t measure.”So why do we put so much faith in central bankers?Initially, central banks were conceived as the lenders of last resort for the banking system, but in the words of economist Pascal Hügli, they have mutated into “dealers of last resort.” They are the fire department called in to put out the world’s economic fires.The Federal Reserve’s response to the coronavirus pandemic is what we’ve come to expect from our central banks. The Fed almost immediately cut interest rates to zero and then launched QE infinity, buying up trillions in Treasury bonds and mortgage-backed securities. But it didn’t stop there. It set up lending programs, buying risky

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Fun on Friday: Searching for the Jekyll Island Creature

October 16, 2020

I spent a little time at Jekyll Island, Georgia, last weekend. I looked hard, but I didn’t find the mythical creature from Jekyll Island. From what I hear, it’s taken up permanent residence in Washington D.C. But I did locate its birthplace.If you don’t get the reference, I’m referring to the Federal Reserve. The central bank was conceived during a secret meeting at a private club on Jekyll Island. According to an NPR article, Sen. Nelson Aldrich, chairman of the Senate finance committee, organized the clandestine meeting.“He told a handful of New York bankers to go on a given night, one by one, to a train station in New Jersey. There they would find a private rail car hitched to the back of a southbound train. To conceal their identities, Aldrich told the bankers to come dressed as

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Fun on Friday: A Moving Nightmare

October 9, 2020

I hate moving.We moved from Kentucky to Florida about a year ago. It wasn’t fun. It was stressful. I lost things.Now, imagine moving $11.7 billion in gold bars and coins.No thanks!But Netherlands’ central bank recently did just that. It moved 14,000 gold bars and about 1,000 boxes of gold coins.The Royal Dutch Military Police coordinated the move, because, you know, you probably don’t want to trust ACME Moving with $11.7 billion in gold. Those guys tend to lose things just like I did. And I’m guessing their insurance probably wouldn’t cover the loss.On a side-note, I don’t think I’d want to be the guy that has to tell some government officials, “Oops, we seem to have misplaced a box of gold coins.” The response would probably be along the lines of, “Oops, you’re going to prison.”At

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Retail Apocalypse

October 7, 2020

Less than two months after reopening, Regal Theaters will shut down all 536 of its locations on Thursday (Oct. 8).The company said the closures reflect “an increasingly challenging theatrical landscape” due to the coronavirus pandemic.  Regal says the closures are temporary, but the company has not set a date to reopen.The shutdown reflects broader problems in the retail marketplace that have been exacerbated by COVID-19 and stabs another knife in the narrative of a quick economic recovery.The Regal shutdown will result in layoffs for 40,000 employees.Regal is a subsidiary of UK-based Cineworld Group and ranks as the second-largest theater chain in the US after AMC.Hollywood has exacerbated the problems for movie theaters. Studios have delayed dozens of big releases over the past six

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Silver Charts Best Quarter Since 2010

October 6, 2020

Silver just charted its best quarter since 2010.The white metal finished up 27.62% through the three months ending Sept. 30. Taking the timeline back a bit further, silver is up 106.6% off its March low. And there are plenty of reasons to believe the silver bull-run will continue.Silver saw a big third quarter gain despite a significant sell-off at the end of September. Both gold and silver dropped precipitously last month in large part due to a surge in the dollar.  The white metal dipped below $21 an ounce at its lowest, about $8 off its August highs.Overall, the fundamentals continue to look good for silver.Dollar strength creates the strongest headwinds for precious metals. Investors moved into the dollar late last month due to concerns about a resurgence in coronavirus in Europe,

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Fun on Friday: Don’t Get Duped

October 2, 2020

Gold scams fascinate me.I guess it’s because I can’t imagine getting suckered by these setups. I mean, who is going to buy gold in a gas station parking lot? Or believe that some dude from Africa they’re in an internet relationship with is going to pay them to ship gold? It seems implausible people would buy these stories. But a lot of people do. They fall for these scams. As a result, the scammers keep scamming. Here’s how to avoid getting duped — don’t take anybody’s word for anything. Check, verify and confirm.It’s interesting how scammers target different demographics. The scammers on the dating sites target the lonely. Some of the telephone and email scammers target the elderly. Well, I’ve got a new one for you today  – scammers targeting political conservatives.And my-oh-my it was

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Is This a Buying Opportunity for Silver?

September 30, 2020

Gold’s recent correction has taken silver down with it. The white metal dipped below $21 an ounce at its lowest, about $8 off its August highs.That has led some to speculate that we’ve seen a knockout blow for silver. These are generally the same people who have declared the gold bull dead. But I think it’s way too early to hang “rest in peace” over the silver market for the same reasons I don’t think the gold bull run is over. In fact, this may be an ideal buying opportunity. In order to begin saying last rites for precious metals, you have to believe the Federal Reserve is actually going to tighten monetary policy and the dollar is going to remain strong. Both of these prospects seem pretty implausible.The big drop in both gold and silver last week was primarily been driven by dollar

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We Don’t Need a Higher Minimum Wage; We Need to Fix Our Money

September 27, 2020

You’ve almost certainly heard about the “fight for $15” movement to increase the minimum wage. Well, some activists have upped the ante. How does “Fight for $20” strike you?Here’s the problem, these people are trying to solve a legitimate problem with a really bad solution.Last year, Rep. Rashida Tlaib (D-Mich.) called for a $20 national minimum wage. And why not? If $15 is good, wouldn’t $2o be better? In fact, why not go for $30 an hour. Or $100? If you can just arbitrarily assign a number to wages without consequences, why not go really big?This reveals the problem with progressive thinking on wages. They know at some level you can’t force wages to infinity. But they have no actual economic principle upon which to peg their policy. They just throw out arbitrary numbers based on

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Fun on Friday: Wanna Take My Bet?

September 25, 2020

I bet you have gold within arm’s reach right now — even if you aren’t wearing any jewelry.Wanna take my bet?It’s in your cell phone!If your cellphone is within arm’s reach, so is a little bit of gold.According to the US Geological Survey, the average cell phone has about 0.034 grams of gold inside. That equals about 0.001 troy ounces and is worth roughly $1.86. So, no – I don’t recommend busting into your phone to get the gold. But it’s there.On a side-note, your phone also contains about 0.35 grams of silver.Now, before you start getting all cocky thinking you won the bet because you’re reading this on a computer, not a cell phone — well, you still lose. The average laptop contains about 0.1 grams of gold.Checkmate.Now obviously, that’s not a whole lot of gold. But it adds up. Think

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