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Tag Archives: US

A Chicken Game Between Two Governments

If President Trump called off an Iranian attack in order to save innocent civilians, he deserves praise. Render to God what is God’s, and to Caesar what is Caesar’s. But, as a Wall Street Journal editorial emphasized, there is something off in this story (“Iran Calls Trump’s Bluff,” June 21, 2019): It’s important to understand how extraordinary this is. The Commander in Chief ordered ships and planes into battle but recalled them because he hadn’t asked in advance...

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The Grand Irony of RussiaGate: The U.S. Becomes More Like the U.S.S.R. Every Day

There are many ironies in the RussiaGate drama, but none greater than this: The U.S. becomes more like the former U.S.S.R. every day. Longtime correspondent Bart D. sketches out the irony: I look at the US economy and what I see in actual everyday life is that corrupted capitalism has resulted in the same problems for average citizens as what crony communism did for the citizens of the USSR. Poor consumer choice. Poor resource allocation. Poor quality consumer products....

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Toward A New World Order, part III

A new world order is coming of age and the transition is painful to accept for a Western middle class with a deep-seated sense of entitlement. We showed how the West feels threatened globally in Toward a New World Order and followed up explaining how this translate into domestic politics in Toward a New World Order Part II. We will now continue this series by showing how gross economic mismanagement have created the new political...

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Toward a New World Order, part II

One of the most widespread misconceptions in the realm of politics is the notion of a left-right axis. This has been used over and over to explain political outcomes and paint the various factions as polar opposites. For example, in the US the two main parties, the Republicans (right) and Democrats (left), are often portrayed as a fight between good and evil. Which party representing good and which one is advocates of evil is highly...

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Toward a New World Order?

A Brave New World is coming? Perhaps. We had a recent discussion with a group of people in the hopeless business of doing long term forecasting. This made us think about what the world will look like over the next 20 to 40 years. A pretty thankless task, but the bottom line is without a damn good war, Asia will be the way of the future. As an experiment, assume, as most long term forecasters do, that both Europe and the US have...

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USD ready for a second leg higher – then what?

One year ago we showed the following chart to explain the relative strong dollar that was on everyone’s mind at the time. With a second leg higher in the US dollar imminent, this particular chart will be more important than ever. Claims to dollars, such as demand and time deposits, or even more opaque money-like products created by the shadow banking system is just that, a claim or derivative on the final mean of payment, namely base...

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Do our money managers really believe this will end well?

An economic bubble is essentially an economic activity that cannot sustain itself without a continuous influx of new money and credit to bid away real resources from self-funding endeavors. Financial bubbles are obviously closely related as financial assets are derivatives of underlying real production of goods and services. For example, an Apple stock is a derivative of the economic good emanating from peoples use of their cell...

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The Road to Fascism in Just Two Charts

Laws of politics have been turned upside down. The Intellectuals Yet Idiots can make no sense of it. The underdog who ‘tell it how it is’ appeal to people while established reasoning does not.  Politicians used to pit people against each other and bribe key electoral groupings with the spoils of ‘democratic’ victory to maintain power; well aware that the “…[process] will [only] endure until the day [politicians] discovers that it can...

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Two Simple Charts Explaining Everything

The great “science” of economics once discovered an empirical relationship between GDP and unemployment that has been dubbed Okun’s Law. It simply states that the unemployment rate rises as GDP contracts, or vice versa, as production shrinks less people will be employed. It is not exactly rocket science. However, this made us think about another relationship we have observed lately. US government real tax receipts have been trending...

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Mission Creep – How the Fed will justify maintaining its excessive balance sheet

FOMC have changed their normalizing strategy several times and we now see the contours of yet another shift. The Federal Reserve was supposed to reduce its elevated balance sheet before moving interest higher as it would be impossible to increase the fed funds rate in the old fashioned way when the market was saturated with trillions of dollars in excess reserves. When it finally dawned on the FOMC that selling large quantities of...

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